A worker walks past a mural outside the JBS SA pork processing facility in Louisville, Kentucky, United States on Friday, June 5, 2020.
Luke Sharrett | Bloomberg | Getty Images
The Cyber attack on JBS, the world’s largest meat packer, could cause pain to restaurants if the situation is not resolved quickly, analysts say.
On Tuesday, the Brazilian company said it had made “significant strides” in resolving the ransomware attack that was affecting operations in North America and Australia. JBS expects the vast majority of its factories to be back up and running on Wednesday. She initially disclosed the attack on Monday.
Meanwhile, beef prices have risen. The U.S. Department of Agriculture reported that select cuts of beef rose 1.1% to $ 334.56 per 100 pounds on Tuesday. JBS accounts for about 23% of total cattle capacity in the United States, according to the Steiner Consulting Group.
Andrew Strelzik, an analyst with BMO Capital Markets, wrote in a statement on Tuesday that he expects the price environment to normalize once the plants resume full production. Most large restaurant chains have contracts with their main suppliers to protect them from short-term outages like the JBS attack, according to Strelzik.
“We don’t expect any significant margin impact for restaurants that are adopting a relatively quick fix,” he said.
A prolonged impact on the operations of JBS could have greater consequences for restaurants that serve beef, including shortages or prolonged inflation.
Truist analyst Jake Bartlett compared the situation to a fire in one Tyson Foods Plant in 2019, which affected 5 to 6% of US supply and resulted in an increase in beef prices the following month.
“The shutdown of the JBS facility is affecting more of the supply, but the supply disruption is likely to be for a much shorter period of time (the Holcomb facility reopened in ~ 5 months),” wrote Bartlett. “This is a bad time to disrupt supply, however, as increasing demand is already putting a strain on the supply chain.”
The summer months are already a time of higher demand for beef as the barbecue season begins. Bartlett said he wasn’t sure which restaurant chains depend on JBS for their beef, but he pointed it out the Texas Roadhouse, Shake shack, Burger King franchisee Carrol’s restaurant group, Cracker barrel and Restaurants Darden than the companies it covers with the highest beef exposure.