Sunday, October 28, 2012

Local Suppliers Can Help You Avoid The Coming U.S. Supply Crunch

Foodservice operators are able to improve the quality and value of food products by sourcing local vendors, and giving preferences to green initiatives. This is an important sourcing strategy that also supports an even more important initiative.
The world’s food growing limitations and coming inflation will politicize the production and distribution of many transported food products and commodities. We have already seen legislation controlling farming land development, cattle and poultry processing. These are only a few of the components that will change the face of the food supply-chain.

Unless the foodservice industry reforms the menu and purchasing process by supporting local and regional suppliers, America’s golden age of food product variety at reasonable cost will give way to product shortages and allocation programs.    

In our purchasing consulting practice and my previous experience with Fortune 50 restaurant chains, there has always been a battle for a share of the world’s food supplies. The independent restaurant operator,and many emerging chains do not understand that we compete against international conglomerate farm/packers, both domestic and foreign.   

Will your foodservice organization be forced to change menu offerings because of world-food management solutions? Did you realize that the largest food organizations already utilize closed buying systems for the purpose of expanding control over food supplies. 

My consulting firm specializes in protecting foodservice clients from price increases and supply shortages. However, we still come across too many operators that try to match the popular menu items promoted by the major brands, which means they make less profit and risk out-of-stocks. Other restaurants depend on distributors to manage supply relationships,  without realizing the that are not protected without a formal supply agreement.  

What can be done? 

We are a creative and talented industry, isn't it time we made changes to how products are selected for the menu?  Why create “false” markets and elevate common products like the Kiwi fruit to high-cost exotic food status?  Many restaurants promote bone-in chicken wings, once a cheap throw away item, now high priced and hard to buy. Does every casual dining, sports bar, pizza and sandwich joint have to offer chicken wings?  

In my openion, foodservice has always been a "follow-the-leader" industry when it comes to new products. Not only are “me-too” menu offerings boring, but they inflate acquisition costs and lower profits for everyone! (btw.. chicken tenders’ prices are falling now that the BK promotion has ended)

When will product development managers and chefs follow the lead of procurement professionals who can identify best buys based on product seasonality and availability. Why not use more pork and turkey for greater and actually give the customer a break by discounting the menu price! 

The process can be managed in the cloud with purchasing and vendor postings of based seasoning buying calendars,protein production cycles and local products available for immediate purchase.  This new menu management process starts with Purchasing providing the Culinary team with the product list for developing new products. 
Independent restaurants can do more to support local and regional supply sources and  jump start this process, by developing a local supplier database that includes green suppliers, independent farms, growers, packers, processors and re-distribution centers (ie: DOT Foods, Mega-Warehouses). Send your  local supplier data base to the State Restaurant Association and SPS ( so we can share the information online.   

I am confident that local suppliers and smarter product selections can help us prevent a supply-crisis.  The industry will  be forced to "do more with less" and we will pay higher prices for the products that are available. That's why we must develop and support food sources closer to home and change the menu management process.

The Foodservice community, more than any government program, can and will lead the way in preserving our food self-sufficiency. And, in doing so,assure food supplies for the talented professionals that feed America.

A final suggestion: whenever your foodservice distributor or purchasing agent seeks a new source of supply, takes a competitive bid, grant a 5% cost preference to locally qualified suppliers and consider it a business investment.
                                                                                                                                                                       To Sustainability,

Fred Favole is President of Strategic Purchasing Services (SPS), America’s most experienced foodservice firm specializing the outsourcing, rebate recovery,  staff support, and commodity contracting. His contract information: P: 912.634.0030, email:  Profile:

Wednesday, October 17, 2012

Foodservice Struggle To Cut-Costs As Chain Compete for Better Prices

In order to be competitive, emerging foodservice organizations are re-examining the way they perform activities such as; menu-management, strategic product sourcing, contracting, vendor price-compliance and other routine C-staff functions.

Despite the clear advantages of outsourcing these non-core business processes, many organizations fail to do so because of established attitudes, limited knowledge of the purchasing supply-chain, fear of high retainer costs or long standing distributor and supplier relationships.


Consider your strategic supply-chain plan for 2013 and how well you managed the 2.1% food inflation since May 2012.   Did you know that Q1-2013 is projected to be the highest food cost-quarter in 30 years!

You still have time to unlease the tremendous benefits of utilizing the skills and resources  available from SPS and other industry leading companies; consider the following:

More than a trend - there is a need for hotel and restaurant brands to focus on critical / core business functions, downsize staff and upgrade the purchasing process. Outsourcing programs managed by the top 4 companies in the foodservice industry now manage $2.65 billion in food and supply purchasing for clients through "direct-to-supplier" contracting. 

Gain Leverage - leading consulting companies are managed by senior level procurement executives with a tremendous network of alliances / partnerships which allows them to operate much more efficiently that your purchasing department.

Experience Drives Performance - product costs are driven by commodity price managment and you really do need an ally with experience and experience to conduct business in this tough foodservice environment that demands excellence in everything your do.

Best ROI On The Planet -- the value proposition for outsourcing is much larger than simply cost reduction. Outsourcing also allows organizations to be more effective and flexible.  To start, ask SPS to complete a 1-time department and spend assessment,  it's really worth your time and investment.

Ranking the best purchasing outsourcing services by critical performance categories:

#1 Strategic Purchasing Services (fields the most sr. level purchasing & distribution management,)   acheives the highest acquistion cost-impact / savings, offers outsourcing package and a stand-alone 100% performance based commodity contracting service. 

#2 Spend Difference (most $ spend under managment and growing, solid service, features "vendor paid fees" that offsets the cost-of-service, service leader operating is the Western states.

#3 Empad - provides proven service, middle management provided support to a variety of chains, leadership is knowledgable, steady but not dynamic.

#4 Restaurant Partners - an emerging service for casual and fine dining operators; service works best when combined with RP's restauarnt managment program; lacks advanced spend-management software. Part of the Foodbuy program re-seller family, with a focus on rebates.
SPS, on average, achieves savings or cost-avoidance of  5% to 15% of total food and supply spend; with overhead cost reductions as much as 60%,  when the full department outsourcing option is selected. 

To Higher Profits!

Fred Favole, President of Strategic Purchasing Services (SPS) along with Ron Bay, Managing Partner, direct America's most experienced firm specializing in purchasing dept. outsourcing and cost-reduction contracting.   Contact: HQ Office. 912.634.0030, email Fred's Bio: