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Commodity Costs are Likely to Rise in 2013. What can you do?

With the drought, rising beef prices and internation pressures, indicators point to food costs going up in 2012.  Here is an interview with some suggestions on how to deal with rising costs.

 

"We are looking at a very difficult round of food commodity cost increases," says John Gordon, Principal of the Pacific Management Consulting Group. In a Foodservice Radio interview, John talks about the new drivers influencing food costs and what operators can do to help offset increases in the coming year.

"It has been very difficult over the past several years with an up-and-down pattern but in 2013 it will begin anew," says Gordon. "We have been dealing with commodity cost issues forever. What is new is globalization. With so much economic activity occurring internationally, the strength and weakness of the dollar has become a much bigger issue. A big portion also has to do with arbitrage or contracting and what positions the commodity markets are actually taking. We saw this last year with the coffee commodity cost run-up. So the short answer is the situation is more complex today with more drivers."

There are several opportunities where operators can bring down overall expenses. "Operators need to think very carefully about what they can control," Gordon continues. "For example, an independent operator will generally have more flexibility in terms of menu and pricing. It is critical to get the menu sized properly and do many frequent looks at the actual menu product mix. You don't want to have your menu crowded with low selling items because it creates a lot of drag on restaurant operations not only in terms of high inventory, but also menu complexity, order-taking, and cooking.

The number one item that every restaurant operator can control is suggestive selling. "It is amazing to me the number of times that restaurant customers are not suggested towards a menu item by human-to-human contact," Gordon concludes. "This industry does a lot of work with menu boards, drive-thru panels, and posters. But it really comes down to a service business and one human being has to be able to interface with another. It is just amazing to me to see how little that actually occurs. It is more prevalent in some operations than others, but the question 'Is that all?' has to be banished. Every employee, no matter how shy they are, has to have at least one default question."

Restaurant operators will also have to look beyond the two usual places food and labor to control costs. Utilities in restaurants are notoriously inefficient because restaurants operate many hours during the day. Operators can realize cost savings by turning on equipment and lights as needed, monitoring the thermostat throughout the day, and getting separate temperature controls for the kitchen and dining room.

Foodservice Radio is the 24-hour streaming internet station programmed for the food service operator.  You can access full stories and interviews at www.foodserviceradio.net.

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