The demand for steak is not declining

As Americans prepare to fire up their grills on the Fourth of July, they are facing some of the highest beef prices ever.

However, despite the sticker shock, demand for beef and steaks is still holding up.

Beef prices rose after the US cattle herd shrank to its smallest size in decades after years of drought, high feed costs and herd culling. The resulting supply crunch drove up livestock prices and, ultimately, the higher cost of beef on grocery stores and restaurant menus.

While prices fell slightly in May after reaching record levels in the spring, consumers are still paying near-record prices for ground beef and steak. The price of ground beef averaged $6.75 a pound in May, according to data from the U.S. Bureau of Labor Statistics, up about 13% from a year ago and just below April’s record high of $6.90. Beef steak prices averaged $12.80 per pound, up 16% from the previous year and the second highest level ever.

But so far, it doesn’t seem like shoppers are ready to give up their summer barbecue tradition. The resilience provides further evidence of consumer behavior at a time when investors are closely watching for signs of whether and where higher prices are causing shoppers to pull back.

“We are seeing that customer demand for steak remains very high, with a shift toward more premium organic options,” a Kroger spokesperson told CNBC. “We have also seen that beef continues to be the preferred choice during recent holidays, including Easter and Memorial Day.“

Beef had the biggest dollar growth of any food category before Independence Day, with sales up about $352 million over last year, according to data from NielsenIQ.

“Consumers are entering the holiday with discipline, taking more trips but with clear intent behind each trip,” the consumer research firm said in a June report.

With the rise in demand for beef, consumers have shown clear preferences within this sector.

Consumers increasingly view steak as the centerpiece of special occasions: an “affordable luxury” where they are willing to pay more for quality and experience, while saving money elsewhere when they shop for groceries, NielsenIQ said.

The data also suggests that consumers are not simply looking for the cheapest protein. Instead, many focus more on quality.

Shoppers report increasingly favoring quality claims such as USDA Prime (42%), no added hormones (40%), grass-fed (37%), and never used antibiotics (36%) when purchasing meat, according to NielsenIQ.

“Shoppers are looking beyond the label and to the story behind the meat,” the company said. “Claims linked to quality and sourcing are gaining momentum as buyers seek trust.”

The demand has also benefited other companies in the industry, such as Omaha Steaks, which told CNBC that consumers continue to prioritize gifting steaks even as they cut back on other places.

“Customers still celebrate Dad with premium proteins, but they also think about value and variety,” Nate Rempe, president and CEO of Omaha Steaks, said last month as Father’s Day approached.

The company said it has seen continued growth in USDA-certified top sirloin, a devaluation recently introduced, with sales up 25% in the weeks leading up to Father’s Day this year compared to 2025.

Restaurants also reported seeing benefits from the dynamism. LongHorn Steakhouse, among other restaurants, has seen a rise in diners seeking steaks.

“Guests know they are getting quality steaks when they come to LongHorn [Steakhouse]said Rick Cardenas, CEO of the chain’s parent company Darden Restaurants. “They’re getting great value. It doesn’t hurt to have high beef inflation in the market. So the relative value looks a little better.”

The key question for investors is how long this dynamic can continue. Rebuilding the U.S. cattle herd could eventually increase beef supplies and lower prices, but that process takes years without the help of imported supplies.