Things To Come: Food Service 2014

2014 the year that consumers will be spending more, which translates to more posteriors in more restaurant seats. Are you fully prepared to handle this new business. 

Depending on your industry segment and region of the country; changes in products or service style can be subtle or you you may need a major renovation.  Here are a few insights to consider.  

As industry consultants we're lucky enough to work with exciting chains all over the country.  We've seen some trends popping up on menus that is sure to move mainstream in 2014.  You need to reach new customer through their senses, both intellectual (ie: healthy eating or great value) and olfactory.

Fast Casual concepts with continue to fight each other for market share as innovators like Modmarket Farm Fresh Eateries, Great Wraps and Garbanzo Mediterranean Grill  focus on fresh & healthy, while delivering taste sensations that consumer’s translate into dining value. 

Multi-concept casual dining giants serving up more of the same seafood and Italian dishes will continue to struggle with declining sales, but they can look forward to improvements in 2014.  However, real growth in this segment does not come easily because the faster moving and clearer thinking emerging chain innovators keep introducing spot-on trendy products. 

Savvy executives have discovered that re-imagining the menu is far cheaper and faster than “re-branding.”   They are looking to add new seasonings, sides, toppings, and specialty breads...the nitro that has fueled the segment since early 2011.  Ask whether or not you have been providing what your customer needs – or want he wants?  

The “hot chain” concepts that we support have added culinary support to develop or refine new taste experiences. Take time to tell customers why they are using quality products ABF poultry, ZTF oils, red tomato, chia and Quinoa seeds, and roasted veggie toppings. As Chef Paul Ladouceur, SPS-Culinary Services says, “try to add texture to products and discover how intelligent ingredients are not only trendy, nourishing and taste good, but they can produce a healthy bottom-line.”.” 

QSR (fast food) restaurants will outpace all segments in increased profits, partly because the Affordable Heath Care Act forces foodservice organizations to move hourly-workers to 30 hours per week (leaving them to toil without a health safety net).  This unfortunate situation does offer operators an opportunity to invest this political cash gift (they don't have to pay insurance) in equipment upgrades and profit producing promotions.

Thoughts on Distribution 

Not even the Wall Street Journal knows how Sysco’s purchase (merger) of U.S. Foods will impact the marketplace. Lets just accept the fact that it's hard to turn the Queen Mary even in calm waters, but they will find a safe harbor, even as they improve their Machiavellian category management program.

Look for the continued growth of regional distributors and groups like, DMA and Uni-Pro (Mug-Group) that are sure to capture market share during the next 18 months. You can also bet that the super-cube will emerge leaner and more profitable. To the average chain operator differences between distribution services will become even more obvious later in the New Year. 

Food Trends – Eat This List

PRETZEL EVERYTHING	Breads, twists, wraps, nuggets
MIS-MASH	Haute Jewish Deli (amped up chicken liver, peppered pastrami; other - Beef potato chips, marshmallows & macadamia nuts, Asian-American comfort food (hand held)
The NEW COBB SALAD	Trendy ingredients (jerk, ABF chicken, Italian ham, fried avocados
More BROCCOLI	Frittata, broccoli slaw, roasted, as pizza topping, and Pizza oven-roasted cauliflower with whipped goat feta
TO-GO "car cups"	Actually fit cup holders & not just for drive-thru's to hold finger foods from fried fish to whiskey-butterscotch parfaits

Make a New Year's resolution to stay current with your industry, attend a trade show, improve your product knowledge and remember to share your experiences by mentoring the next generation of foodservice professionals.

To Your Success!

Fred

Fred Favole, is Founder & President of Strategic Purchasing Services (SPS), America’s most experienced firm specializing in chain purchasing & supply-chain management support. Ask Fred about a solution for your business; P: 912-634-0030 e-mail Fred@StrategicPurchasingServices.com

Riding Purchasing Off the Rails

You would be surprised (unless you get to see as many procurement departments as I do) just how many companies today are not able to identify savings opportunities

Many of these companies will tell you they know where the cost savings are and they have vendor “deals” in place, but they don’t really. They roll the dice on profits by allowing manufacturers and distributors to control the true cost of goods much like a reverse auction.

I recently started learning to play the drums, which means that I currently suck out loud in neighbor-terrorizing fashion. On the way to my lesson today, I psyched myself up by repeating the simple trick for learning anything: embrace failure.

We can't be good at something until we've first spent a lot of time being really bad at it.  Why should foodservice purchasing be different?

So in the spirit of embracing failure, I am sharing with you how 75 % of the chains we've consulted with over the past 18 years have mastered the process of giving money away to their so called “supply-partners”. 

For many emerging chains, advanced product contracting and spend management control is out of reach unless they turn to professional outsourcing services.  The legendary mistakes made by untrained staff can take years to repair.  

After a few minutes of fumbling, the new Director of Purchasing for a 100 unit chain, just promoted from training director, and with zero purchasing experience, calls his primary cheese supplier and asks if there is a contract in place and demands a price decrease.  Or the new manager rolls-over past contracts walking past immediate savings opportunities available through forward buying programs.

Chain executives that hire inexperienced staff should not be asking why they come up with dry holes again and again in drilling for cost savings. Why? Because they haven't done the due diligence needed to really understand that chains complete by having high performance procurement management. Many chain organizations do value supply executives. For example, McDonald's has always raised purchasing to a "C-Staff" level of importance, right up there with marketing and operations. 

I spent a few minutes here working on the premise that experience drives performance and that if you invest in hiring or retaining a professional to manage procurement you will be more profitable.

Sifting the rubble after the purchasing guy departs

It’s easier to blaze a new trail after you've already been hiking for a while and every time our firm takes over for those smart multi-tasking COO's or Chef's or the guy promoted from training, we are reminded just how much it really costs to be out-of-touch or “cheap”.  

At some point you're going to run out of time and money as the competition devours business in your home market or stops your expansion plans.  The reason is you don't control the supply-chain, manage markets or have the systems, controls and procedures in place to support profitable growth.

You will find that one of the neat things about taking back your purchasing process from distributors, buying groups, and brokers is how, maybe after three months, out of nowhere, bam!   An amazing string of savings opportunities will just burst onto your bottom-line.

Trying to explain to emerging chain organization executives why they should invest in professional management can be a lot like trying to put an octopus to bed.  I can always come back to it later, but for now, I am turning my attention on completing a spend analysis for restaurant chain that will lead to a $1 million savings next year.

To Higher Profits!                                                                                                           
Fred


Fred Favole is Founder & President of Strategic Purchasing Services (SPS), America’s most experience culinary-purchasing firm specializing in department outsourcing and cost-reduction management.  Contact email: fred@strategicpurchasingservices.com Office: 912-634-0030

Wing Crunch Time

Restaurant chains driven by wing sales should consider switching to a wing portioning program to bring menu profits more in line with acquisition cost. Supply of the highly desirable jumbo cut wing size is limited and pricing is under siege year-round - not just for the Holiday's and the Super-Bowl. The situation will not be getting better anytime soon. 

We are advising clients to adjust their portioning policy to make wing count size issues less critical. An obvious strategy is to adjust the count range requirement and move to a smaller or larger wing. Some of our favorite joints (they all have WINGS in their name) made this move in 2012).  We favor a variation of this approach;  instead of serving a set number of pieces, factor the size (wt) of the wings in each portion, more than the wing count. 

Consider what the a portioning program can bring to your business. Customers instead of ordering with the expectation of receiving a certain number of pieces, will have a choice of ordering by weight;  ¼ lb., ½ pound and 1 pound or family & friend platter servings. 

Despite the wing count, the customer gets the same volume of meat, and the new serving policy improves the chances of keeping supplied at somewhat discounted prices. Right now, because of low production and high product demand, it's " Wing Crunch Time - All The Time" for fresh small bird cut wings. 

You already know that no poultry company actually counts the wings they pack in a 40# case. The wing count is 100% determined by the size of the live bird and there aren't many 5-6# birds being grown. Just asking leading poultry companies like; Tyson, Wayne Farms, Pilgrims, Mountaire, Simmons, Perdue, Sanderson, OMP, Koch and Keystone about availability....by the time these nice folks get around to returning your telephone call, you can finish reading Wenzel's "Menu Maker".

