If you've ever wondered why that rib eye steak or beef tenderloin was so expensive, you probably assumed it was because the most desirable cuts of meat naturally cost more.
And that's true. If people stopped buying filet mignon tomorrow, the price would come down.
But it also has to do with to the relative abundance or scarcity of one piece of meat versus another.
It's just an accident of bovine evolution and anatomy that the part of a steer that provides those tender cuts is relatively small.
Expensive Steaks are Tender Steaks
The high-end steaks we're talking about are the rib eye, strip loin, tenderloin, T-bone and Porterhouse steaks. These cuts come from high up on the animal, from muscles that don't get much exercise, which is why they're so tender.
But those cuts make up just 8 percent of the beef carcass. That means a butcher has to charge enough for that 8 percent to make up for the other 92 percent, which is significantly less profitable.
Let's break down the percentages to illustrate the problem.
Ground Beef: Where Butchers' Profit Goes to Die
Ground beef and stew meat are probably the least profitable items in the meat case. It's where lean trim (sometimes very large pieces) and other bits that can't be sold as steaks or roasts end up. As much as 38 percent of a side of beef ends up in this category (which also includes products like kabobs and stir-fry meat).
Another 35 percent of the carcass is pure waste, in the form of bone, fat, and trim that can't be used for anything else.
Waste means zero profit.
That leaves about 20 percent of the beef carcass that makes up everything else — from short ribs to tri-tip to flank steak to brisket.
That's not to say that every butcher purchases whole sides of beef and breaks them down in-house. But even if they only purchase the parts they want, those other parts still have to go somewhere.
Until someone figures out how to grow a rib and a short loin without the rest of the cow attached, this is just the way it's going to be.
Tougher Cuts Are Cheaper Cuts
Some of the cuts that have traditionally been less desirable include ones that come from the round, bottom sirloin and chuck.
This is because these are muscles that get a lot of exercises, making them tough, and there's often a lot of connective tissue holding these muscles together, which can be chewy unless cooked at a low temperature for a long time using moist heat (i.e. braising).
And as long as the butcher isn't earning big profits on a significant portion of the beef carcass, he needs to make his profits elsewhere on the carcass — namely that 8 percent that gives us rib and short loin steaks.
It also happens to be the largest single primal cut on the beef carcass.
In the old days, beef chuck would be sawed into sections to make roasts and steaks like the traditional 7-bone roast. Cooked properly, these are flavorful, satisfying cuts of beef, despite not being especially profitable for the butcher.
Beef Chuck: New Steaks Mean Greater Profits
These days, however, the beef industry has learned how to dissect the beef chuck to isolate certain muscles that are more tender and which can be sold as individual steaks and roasts.
Thus, as butchers are able to earn more profit from a beef chuck, they should theoretically be able to charge less for cuts that come from the short loin.
However, would you like to make a bet that as flat iron steaks and Denver steaks start to fatten your butcher's bottom line, you'll start to see filet mignon selling for $5.99 a pound? Yeah, me neither.
By the way, this is nothing against butchers. They want to stay in business and earn as much as they can. (Also see: Why You Need to Find a Great Butcher)
Ultimately, a grilled rib eye steak is going to cost you a few dollars. Buying in bulk is a good way to save money. If you have enough freezer space, you could even buy a whole side of beef.
But another great way to save money is learning how to prepare those cheaper cuts, like chuck, shank, oxtail and short ribs. Generally, that means braising, which you might only want to do in the colder months.
When it's warm out, barbecuing (and by this I mean cooking slowly over low heat, using smoke) is another great way to prepare cheaper cuts like chuck, brisket or sirloin tip.