As the supply chain is being impacted by factors including labor shortages, extreme weather, gaps in the availability of raw ingredients, and a spike in demand from consumers returning to foodservice outlets, businesses at every link in the supply chain are feeling the stress. At a time when some foodservice operators have been completely dropped by their distributor(s), the strength of your partnerships is paramount. At the time of this writing, the average fill-rate from manufacturers to distributors was running below 85 percent. But the service level for Premier Value 4 members is considerably higher than this average. That is due to the work our distribution partner, US Foods, is doing to rebalance inventory to provide our members with the best possible service. In recent quarterly earnings releases, US Foods and Sysco disclosed their food cost inflation rates: 8.2 percent and 10.2 percent, respectively. To keep this in context, a normal food cost inflation would be in the 2-3 percent range. Value 4 members have protection against this inflation with contracted manufacturer agreements (CMA). CMA’s give access to 350 vendors covering 105,000 products. Over the past 15 years, inflation on CMA products has been half of the inflation of non-CMA products. Our CMA contracts are firmly in place and while we will not know if that 50 percent “savings” rate is less or more until the current hyper-inflationary period has settled, we are confident that using CMA products is your best protection against inflation – and will offer extra security until we return to conditions that feel closer to normal. If you do not have these protections from your suppliers and partners, consider calling Value 4 to see if you qualify for our programs.
To be sure, the vast majority of restaurant operators wouldn’t want to relive the challenges of the pandemic. But it hasn’t been all bad: The past year has also stripped away the clutter and forced operators to focus on making the kinds of improvements and adaptations that kept business running. As times improve, those changes should become permanent – while other possibilities should be considered with a more wary eye. Here are five key pandemic-era changes to embed in your operation (if they aren’t already permanent): Be transparent with your guests – about the origins of the food you serve and how you protect consumer safety – and make those elements central to your brand. Keep your menu simple to enable you to more flexibly manage your inventory and waste. Harness data to help you stay current about customer preferences, supply-chain challenges and areas of your business that are generating excess costs. Find ways to offer a personal touch while allowing guests to minimize physical contact with surfaces and other people – whether they are using your restroom or paying for their order. Finally, embrace structures that will allow you to be more nimble in the future. That could mean having a real estate footprint that can easily adapt to different service models, or adopting technology that allows you to more easily scale up and scale down your staffing based on changes in the weather.
Late this summer, the Mediterranean fast-casual brand Cava opened its first innovation kitchen, a technology-driven effort designed to collect and analyze consumer tastes and trends in real time – without the time-consuming hassle of organizing focus groups or experimenting with new menu items in test locations. Cava isn’t the first brand to launch such an effort and it’s further evidence of the increased pressure restaurant operators face to innovate their menus and to get them right each time. Even if you don’t have state-of-the-art technology to help you fine-tune your menu, you can still innovate your menu well if you start with the problem you’re looking to solve. Are you looking to improve the quality of your off-premise options? Increase your dine-in traffic? Then let that question drive your decisions. Chefify advises operators to keep several factors in mind when making menu changes. First, be able to back up your prices with market research and an understanding of what your guests will enjoy and are willing to spend for a particular product. Next, make sure your new menu items are extensions of what you already do well – not overeager attempts to follow the latest trends. Third, be clear about your ingredients and list them so guests (particularly those with food allergies) can make the best choice for themselves. Fourth, make sure that if you need to cut food costs, focus on your less-essential ingredients so you’re not sacrificing the quality of the core ingredients that make your restaurant appeal to guests. Finally, opt for a minimal, easily understood menu that allows guests to make decisions quickly when they’re hungry and allows you to both minimize your food waste and improve your order accuracy.
If you feel like the rising costs of ingredients, labor and transport give you no choice but to raise prices at your restaurant, you might take comfort in knowing that across the country, brands are following through and raising prices -- and customers (so far) aren’t blinking. As the Wall Street Journal reported recently, Chipotle, which raised prices last year, experienced a 10 percent rise in sales largely as a result of bigger orders. Mondelez and McDonald’s have been experiencing similar results after boosting prices. While talk of a recession looms, U.S. consumer confidence is still at near-record highs since the recession, according to the Conference Board. If you need to raise prices in the coming months, find ways to make consumers feel it’s worth their while to pay you a visit. Link your price increases to discounts and other promotions, particularly for your most loyal guests. As Psychology Today reports, those deals tend lead to greater overall spending – an item regularly sold at a stable, discounted price will seem more valuable and worthwhile when the price is raised and a generous coupon is offered to offset it. Be strategic about the promotions you offer. As Toast advises, for a promotion to be most successful for your business, you should take time to understand your target customers and tailor promotions to what motivates them; address the business operational challenges you face (and which your point-of-sale system – not your gut -- will best help you identify); tap into local media, which can broaden awareness and interest well beyond the time frame of your promotion; and know your margins so you can bundle items that will lead guests to try higher-margin items on your menu (i.e. offering free fries with every milkshake purchase is better than simply giving away fries).