To Higher Profits,

Fred

Fred Favole is President of Strategic Purchasing Services (SPS), America's most experienced foodservice purchasing services firm. Services: spend assessments, bid & GPO management & menu ideation & outsourcing. Contact Info:  (912) 634-0030 e-mail: Fred@StrategicPurchasingServices.com 

Hot Trend Wraps R&D, Menu, Purchasing and Profits

In the new food service workplace, multi-unit operators are creating lean organizational teams that can react quickly to competitive challenges through a dynamic management process called "culinary-purchasing (CP) ".

Many restaurants outsource technical expertise to develop products and join group group buying organizations to leverage lower product pricing. This new CP structure coordinates the efforts of highly experienced and motivated professionals resulting in new sources of supply, exciting products and higher profits, all delivered with cost effective results.

This Chain-Link-Services model introduced by Chef Paul Ladouceur and Fred Favole of Strategic Purchasing Services (SPS), combines the talents and expertise of procurement, culinary and supply-chain to deliver successful profitable outcomes. The unity of purpose is achieved by combining individual profession skills which provides food service organizations or manufacturers turning to SPS for client menu ideations with products perfectly matched to menu, kitchen equipment, price points and operational capabilities.

The CP process when incorporated into the national account chain selling program by manufacturing companies delivers the knockout punch that makes the customers culinary-purchasing process rock!

When you consider broad line distributors are withdrawing value added services and suppliers are reducing support staff, most companies have more Product Development, Recipe Development, Product Utilization and Menu Ideation projects than they are staffed to handle economically.  Now with chain-link services by SPS, all that changes!

SPS manage and implement the entire program for food service chain, or can assist with the individual steps in the process;  from the CP dynamic “ menu ideation ” and spend management (costing & logistics) analysis process through focus groups, staff training and introduction into the restaurant/hotel's distribution network.

Here’s a sad fact that based on our 18 years transforming decentralized purchasing programs;  less than 15% of all food service chains ever achieve the efficiencies of their competition.

How can things be improved to guarantee that products fit both form and function while still making a profit?   “ Culinary-Purchasing is the next logical extension and development trend that will integrated into the business outsourcing process, as older models continue to fail", states Chef Paul Ladouceur, V.P. of Culinary-Purchasing.

Lets take a look at 5 traditional ways most chains use to make bottom-line improvements. Then,  ask if culinary-purchasing management is what's missing in your process:

• Decreases in Food Cost
• Change in Sales Mix
• Increase in the Number of Covers (Customers)
• Increase in check average (often via price increase)
• Reduction in Overhead

Because of the resource-intensive nature of developing cross-functional teams, the hot new process is to use specialized services companies with motivated procurement and culinary professionals to assure profitable and successful outcomes. By bringing in your extended  “team” early on in the menu engineering or sales process, you save development time and the creative process is improved. 

Not only will this help functionality, but it will help lead to more profitable product introductions with fewer cost, operational and profit ” surprises” later on in the process. 

To Higher Profits!
Fred

Fred Favole is President of Strategic Purchasing Services (SPS), America’s most experienced outsourcing firm and innovator of the dynamic "chain-link services" program. Ask Fred about a solution for your business. Contact: Fred@StrategicPurchasingServices.com  Office: 912-634-0030 

Compete Using Strategic Sourcing To Achieve Goals

Foodservice purchasing experts focus on creating  a competitive advantage by sourcing products “outside of the box” typically created by standard supply-chain models. Ask any executive in major chain procurement what separates their performance from emerging chains, buying groups or distributor buyers and the answer may surprise you.

Their reply is likely to place saving money lower on the list.  After all distributors, suppliers and brokers always offer the best overall product solutions for the business, right?  On the other hand, we must consider that distributor account representative must maintain company earned income, brokers earn commissions selling products in the distributor' warehouse, staff buyers have limited sourcing and culinary experience, and GPO's (group purchasing organizations) partner with lead suppliers to earn money and offer  members a limited number of brand alternatives.    

For foodservice sourcing to be truly strategic, it must go outside of the supply-box created by these restrictions. A world-class process brings value to the organization in many ways including saving money; the foremost of which is establishing a direct relationship with suppliers that are committed and capable of contributing to profitable growth. 

Here are 5 strategic sourcing goals used by SPS in managing chain purchasing and providing chef services:

Goal #1: To reduce risk. The brave new foodservice world requires that buyers understand how to compete in the international marketplace for proteins and grains once available and affordable in the U.S.A. 

