Friday, March 30, 2012

How Foodservice Buyers Reduce "KOPI LUWAK" Costs

In your foodservice business, it is unlikely that you want to enter into spending wars for the
worlds most expensive bean to support your civet coffee habit. On the other hand, you want
to take advantage of the best prices offered in the supply community by working to
create competitive bids and cost savings opportunities.

Part of the solution is to reduce  or contain distributor landed costs and preparing for product
bids. Start by establishing target  prices for purchases based on commodity market knowledge,
purchase history and seasonal markets.  Understand how product specifications impact your
final  cost. It can be a challenge for GPO members and emerging chains to identify low-cost
suppliers and to determine what price they should be paying for high-volume purchases.

Leave your comfort zone and stop making these 4 fatal mistakes:  

1.Taking bids from the same distributors or suppliers, "over and over again"

2. Allowing  distributors or brokers to be your sole source for finding products and quoting prices.         (tip: work directly with suppliers on key item purchases

3. Accepting  rebates instead of negotiating deviated pricing agreements.

4. Failing to understand commodity markets and seasonal price changes.

The process of reclaiming spend control for your foodservice business requires the appropriate
purchasing skills starting  with an analysis of your descending dollar purchases  and basic
spend metrics profile.  Take action to protect your bottom-line by retaining a capable purchasing
firm to implement a Supplier Performance Management & Contracting Program or
hire an experienced procurement supply-chain manager to accomplish the job. The ROI for your investment to upgrade procurement will be repaid 10 times --- try getting that type of cash return
on Wall Street !

Yes you can successfully implement a self-directed purchasing and cost-reduction program
and improve your company’s buying process. Challenge yourself by establishing a goal of
improving the cost of 20% of the items, representing 80% of spend by 3% over the next 90 days.
And, take time each week to develop supply relationships that support your long-term profitable

To Higher Profits ! 

services company specializing in purchasing department outsourcing, bid & commodity
price management and distribution program warehouse audits. His contact information:
Office 912.634.0030, E-Mail: Favole@Gate.Net     Follow Fred’s Blog at https//
Fred Favole is Founder & President of Strategic Purchasing Services (SPS) a leading 

Wednesday, March 7, 2012

Menu Price Management: Use Less Beef and More Horsetail

Gaining an advantage from commodity market price management can lead to profit boost for a limited time but does not address the long-term effects of food inflation and higher beef costs.

One way to get the most from a little beef is by using horsetail ”. Now this can be thoroughbred Angus, Arabian, Paint or even Appaloosa no-roll, just as long as you purchase chemically lean tail from a certified U.S.D.A. packer.  If you are looking for a low food cost percentage, serving “horse” is a marvelous way to make money from a little beef. 

The Meat Buyers Guide does not yet recognize "horsetail" as real beef, although there is a strong lobby group lead by “Chefs Cooking for Profit”, group based in Baltimore, MD pushing for this recognition.  They claim that any casual or fine dining restaurant can achieve a 26.5% food cost using the “horsetail” menu. 

Purchasing consultants are always looking for new cost reduction methods, but this  horsetail” jargon has really thrown me a curveball, so I sought the council of friend and Master Chef working at the Palmetto in New York City.  I said to Chef Mykal Gruber, It doesn’t sound very appetizing Chef, what’s up?

Chef Mykal explained when he served "horsetail", he was talking about the tasty foods that accompany meat entrees, and that this was a pre-90’s CIA term for reducing the amount of meat needed per serving. Then he gave me some examples: the rice pilaf served with stir fry beef, the celery-onion stuffing mounded under thin slices of roast beef for a roast beef diner; the slices of bread and the scoop of mashed potatoes and all that good, rich gravy poured over everything (this bogglers personal favorite, the All-American, hot roast beef sandwich)

Our firm has several client chains upgrading steak and burger toppings or developing special sides to utilize this “plate-filler” concept. Now that this purchasing consultant has learned a new cost-management tactic, I realize there are horsetails everywhere!  

Not only will these high-quality fillers increase interest in your menu, but they will lower your food cost substantially.  In fact, it you offer top quality sides, customers may never miss the absence of larger portions.  Once you start thinking “horsetail”, you can cut beef portion size and plated cost.  You can also help keep your purchasing manager bonus in place, as he won’t have to buy as much $2.45 lb., 80/20 ground beef or high-price beef cuts.

How to make a lot of money from a little beef and “horsetail”:

Armed with this cost-cutting concept, I approached a successful emerging chain near Santa Anita, CA to test this menu engineering theory:  that less beef is more profitable. I agreed with the owner, Diane Crump, that the maximum beef utilization would be to use the top (inside) round.  Chefs will know how to cut the top round properly,  once the distinctive parts are separated, it’s very important that the beef be cooked with care. Now, the accompaniments, in the words of Auguste Escoffier, in cooking, care is half the battle.

The use of more high-quality healthy plate fillers makes a lower food cost possible and enhances your menu offerings.     

To Higher Profits!

Fred Favole, is Founder & President of Strategic Purchasing Services (SPS), a firm specializing in purchasing outsourcing, commodity price management and distribution program audits. His contact information: ph; 912.634.0030, e-mail: Connect on Linked IN & follow Fred’s blog at