Rising beef prices in the United States this year are taking a hefty bite out of the cheesesteak business and putting some of the biggest names in the city in an uncomfortable bind.
A carousel of food commodities — eggs, sugar, cereals and beef products, to name a few — have gone up in price due to varying political and agricultural pressures. Droughts have cut into the profit margins of domestic cattle ranchers, while the Trump administration’s tariff policies threaten to raise costs and uncertainty in the imported beef market. In June, the average price of uncooked beef steaks rose 8% to a record-high $11.49 per pound, according to U.S. government data.
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“In the last six months, our price for imports is $1.50 to $1.75 per pound higher,” said Frank Olivieri, owner of Pat’s King of Steaks. “Meat was $4.25 per pound before. Now it’s about $5.25 to $5.75 per pound. It’s significant. We buy between 8,000 and 11,000 pounds of meat per week in the summer.”
Frank’s great uncle, Pat Olivieri, is credited with inventing the cheesesteak at a stand in the Italian Market in 1930. The family’s storefront that later opened at 9th Street and Passyunk Avenue endures as one of the city’s stalwarts, but Olivieri said his business is getting pinched by beef prices more than ever before.
Pat’s primarily buys imported beef from Australia, New Zealand, Uruguay and Chile. Olivieri said he prefers the fat content and taste compared to domestic beef, which is usually pricier. The business doesn’t put a fixed amount of meat on each cheesesteak — it ranges from 8 to 12 ounces, depending on who’s making the sandwich — and for now Olivieri has no plan to change his recipe. But he’s had to up the price of a cheesesteak to $17, including tax, and he’s been weighing cutbacks to spending.
“We’re maybe being less philanthropic,” Olivieri said. “We normally donate to the parks here and the (American Cancer Society). I can’t lay people off because we’re still so busy. … We’re not going to change just because our current administration doesn’t have a concept of what tariffs do to small businesses.”
At Joe’s Steak and Soda Shop in Fishtown, owner Joe Groh has always used domestic beef for his cheesesteaks. In the last year, he said his price for beef has gone from about $5 per pound to $6.50 per pound and he purchases at least 1,000 pounds per week. Groh views buying domestic beef as a moral question, but sticking to his recipe is costing the business and forcing him to raise prices more regularly.
A cheesesteak at Joe’s, before adding any toppings, is up to $16.49 with tax. That’s a big leap from the $11 a cheesesteak cost around the time Groh closed his family’s original shop in Torresdale three years ago.
“The prices have been astronomical,” Groh said. “I used to raise the price of a cheesesteak every 2 or 2 1/2 years. I’ve raised them three times in the last year alone because I’ve had to. There’s just no way around it. I’m not cutting quality or making it a smaller sandwich. It’s my own prices, but sometimes even I get sticker shocked.”
Groh is stubborn about only using domestic beef, but he said he’s concerned about the potential impact of the Trump administration’s threat to impose steep tariffs on Brazil. If a proposed 50% duty goes into effect on Aug. 1, beef from Brazil would face a tariff rate of 76% for the rest of the year, and that could send more buyers scrambling to domestic suppliers.
“I’m afraid that if imported meat becomes less available, my price is going to go a lot higher because there’s going to be more demand,” Groh said.
Places known specifically for their cheesesteaks also face a disadvantage compared with other restaurants, especially pizza shops that sell cheesesteaks.
“It works out better for businesses that have pizzerias because it might cost $2.50 to make a $30 pizza,” Olivieri said. “You could put a whole pound of beef on a sandwich and say you’re giving it away. If you don’t sell pizza, you couldn’t do that because it would be cutting into your profit margin. They raise the price of the pizza to absorb the cost of the beef.”
Pat’s has added hoagies, meatballs, Italian sausages, hamburgers and other items to their menu at different points. The problem is customers don’t really want that stuff from them.
“They come for old-fashioned cheesesteaks,” Olivieri said.
With beef prices climbing, Groh said it’s going to put the most strain on the places in the upper echelon of cheesesteaks.
“If a cheesesteak is $12, a customer might come four times a month,” Groh said. “If it’s $16, they might only come twice a month.”
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