July 4 is one of the most widely observed American holidays, with 153 million consumers expected to celebrate with food this year for an estimated $6.2 billion spend, according to the National Retail Federation and Prosper Insights & Analytics.
This year’s survey indicates the average household will dole out $68.16 on burgers, snacks and other food for the occasion. This is the first year the survey tracked food spending.
Meat prices continue to rise to record levels as shrinking cow and hog herds have packers paying more for slaughter livestock and passing those costs to the consumer. The U.S. Department of Agriculture reports the all fresh beef retail price hit $5.45 cents a pound in May, up 10.5% from a year ago. Beef prices have risen consistently over the past three years and are expected to jump 6.5% for all of 2014, compared with gains of up to 3% for pork and chicken.
The July 4 holiday is typically the busiest season for beef sales, but consumers are backing off red meat purchases at the higher prices. In the first four months of this year, U.S. beef sales volume fell 0.6% from a year earlier after rising in the last two quarters of 2013 at 18,000 grocery stores, supermarkets and other retail outlets tracked by Nielsen Co. In contrast, sales volumes for chicken rose 1.9%.
Grocers from Kroger to Wal-Mart Stores have added smaller packages of beef and more lower-priced cuts to their meat cases for consumers watching their grocery budgets. Analyst Steve Kay, with Cattle Buyers Weekly, said grocers are not featuring beef, nearly as often as they have in past summers, partly because supplies are down and costs are way up.
Restaurants are also beginning to respond to the pinch of rising beef prices. Hardees began scaling back the size of its burgers last year and launched a new chicken sandwich alternative in May.
Texas Roadhouse operates around 420 restaurants said it raised its prices 1.5% in December, while Chipotle Mexican Grill raised prices for beef-based entrees by 8% in May. Chicken entrees went up 4% and pork-based items rose 6% as the burrito chain cited rising protein prices. It is Chipotle’s first price hike in three years.
Meat packers like Springdale-based Tyson Foods have moved to shorter term contracts with food service customers in order to pass along higher wholesale prices quicker.
JULY 4 TRAVEL, FIREWORKS
While two out of three consumers will celebrate Independence Day with food, less than half will partake in fireworks and parade celebrations, according to the Prosper survey.
Roughly 105 million survey respondents said they will attend a fireworks show this year and 29 million plan to attend a holiday parade. Prosper notes that participation in these two activities are down slightly from a year ago.
The friday holiday makes for a three-day weekend which has more consumers planning travel vacations this year. Prosper said 32 million consumers will take a vacation during holiday period, the highest level in the survey’s history. About 20% of Millennials surveyed said they plan to vacation during the holiday. Consumers overwhelming (70%) said the price of gasoline will not impact their July 4 holiday spending.
Gas prices have recently spiked higher making this July 4 holiday the most expensive for drivers since 2008. AAA reports the average gas price in the U.S. is around $3.58 per gallon, up 17 cents from last year. The recent uptick in price is linked to political unrest in Iraq, which has sent crude oil prices higher.
According to GasBuddy.com, regular gasoline prices are averaging $3.45 in Arkansas, up 8 cents in the last month and 5% higher than a year ago.
GasBuddy.com expects U.S. gas prices will top out this year at $3.75.
Demand this summer is brisk, but it won’t likely match last year’s consumption rate. Year-to-date, U.S. motor fuel demand has averaged about 365 million gallons per day, up about 1.7% from the same period in 2013, according to GasBuddy.com. The lower demand is attributed to less driving by Millennials and more fuel-efficient cars and trucks on the road.