Post by Paddy by Grace on Mar 12, 2010 8:19:18 GMT -7
money.cnn.com/2010/03/09/news/economy/tomato_shortage_fast_food/index.htm
NEW YORK (CNNMoney.com) -- Fast food joints are scrambling to find alternate sources for one of America's favorite sandwich toppings after a winter freeze took a huge bite out of Florida's tomato harvest.
Due to unusually cold winter weather, 60% to 70% of Florida's tomato crop was destroyed, said Terence McElroy, a spokesman at the Florida Department of Agriculture. And because the sunshine state produces about 75% of U.S. tomatoes, prices across the country have spiked.
A 25-pound box of tomatoes from south Florida is selling for $30, up more than 300% from a year ago, when a box of tomatoes cost about $6.50 to $7, said Reggie Brown, executive vice president of the Florida Tomato Growers Exchange.
Because ingredients make up about 30% of the price of a typical fast food meal and tomatoes go into nearly every sandwich or burger, a price spike could chew up profits in no time.
"We're seeing the effects in restaurants and produce aisles at grocery stores, but fast food chains in particular are being impacted, because those restaurants buy tomatoes in bulk and put at least a thin slice on almost everything," said McElroy.
'Sorry, out of tomatoes'
Restaurants are trying to offer their customers uninterrupted tomato supply without raising prices. For some large chains that means getting tomatoes from other sources. But others are only offering the fruit "upon request," or slicing tomatoes from menus altogether.
Burger King was so low on tomatoes in the last couple weeks that some of its restaurants were forced to stop offering them.
"We just didn't have them for a few days, so we put up a sign from corporate saying we're sorry, we're out of tomatoes," said an employee at a Burger King in Missouri Valley, Iowa.
A Burger King spokeswoman confirmed there have been "spot outages of tomatoes," and the chain "will continue to resupply Burger King restaurants with tomatoes that meet our standards as they become available."
While fast food chains like Hardee's and Carl's Jr. avoided price hikes by sourcing their tomatoes from Mexico prior to the freeze, restaurants that typically rely on the Florida crop are looking elsewhere.
Subway usually purchases its tomatoes from Florida at this time of year, which has an earlier tomato season than other parts of the country because of its warmer climate. In the spring, as tomato seasons begin elsewhere, the chain starts looking to places like California and Mexico for tomatoes.
To maintain a steady supply of tomatoes, Subway has switched its sourcing earlier than usual this year, said Les Winograd, a company spokesman.
The effect on your burger
Fast food chains are doing everything they can to keep the shortage from affecting their customers' dining experience. Denny's is hoping prices stabilize soon, and has not made any menu changes so far.
But some changes may be unavoidable. Subway, for example, typically purchases a specific type of tomato from Florida, but surging prices have forced the sandwich chain to experiment with different varieties.
"Because of the freeze in Florida and because certain tomatoes are becoming harder to come by, we're going to be purchasing some other varieties that are not in as short of supply," Winograd said.
Switching to a new product or source poses a risk for these chains, because customers could perceive it as lower quality, said Darren Tristano, executive vice president of food industry research firm Technomic Inc.
"It's a question of if you are going to be those that opt for a lower price and sometimes lower quality products or if you are going to maintain the level of quality your customers expect," he said.
But substitutions might be better than no tomatoes at all. The lack of tomatoes at some Burger Kings really hit a nerve with certain customers.
"Burger King, I am through with you," a customer who received five tomato-less Whopper Jr.'s from Burger King said in an online consumer forum, My3cents.com.
But some chains believe their customers will be more understanding.
Since last week, Wendy's has been including tomatoes in its sandwiches and burgers only upon request, said Denny Lynch, a company spokesman.
"We're doing this in all U.S. stores for two reasons," Lynch said. "One is availability -- we can't get as many tomatoes as we need -- and secondly, the color, size and quality has been affected by the deep freeze in Florida, so the quality might not meet customers' expectations."
Lynch said Wendy's has placed signs explaining the situation outside the restaurant near the drive-through window and next to the cash registers inside, and that so far, customers have been very understanding.
