Ode to a Food Purchasing Agent

The Food Purchasing Agent stood at the Golden Gate,

                         -His head was bending low. 
He merely asked the man of fate,
                         -Which way he ought to go.

“What have you done", St. Peter said,
                         -To seek admittance here?”
“ I was a Food Purchasing Agent down on earth,
                         -For many and many a year.” 

My bids were sharp, the record clear.,   
                         - the burger had no "slime". 
St. Peter opened wide the gate,
                         -And gently pressed the bell.

“Come in,” he said, “and choose your harp".
                         - You’ve had your share of hell. !

                                                       Author (Somewhat) Unknown



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Simple Tips To Buy Food "CHEAP"

Simple ways to “buy cheap” and minimize food spend for any large independent operator or emerging chain starts with timing purchases to the seasonal commodity markets, and using applied product specifications and improving delivery and receiving efficiencies

If you have managed procurement for a Fortune 500 foodservice chain, then read no further. However, if you are a first-timer to the spend management process, you must equip yourself with the tools required for the job.

Start with these basic tools; purchase a seasonal buying calendar, Wenzel’s Menu Maker or Meat Buyers Guide; as they will provide you with industry standard specifications, and crop information. Then, bookmark U.S.D.A. websites for beef, pork, seafood, poultry and dairy, for quick access to commodity price quotes. (These links are listed on our website http://www.strategicpurchasingservies.com/).

You will also find commodity prices free on our Foodservice. Com community website, or for few bucks, you can subscribe to pay services like American Restaurant Association’s “Weekly Commodity Report” or the more expensive, “Urner Barry Reports”; both leading trade sources.

You’re Savings Plan

1. Develop product specification sheets; include the cut, grade, score, origin of the product and document accurate case yields.   Now you are ready to compare brands and evaluate price offers. You may find that lower specification products are better for certain menu applications. For example; #2 tomatoes & limes for back of the house prepared products; paying more per case can  actually save money; switch Crisco Professional or Mel-Fry from a clear a soy based fry oil for reduced consumption.

Check yields on basic items like pickle chips, where distributor labels are often less expensive but have lower case yields. With high beef trimming prices , consider changing the fat to lean specification for burgers  from 80/20 to 78/22 to gain an immediate savings of $.07 per pound. Learn as much as you can about price-value relationships as it relates to specific menu applications.

2. Create a seasonal price book for your top 20 purchased items that represent 80% of your food spend. List high volume item in one column and the low price / high price months in columns to the right. Now you have a quick reference market price sheet.

3. Track commodity item prices to gain a better understanding of the relationship between the products published raw material cost and your final purchase price. This ”farm to table” costing approach is the single most important building block of supply-chain management.

For example; assume that the U.S.D.A published price for green pork bellies on 5/2/2012 is $1.44 lb. and your delivered distributor price for 18/22 layout bacon is $2.40 lb. Using this raw material to finished goods relationship as the “basis”, you can monitor changes and project the impact of future price changes.  A change of $.01 lb. in the belly market will impact your price by $.015

4. Buy foods in bulk to reduce the per unit costs from your distributor. If you have a Master Distributor Agreement that calculates selling pricea by using case fees, increasing the case weight of burgers or bacon can save as much as $.08 per pound. If you are on a margin or cost-plus pricing schedule, be sure to do the math before you make a change.

Tip: Talk to the local broker or manufacturer representative about the proposed case change, obtain product data sheets with order code numbers. Then, when you are  ready, advise your distribution that you want to make a product change.

Perhaps one of the most critical responsibilities of food buyers is to understand how product specifications and commodity markets impact the final cost of the food and supplies they purchase. If a "hot" price offered by a new supplier seems too good, then its Caveat emptor – “let the buyer beware”.

Your applied knowledge about product specifications and raw material markets is guaranteed to impact the purchasing performance of your organization.

To Higher Profits!
Fred

Fred Favole is Founder & President of Strategic Purchasing Services (SPS), a firm specializing in procurement outsourcing, cost-reduction management and distribution program warehouse audits. His contact information: P: 912.634.0030, e-Mail: Favole@Gate.Net.   View Fred’s profile on  www.linkedin.com/in/strategicpurchasing and Follow his blog at https://purchasinginsights.blogspot.com

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 growth. To Higher Profits !  Fred 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//purchasinginsights.blogspot.com Fred Favole is Founder & President of Strategic Purchasing Services (SPS) a leading

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

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: favole@gate.net Connect on Linked IN & follow Fred’s blog at  https://purchasinginsights.blogspot.com/