How did restaurant and foodservice closures in 2020–2021 change demand for potatoes and beef in the U.S.?
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Executive summary
Restaurant and foodservice closures in 2020–2021 shifted large volumes of both potatoes and beef out of institutional channels and into strained retail markets, producing short‑run mismatches: potatoes destined for fries and baked‑potato programs went unsold or sat in storage, while beef experienced both a collapse in foodservice demand and simultaneous processing disruptions that redistributed which cuts consumers bought and caused volatile wholesale prices [1] [2] [3]. By mid‑2021 much food‑away‑from‑home spending had rebounded toward pre‑pandemic levels, but the transitional effects — oversupply of some products, shortages of others, and cut‑level price swings — define the pandemic imprint on these commodities [4] [5].
1. Instant shock: restaurants closed, institutional channels evaporated
When stay‑at‑home orders and capacity restrictions shuttered dining rooms, schools and event venues in March–April 2020, entire institutional demand streams for products like frozen French fries and restaurant‑grade russet potatoes disappeared almost overnight, leaving distributors and growers with product that could not be easily redirected to retail shelves [1] [6]. The same pattern applied to beef: demand from restaurants, hotels and cafeterias dropped sharply, producing a measurable decline in “food‑away‑from‑home” expenditures that eroded orders for live cattle and specific primal cuts typically used by foodservice [7] [2].
2. Potatoes: unsold fries, storage and a slow reallocation to retail
Potatoes grown and processed for foodservice — frozen fries and high‑yield russets for baked potatoes — faced sudden oversupply as restaurants closed, forcing some processors and distributors to hold inventory or see product go unsold; media and industry reporting documented frozen fries and russets targeted at restaurants sitting idle and creating distribution headaches for the foodservice supply chain [1]. Retail demand for potatoes rose with home cooking, but packaging, specifications and distribution systems were not perfectly compatible, so much of the foodservice potato channel could not be instantly repurposed, prolonging localized gluts and losses for growers and processors [1].
3. Beef: demand collapse, processing bottlenecks and cut‑level reallocation
Beef markets saw a two‑front disruption: restaurants’ collapse reduced demand for higher‑end steaks and restaurant cuts, while COVID outbreaks and capacity reductions in packing plants constrained processing and created a “logjam” of live cattle waiting for slaughter — a supply–demand tug that amplified price volatility [2] [3]. Wholesale and retail prices diverged as cuts typically sold to restaurants fell in value relative to ground and lower‑quality cuts that retail consumers bought more of at supermarkets; studies show tenderloin and other primal steak prices plunged early in the pandemic while ground‑beef demand and prices rose as consumers shifted to home cooking [5] [8].
4. Price dynamics: rapid swings and heterogeneous effects by cut
Empirical work and USDA reporting document that the beef market experienced sharp, heterogeneous price movements rather than a uniform shock: an early drop in some wholesale prices was followed by spikes when plant closures reduced supply of prepared meat, and relative prices across cuts changed as retail consumers favored different products than restaurants did [7] [3] [5]. Economic analyses find that demand shocks from restaurant closures produced relative price declines for certain cuts for months and then an “inversion” as reopening began in 2021, illustrating that where value was captured along the chain shifted materially [5].
5. Recovery, persistence and structural lessons
By spring 2021 food‑away‑from‑home spending had largely returned to pre‑pandemic levels, easing some demand dislocations, but the pandemic exposed the fragility of channel‑specific supply chains: potatoes and beef could not be instantaneously rerouted without losses, processors’ capacity constraints amplified price volatility, and producers faced added feeding and storage costs while inventories of frozen beef or potatoes accumulated [4] [9] [3]. Alternative interpretations exist: some accounts emphasize mainly a demand redirection to retail, while others stress supply‑side plant shutdowns as the dominant cause of price swings; the literature and USDA analyses show both forces operated together and had different impacts across products and cuts [7] [2] [5].