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National Restaurant Association - Assess your buys as food costs rise

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Assess your buys as food costs rise

Wholesale food prices continue to increase, jumping more than 5 percent in 2014 and nearly 25 percent during the last five years, according to the National Restaurant Association’s 2015 Restaurant Industry Forecast. While you can’t control the markets, there are ways to keep food costs in check. Try these strategies to boost your bottom line.

  • Feature affordable quality. Track food prices; the USDA expects double-digit declines in pork, cheddar and milk prices this year, after sharp gains last year, according to the NRA Forecast. Meanwhile, beef prices are expected to continue their rise. Review your menu and recipes for affordable alternatives. For example, use pollock or swai rather than the more costly Atlantic cod, recommends Bruce Reinstein, chief operating officer for Consolidated Concepts, a purchasing partner that focuses on supporting multi-unit restaurants with leveraged buying and consulting. For meats and poultry, consider less expensive cuts, like chickens thighs, which pump up your profits while going easy on customers’ wallets.
  • Review your produce specifications. Too often, restaurants pay more than needed for produce because they’re not selecting the most appropriate variety and grade for their use, says Consolidated Concept’s Reinstein. For example, a restaurant might automatically specify No. 1 grade avocados. “But the real difference between No. 1 and No. 2 grade is how the avocado looks on the outside; it has no effect on the inside,” he says. “If you buy No. 2 grade, you’re going to save money and still have the quality.” Consolidated Concepts offers a produce management program that includes monitoring specifications and negotiating contracts.
  • Join a purchasing group. Because of their sheer volume of purchases, large chains often negotiate favorable deals. “The only way an independent restaurant can compete with the chains in terms of food costs is to join a purchasing group,” says Linda Lipsky, a Broomall, Pennsylvania-based restaurant consultant. Collective groups, such as Dining Alliance, Consolidated Concepts’ sister company, let independents gain purchasing power by pooling their procurements.
  • Compare apples to apples. When bidding out items, be careful that you’re making a true comparison between items. For example, if you’re comparing the prices for a case of tomatoes, factor in any differences in yield, urges Reinstein. Just because one vendor offers a case for less, doesn’t automatically make it a better deal.
  • Get set to prep. Consider doing more prep work in-house, rather than buying items already cut and prepped. Instead of purchasing precut 4-ounce chicken breasts, you’ll pay less per pound for pieces that randomly weigh 4-6 ounces, points out Lipsky. So, by trimming the excess chicken in-house, you’ll also trim food costs. Don’t throw away those savings by trashing the chicken trimmings; incorporate them into other dishes like a Caesar salad topped with grilled chicken. Conduct a make/buy analysis to determine where this approach makes sense for you; don’t forget to factor in labor costs.
  • Lock in prices. By signing a contract, you can shield yourself from surging prices, due to extreme weather conditions and other unpredictable factors, says Reinstein.
  • Don’t let your crew eat your profits. Minimize costly order errors by training your front-of-the-house team on how to accurately record and check guests’ orders and your back-of-the-house team on time and temperature indicators of readiness. Discard any items sent back to the kitchen and record them as waste.
  • Remember the 80/20 rule. As a general rule, about 80 percent of your food costs come from 20 percent of your items, says Reinstein. Negotiate good deals on these core items, he advises, but don’t overlook the other items. “I’ve seen restaurants that grossly overpay on the other 20 percent.”
  • Root out hidden costs. Beware of hidden costs like freight charges, says Reinstein. Be sure to negotiate these upfront. Audit your invoices to ensure that you pay for only what you receive and that no extra charges are tacked on.

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