Building your menu based on being able to consistently buy certain imported seafood species and beef sub-primal cuts or chicken wings at affordable prices can be risky business. Strategic sourcing enables your company to sustain a continuity of supply, quality and price, even in the face of the unexpected markets and supply disruptions.    

Goal #2: To improve supplier performance. Reducing the delivered to distributor unit price on your order guide is nice, but meaningless if you don’t hold suppliers to formal product, specifications, and distributors to on-time and complete deliveries.  Not to mention quality defects or changes in product yield that affect your business.. Strategic sourcing is only truly successful when you can achieve a true cost reduction and improve distributor and supplier performance. 

Goal #3: To drive profits to the bottom-line.  Managing cost by controlling the landed cost of goods to your distributor the first step in the process. Transition from distributor or GPO controlled center-of-the-plate purchases and you can avoid the projected 3.5% food price increases through the end of the year.  Then, hire a professional to contract directly with strategically selected suppliers; then maintain high-performance standards by levering total purchases and managing future commodity costs.

Goal #4: To bring in innovations from the food supplier base. In today's competitive restaurant and hotel business you need a constant flow of new sources of supply and options to release the full capabilities of your culinary and purchasing team. Suppliers can be a great resource only if you are selecting qualified partners world-wide from “outside” the box build by many links in your supply-chain.  Start to recover your potential through sourcing and watch your Culinary-Purchasing team ROCK.

Goal #5: To support the organization's social responsibility goals. Today’s operators must support green, healthy, diversity and other social responsibilities; these principles can be incorporated in your strategic sourcing plan and services like SPS can help move your organization towards those goals. 

Discover the principles of the strategic purchasing process and start seeing immediate benefits. Empower your organization to exceed expectations by out-SOURCING and out-SELLING the competition.   

To Higher Profits!   Fred                                                                                                                                                                                                                                                   

Fred Favole is President of Strategic Purchasing Services (SPS) and Founder, Chef Support Services, a foodservice consulting firm specializing in outsourcing, culinary support, and spend management services. Fred at (912) 634-0030, email: Fred@Strategic Purchasing Services.com 

Strategic Sourcing Makes Menu Making Easier

How many times do you wish you had extra professional staff?

Chef Support is a unique program offered by America’s most experienced purchasing firm to address the product challenges faced by corporate chefs and menu professionals.

 

Our service provides real-time access to sourcing experts that use decades of foodservice experience to locate the exact product you need, while handling logistics from farm (or plant) to table.

 

Quickly locate a winning L.T.O. item, replace high cost protein suppliers, expand your CORE items bid list, select #1 product overstocks, or simply discover your next great supplier.

 

Together, working with Chef Support Services (CSS) you will quickly transform the sourcing process into a flexible, powerful and profitable culinary resource. When you select products “outside-of-the-supply-box” without the boundaries imposed by distributors, GPO's, brokers, buyers or sales representatives, you unleash the true potential of your talent and menu. 

 

Menu Making Made Easier  w/ No-Out-Of Pocket Expense.

Contact us to see how we can help you!

 

Office: 912-634-0030

Fax: 912-634-0031

Email:  info@strategicpurchasingservices.com 

Fred Favole, CPO (912) 399-1427

Dan Patterson, VP Services (678) 315-2389

Catherine Gruber , Manager (912) 623-0030

                                                                                                                                                                     

Wine Selection Tips From The Foodservice Golden Age

Only in the last few years have I started to appreciate what the legend of Creighton Churchill  ( "The World of Wines " &  " A Notebook For the Wines of France" ) has meant to the foodservice industry.  He is a forgotten pioneer in the art of wine selection and promotion.   

During my brief encounters with Creighton in the mid-1970's, during the heyday of the airline industry (Jumbo 747s, piano bars, 1st class wine tasting, carved roast beef, King crab and  wonderful deadhead flights from JFK to Paris or Puerto Rico ).   We were both always high;  I worked for American Airlines and was sky-high, and he was high on life and wine.  Creighton was on a mission to bring quality wine to the masses in a New York elitist sort of way, and I was a rookie F&B purchasing agent with a $115 million budget. 

Experience teaches us that potholes, or in my case “air-pockets” are to be avoided when buying and selling alcoholic beverages.  While this blog is not a story about drinking causalities, before suggesting to you how to select a wine for your table or business, it would be best if you would draw a glass of your favorite port or chardonnay, as I share a few tips and quips.      

