Practical steps caterers can take in the face of food inflation and rising costs
While allmanhall continue to negotiate and mitigate and hold off proposed price increases wherever possible, here are some practical ways you can look to manage and minimise the impact of food inflation as costs seep through the supply chain.
A vital approach to managing your food costs is to become as efficient as possible in three core areas – your supply chain, your operational practices and your recipes and menus. Let’s take a look…
What is the best approach for your food purchasing?
Now is the ideal time to work out what approach to your catering purchasing will bring you the maximum benefit. This will very much depend on your volumes, your delivery values, delivery frequencies and the number of suppliers you use.
These are the different approaches that you – or your procurement partner on your behalf – may take:
- Tender: Most impactful when carried out in advance of inflation, tendering allows you to measure suppliers against each other based on your given criteria.
- Operating dual supply: Can be very effective as it creates a sense of competition amongst your suppliers. This would need to be actively managed, and you would need to have ensure efficient average delivery values.
- Consolidating your suppliers: Where you have multiple suppliers, your delivery value is low, and your delivery frequency is high, reducing your suppliers is an effective way to reduce cost.
When looking at suppliers, the best approach involves considering various factors such as product specifications, prices, their service levels, contractual terms and how robust they are. The latter helps with risk management. It’s also important to evaluate suppliers regarding how they may support any systems and accreditations.
Are you undertaking range management?
Undertaking a review of product lists is of benefit, so that you have really focused buying lists with just the products needed to operate your service effectively. This will reduce unnecessary cost and ensure you have the right product range to deliver quality and nutrition requirements. It will also help increase volume on key lines, support stock control and drive consistency.
Reducing the ‘tail’ is a key part of this activity. The ‘tail’ is typically a high number of products with low volumes which tend to have been accumulated over time. These are generally loaded with margin by your supplier, whereas your high-volume lines generally have a lower margin.
Focus on high spend categories, remove any product duplications, and review the pack sizes you have listed. Consider whether you could move to using a more cost-effective pack size. This is a great example of where thought needs to be given to the operational impact associated with a change. For example, will moving to a more cost-effective pack size result in increased wastage? Do be aware of unintended consequences.
Consider moving to own brands. Branded products are more expensive due to costs associated with activity such as marketing and companies are generally owned by large corporations, they have demanding shareholders with high profit expectations. You may like to sample own brands to see if they are a suitable switch.
Understand which of your products are stable and which are volatile when it comes to price movement. Stable products are typically negotiated annually, such as canned tomatoes and solid pack apples. Volatile products fluctuate more frequently, such as butter and bacon.
Like unintended consequences, do also consider false savings. For example, is a reduced yield associated with switching to a different product? Is more of a new product required to achieve the same flavour? Understand the false economies and do try to sample products where a big change is being made to an important product.
Can you reduce your cost to serve?
The final area to consider when optimising your supply chain is reducing your cost to serve. This is the cost for a supplier to make a delivery. As I’m sure you know, pricing is linked to your specific cost to serve.
You can reduce your cost to serve through reducing the number of deliveries each week, increasing the value of each delivery and reducing the need for your supplier to split cases.
Split cases cost more than a full case due to the labour costs associated with picking the split the case and an increase in cost for the supplier due to potential product damage and stock loss. Of course, the benefits of reducing splits needs to be balanced with any potential increase in wastage in your kitchen as a result of ordering larger quantities of a product.
It is always more efficient for your suppliers to have a full vehicle and to reduce the costs associated with multiple deliveries.
You may also like to consider ways to increase your delivery value to counter-balance the cost to serve, such as adding non-food orders to your food order.
OPERATIONAL PRACTICES AND PROCESSES
There are several things that you will already be doing operationally which will help to mitigate food inflation costs – consider revisiting these practices with a real focus on their financial benefit.
Multi and upskilling to increase efficiencies?
Where there are opportunities to review and improve your team’s skills, you can enhance kitchen practices which of course impacts costs. Also, a chef who is skilled and motivated will be willing and able to cook food, which can be more cost effective than using pre-packaged products.
Are you reducing waste wherever possible?
Consider reviewing how your teams are approaching stock management to see if there are opportunities to minimise holding stock and reduce wastage.
Food waste can be a big unnecessary expense, along with being an environmental issue – whether this is kitchen waste or waste from meals.
Consider working with your teams to review and improve how wastage is recorded and managed and how well portion control suits your residents.
Look at these 2 blogs for more information on waste reduction – good for your budget and for the planet!
Is your equipment proving costly?
Consider your long-term capital investment strategy with regard to equipment. Using modern equipment can really drive cost efficiencies.
New technologies may seem like a big cost upfront but will ultimately generate a return on investment as they use less energy, cook more efficiently and support waste reduction and help your catering team to optimise yield.
RECIPES AND MENUS
The final area for consideration is of course reviewing your recipes and menus. Real impact on food costs can be made through smart and effective recipe and menu engineering. Now more than ever, it is time to make adjustments that have no negative impact on quality or taste. Without changing your offering, you can shave off unnecessary cost.
Have you reviewed product specifications?
Consider reviewing the product specifications of the products you use. Can you reduce the product specification without reducing the quality of a finished dish? For example, are class 1 vegetables really needed if they are being chopped up and put into a dish? Or could wonky veg be used instead?! Can 90vl mince be used in place of 95vl? Could a different cut of meat be used? Could you use a different type of protein? Consider asking your suppliers for alternatives for sampling and test your options.
Challenge dishes and re-look at recipes!
As you know, using recipes is not a way to inhibit a Chef’s creativity or undermine their skill, it is an important way of managing costs, improving quality, managing dietary requirements, and ensuring consistency. Consider undertaking a recipe review. Challenge your recipes – can ingredients be reduced or removed without compromising the dish?
When did you last review menu cycles?
Start to think about your menu cycles with the food cost for each dish taken into consideration. You will quickly identify those high-cost dishes and whether they can be adapted to reduce overall menu costs. Understanding changes in product pricing helps to influence your recipes and menus. For example, eggs and poultry are a particular risk area at present. Ensure you stay abreast of these things and adapt your menu accordingly.
Communicating and sharing the challenges associated with rising food costs with your team and, importantly, your diners, is really important. This will help to provide further understanding and will support any menu changes or required tariff increases you are compelled to introduce as food inflation steadily rises and impacts your costs.
Food inflation is a reality for this year. Coping strategies, addressing the things you can control, are therefore going to be key.
Breaking it down into supply, operations and menus may help your catering budgets and food purchases go as far as possible.
If you would like to talk about this or seek support for food procurement and supply chain management expertise, please don’t hesitate to speak to the team here at allmanhall.