Omaha Steaks Cuts Product Lineup by 75% as Beef Prices Soar

Big changes are afoot at Omaha Steaks, America's most well-known meat delivery company. Here is a look at the plan unveiled last week to tackle the rising cost of meat in the U.S. and revitalize the industry.

Omaha Steaks Explores New Strategies to Expand Market Share

Founded 109 years ago, Omaha Steaks has served up countless pounds of beef and other meat products to American consumers over the last century. Despite its reputation of being a pioneer in the industry, CEO Nate Rempe is looking for new ways to become leaner, more affordable, and more efficient as beef prices continue to soar to record highs.

Rempe unveiled a new plan last week, designed to reduce its overall offerings by 75% so that it can focus on its root goal of offering affordable beef. The CEO also detailed how he wants to focus on its selection of meats grown in the U.S. while working to double its retail offerings over the next two years. According to Rempe, the overall goal is to make consumers turn to Omaha Beef for their beef needs rather than the traditional grocery store.

Rempe said that “American consumers are getting worn out by the cost of lots of different proteins — beef being included.“ He went on to note that "We shrink down our assortment and focus on the things that matter.”

Cattle herds in the U.S. are shrinking, now at their lowest levels in 75 years. The natural process of supply and demand means that prices are on a sharp uptick. President Donald Trump is now allowing 300,000 metric tons of foreign beef to come into the U.S. duty-free through November 30 in order to help to lower prices.

However, Rempe does not agree with the White House approach to the problem. “It’s a talking point. It’s not a meaningful solution for American consumers,” Rempe said. Instead, Rempe believes that U.S. ranchers need incentives from the government to increase the size of their herds.

According to the July Consumer Price Index (CPI) data, prices of beef have increased 27% over the last three years. This includes ground beef and veal. While sales for meats such as pork and chicken have also seen sharp price increases, it is the cost of beef that has been hard for American consumers to swallow.

Omaha Steaks has only raised the prices of its most premium varieties of beef, such as tenderloin and beef. The company is also trying to attract new customers by promoting its more affordable cuts of meat. For instance, Rempe said that the top sirloin is a great alternative to the filet for customers looking to save money.

Omaha Steaks Reduces Product Offerings by About 75%

Regular customers will also likely notice that Omaha Steaks is trimming its overall selection, reducing the number of items it sells from almost 500 to just 120. Items on the chopping block include many of its slow cooker meals, desserts, and single-serve choices.  

The goal of the sharp reduction in offerings is to improve efficiency and improve delivery times. The average time that it took to receive a package after ordering was almost a week last year. These days, customers can expect to see the product on their doorstep in less than two days.

Rempe is hopeful that this delivery window will become even shorter as the company opens 80 locations across the country. The new locations will work as fulfillment centers that lower freight costs and accelerate average delivery times.

In today's age of instant gratification, Omaha Steaks recognizes that it needs to be ready to meet the needs of its customers before someone else does. As Rempe said, “Speed is important. It’s a part of the value equation that we’re delivering to our customer, and to do that requires better fulfillment logistics and a more focused assortment."

Lastly, Rempe is leading the company into uncharted territory by expanding its retail presence. One of the biggest challenges facing the company over the years is that customers often prefer to see their meat products in person. As such, grocery stores have had a leg up on Omaha Steaks. Rempe believes that the growth of warehouse club giants such as Costco has “likely been unhelpful to a player like Omaha Steaks, as its bulk offerings are a source of competition."

Omaha Steaks is hopeful that it can start to chip away at the market share controlled by grocery stores and warehouse clubs by expanding its retail presence. The timing of expansion is ideal, as Americans recognize the health benefits of adding more protein to the diet. Rempe believes there is still a lot of room to grow and grab customers from traditional retail outlets, calling this category "prime for disruption."

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