1. Foodservice purchasing agents should not buy everything they sample.
2. Never play golf for money with a liquor salesmen
3. Deny that you have an extra set of keys to the liquor storeroom
4. Do subscribe to Food & Wine Magazine and The Wine Spectator
5. Attend the “ Pune Wine Tasting Festival ” at least once in your life.
6. Read "The Noble Grape",  by Andre L. Simone, before your visa to India expires or they outsource your job.  
7. Surprise your employees with a Hydrometer test (for alcohol contents)
8. Never buy anything but quality brands of liquors and wines (regardless of the price or free trip to Las Vegas)
9. Respect liquor controls from the Feds down through the state, county, police, health department and especially your wife.

I have always respected hotel and retail F&B executives like Don Stanczak (Interstate Hotels & Resorts) and Kevin Garvin (Neiman Marcus).  Our consulting firm has been blessed having had a business relationship with both. Their leadership and buying savvy regarding the selection of fine wines and spirits leaves a lasting impression. 

Just like my first mentor, Creighton, both Kevin and Don used to say that they could tell their managers or Chefs  “how to buy liquor and wine in five minutes – but teaching them what to buy would take five years.”

The art of tasting, however, can be leaned more quickly than selection, and this can be a very enjoyable process, especially when wine is perfectly matched with great cuisine. 

Here are the basics of wine tasting:    

• Look     (bright, clear, free of sediment, color),
• Smell   (bouquet, aroma, identify grape, nuttiness),
• Taste   (dry, sweet, fortified, “pluckiness” or tannin )

If you are new to wine selection and spirits purchasing, take a few years to watch and listen to the experts, learn how to spit professionally and try not to fall down along the journey.

To Higher Profits,
Fred

Fred Favole is President of Strategic Purchasing Services (SPS), America's most experienced purchasing firm specializing in outsourcing, and cost reduction services.  Contact Information: p: 912-634-0030, email: Fred@ StrategicPurchasingServices.com

Foodservice Purchasing Best Practices, 2

There is no doubt in my mind that thinking about MONEY first in purchasing staffing and product decisions is dangerous to the bottom-line health of your foodservice organization. Any CEO today needs to call on an armory of resources  to remain competitive and risk free; and, there must be a basis of knowledge and thinking "outside the box" to achieve measurable savings results. 

Secondly, there is a dimension of foodservice purchasing that directly links to profitability that is less measurable, but known to top professionals as the difference between acceptable and exceptional spend performance. My firm meets chain clients where they are and proceeds from there to build stakeholder value to achieve the best financial outcome over time. 
             

Here is my quick list for getting started:

High-Performance Foodservice Best Practices

1. Develop a Supply Chain Purchasing strategy in alignment with the organizations' menu, growth plans and profitability goals. 
2. Focus on the ability to connect product specifications, menu item with equipment and ideal price points. Shift your thinking from linear ( that's the Chef's job, the owner said so or the buyer makes the decision) to supply network partnerships.
3. Simplify processes, controls, and procedures - measure the results
4. Instill Total Cost of Ownership mindset and metrics from Chef to Purchasing and Operations; maintain shareholder value. 
5. Establish key Suppliers, while Improving Strategic Sourcing (beyond regional and distributor financial "walls".  
6. Focus on spend management: visibility, speed of change and accuracy of pricing – invest in resource. 
7. Correctly organize the supply chain function and recruit professionals with correct skills or outsource the process to achieve even higher performance
8. Focus on menu line item profitability to improve cash flow

To Higher Profits,
Fred

Fred Favole is President of Strategic Purchasing Services (SPS), the foodservice industry's most experienced and accomplished firm specializing in department outsourcing, strategic sourcing projects and spend analytics.  Ask Fred or Ron Bay about a solution for your business. Fred@ StrategicPurchasingServices. com, HQ Office: 912.634.0030 St.Louis Office: 636.527.3167 

Do you think about the MONEY first as Key To Better Buying?

Every food service buyer has their own “formula” for achieving the optimum from suppliers and improving end-to-end total product costs. 

However, few emerging chain organizations are able to perform a proficient analysis to benchmark costs or project  long term pricing success.