"We've actually had a number of people compliment us that we told them about it beforehand," he said. "Everybody knows that we've had a harsh winter, so they're very understanding about it."
NEW YORK (CNNMoney.com) -- Fast food joints are scrambling to find alternate sources for one of America's favorite sandwich toppings after a winter freeze took a huge bite out of Florida's tomato harvest.
Due to unusually cold winter weather, 60% to 70% of Florida's tomato crop was destroyed, said Terence McElroy, a spokesman at the Florida Department of Agriculture. And because the sunshine state produces about 75% of U.S. tomatoes, prices across the country have spiked.
A 25-pound box of tomatoes from south Florida is selling for $30, up more than 300% from a year ago, when a box of tomatoes cost about $6.50 to $7, said Reggie Brown, executive vice president of the Florida Tomato Growers Exchange.
Because ingredients make up about 30% of the price of a typical fast food meal and tomatoes go into nearly every sandwich or burger, a price spike could chew up profits in no time.
"We're seeing the effects in restaurants and produce aisles at grocery stores, but fast food chains in particular are being impacted, because those restaurants buy tomatoes in bulk and put at least a thin slice on almost everything," said McElroy.
'Sorry, out of tomatoes'
Restaurants are trying to offer their customers uninterrupted tomato supply without raising prices. For some large chains that means getting tomatoes from other sources. But others are only offering the fruit "upon request," or slicing tomatoes from menus altogether.
Burger King was so low on tomatoes in the last couple weeks that some of its restaurants were forced to stop offering them.
"We just didn't have them for a few days, so we put up a sign from corporate saying we're sorry, we're out of tomatoes," said an employee at a Burger King in Missouri Valley, Iowa.
A Burger King spokeswoman confirmed there have been "spot outages of tomatoes," and the chain "will continue to resupply Burger King restaurants with tomatoes that meet our standards as they become available."
While fast food chains like Hardee's and Carl's Jr. avoided price hikes by sourcing their tomatoes from Mexico prior to the freeze, restaurants that typically rely on the Florida crop are looking elsewhere.
Subway usually purchases its tomatoes from Florida at this time of year, which has an earlier tomato season than other parts of the country because of its warmer climate. In the spring, as tomato seasons begin elsewhere, the chain starts looking to places like California and Mexico for tomatoes.
To maintain a steady supply of tomatoes, Subway has switched its sourcing earlier than usual this year, said Les Winograd, a company spokesman.
The effect on your burger
Fast food chains are doing everything they can to keep the shortage from affecting their customers' dining experience. Denny's is hoping prices stabilize soon, and has not made any menu changes so far.
But some changes may be unavoidable. Subway, for example, typically purchases a specific type of tomato from Florida, but surging prices have forced the sandwich chain to experiment with different varieties.
"Because of the freeze in Florida and because certain tomatoes are becoming harder to come by, we're going to be purchasing some other varieties that are not in as short of supply," Winograd said.
Switching to a new product or source poses a risk for these chains, because customers could perceive it as lower quality, said Darren Tristano, executive vice president of food industry research firm Technomic Inc.
"It's a question of if you are going to be those that opt for a lower price and sometimes lower quality products or if you are going to maintain the level of quality your customers expect," he said.
But substitutions might be better than no tomatoes at all. The lack of tomatoes at some Burger Kings really hit a nerve with certain customers.
"Burger King, I am through with you," a customer who received five tomato-less Whopper Jr.'s from Burger King said in an online consumer forum, My3cents.com.
But some chains believe their customers will be more understanding.
Since last week, Wendy's has been including tomatoes in its sandwiches and burgers only upon request, said Denny Lynch, a company spokesman.
"We're doing this in all U.S. stores for two reasons," Lynch said. "One is availability -- we can't get as many tomatoes as we need -- and secondly, the color, size and quality has been affected by the deep freeze in Florida, so the quality might not meet customers' expectations."
Lynch said Wendy's has placed signs explaining the situation outside the restaurant near the drive-through window and next to the cash registers inside, and that so far, customers have been very understanding.
"We've actually had a number of people compliment us that we told them about it beforehand," he said. "Everybody knows that we've had a harsh winter, so they're very understanding about it."