By Tyler Durden
Just days after the CEO of Tyson Foods warned that the “food supply chain is breaking”, the disruptions due to the coronavirus are starting to surface not only in households and grocery stores, but also across corporate America, and even McDonald’s has now said it is changing how it is doling out beef and pork to its restaurants as a result.
The company has placed items like burgers, bacon and sausage on “controlled allocation,” according to Business Insider. Additionally, the company’s distribution centers have been placed on “managed supply”.
This means that the company is now going to be rationing meat supplies based on demand, instead of just ordering what the company thought was necessary. And while it doesn’t yet mean the company is facing shortages, it does suggest that even the largest US fast food restaurant believes further scrutiny of its inventory is warranted as the next may very well be shortages.
Two key McDonald’s suppliers are Smithfield and Tyson – names we have covered extensively (here and here) over the last month as they grapple with the coronavirus causing significant production bottlenecks. More than 5,000 factory workers have contracted the coronavirus, with at least 20 of those dying.
McDonald’s executives said mid-week that major production reductions were expected through “at least” the first half of May. McDonald’s CEO said on Thursday that the company, so far, had not had a supply chain break.
He also admitted, however, the state of the meat industry was “concerning” and that the company was “monitoring it, literally, hour by hour.”
Tyson chairman John Tyson said last weekend:
As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain. As a result, there will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed.
Meanwhile, reflecting the growing supply scarcity, we previously reported that wholesale American beef prices had jumped 6% to a record high of $330.82 per 100 pounds, a 62% increase from the lows in February.
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