For the most part, the alignment of distributor/supplier/buyer distorts true product cost and plagues chains that work hard to leverage purchasing power. When a product selection is made from the distributor’s stock inventory and the prices are controlled by the distributor, the failure of the chain to obtain the lowest available price is usually attributable to not being involved in the negotiation process. 

How can chains expect to compete with industry leaders without an understanding of the basic “farm to plate” cost of ownership process. What’s trending today is the use of third party group services offering volume discounts and rebate recovery.

However, these services were not intended to replace centralized procurement.  Too many organizations sign-up because they want "free money" or to relieve the over-worked (multi-tasking) executive handling the purchasing responsibilities part-time.  These services can actual add to the acquisition cost of goods because they prevent the chain from developing direct supply relationships.  

Does it make sense to trade $100,000. In salary and benefits, plus 30 food basis points, when a professional outsourcing firm like SPS or experienced purchasing staff can generate, on average,  7% savings contribution year after year?  

Additionally, the structure of the relationship between the rebate service and end-user chain does not foster the highly flexible buying processes with fast reactions to commodity market changes and seasonal buying opportunities..the proven hallmark of world-class procurement.  

It is not the mission of BuyersEdge, Entegra, Foodbuy, and VGM Client Rewards to develop your current or future supply partnerships, plan sourcing initiatives or manage high-volume commodity contracts.   

It is, however, the responsibility of your purchasing executive and specialized firms like Strategic Purchasing (SPS) to develop current and future suppliers and position them to provide the highest performance at the optimum cost levels for your business. 

You can start by thinking about the money last not first.  Start by following proven industry best-practices in building and managing your purchasing supply-chain. 

To Higher Profits!

                                                                                                                            Fred 

Fred Favole is President of America’s most experienced purchasing firm for operators who have no internal procurement department and chains wishing to outsource the function for greater savings and overhead reduction.  Contact Information: 
Email:  Fred@StrategicPurchasingServices.com   Office: (912) 634-0030   



What's Your Food Cost Problem?

Get the most from every dollar by calculating 3 allowable food cost controls & acknowledging that you may have a problem area. If nothing goes wrong, from your back door to your register, what will your food cost be?

With something as important as your food cost, you want to have the tools and resources available to establish standards. In other words, you need to compare actual costs with the standard base, and spend your valuable time managing the variances.

Lets cover the 3 basics, 

1. Standard recipe – includes the ingredients, amounts, menu item prep procedures
2. Portion size – as the recipe is standardized, so too is the portion size, with the employees having the appropriate tools and instructions necessary.
3. Standard portion cost – once we have recipe and portion standards, determine the portion cost of the menu item. 

In reality, in commercial operations a menu item is not usually sold alone, it is part of a complete meal. There are many great point-of-sale systems and programs that can track and calculate daily / weekly number of portions / meals served (and the total food cost for selling, items sold, total sales income).

Even if you’re in control of the food cost management process, you still have to battle the economic turmoil of higher prices or supply shortages looming large for later in 2013.  

Then, there are Fred’s 7 ways to increase food cost in a restaurant, such as; 

waste, overproduction, poor utilization/or selection of products, incorrect portioning, slow menu movers (dogs!), poorly trained employees, and stealing (not just your brother-in-law) 

During a recent consultation, I said to the owner of a 20 unit emerging chain who claimed that all of his employees where honest and his distributor did a great job managing purchasing for his restaurants, 

" Why is it that your waitress in Johns Creek collected for my coffee and sweet roll without presenting a guest check? I watched her closely after that and she never went near the cash register? And, I also noticed that your price of fresh cut chicken wings has not changed, even through post-Super Bowl prices are in free-fall ” 

By this time in the post, you have acknowledged  having  a food cost or spend challenge, so why not do something about it?

The acquisition cost problem is solved by having skilled professionals contracting lower prices, recovering post-purchase income and managing the spend process; services now available in a single outsourcing plan from our firm. 

The other areas of cost management requires experienced on-site management, ongoing training, control systems and world-class communication of procedures and objectives.  

To Higher Profits!

Fred

Fred Favole is President of Strategic Purchasing Services (SPS), America's most experienced foodservice firm specializing in department outsourcing and spend management. Contract info: p: 912-634-0030, email: Fred@StrategicPurchasingServices.com