Your Food Costs: You and Your Suppliers
It shouldn’t need to be mentioned, but it is astounding how many people just lay all of their faith in one or two single supplier, and are then set in their ways, placing near enough the same food order every week. Whilst this might be a comfortable and easy way of managing your food and kitchen orders, it is almost definitely not the most profitable.
As easy as it is to be comfortable with your suppliers you need to be sure that they’re looking out for your interests and not just their own profiteering. There’re three tactics that suppliers use to increase their sales which also increase your cost and not paying attention can quickly mean these slide out of hand. Here they are and how you can catch them and how you can mitigate them.
The Dirty Tactic
Price Spikes – Price spikes are when for just a small period of time an item you order all the time jumps unknowingly in price. Sometimes this is not the fault of your representative, however this is rare because price spikes are usually sustained because of a shortage of said product. Often what happens is that your representative notices what your consistently ordering week in week out then raises the price for that item, or sends you a more expensive alternative, without telling you.
Price Creep – Here the price of a certain staple in your order, say a vegetable or a meat, rises slowly over time. These small incremental increases can be more lethal to your food costs that momentary price spikes because it can take a long time for you to catch on to what is happening.
Price Gouging – If you’re settled in comfortably with your suppliers then they can catch you unaware and charge you above market price for many items. These can be essentials, such as a new salad green you might be bringing on, or even seasonal items you wish to order only once or twice when they’re ripe and in season.
Now you know how your suppliers and representatives could potentially derail your aim for perfect food costs, how do you stop them doing so?
Communication and Relationships – Building a good relationship and constantly communicating with your representative is essential. Even in our world awash with digital technology there’re many out there who still prefer to call in their orders rather than use an online system. Why? Firstly, you get a vocal confirmation of your order and can ask questions directly. The second reason is that they get to talk to their reps every week, ask them questions, and build stronger relationships with them doing so. If someone knows you and talks to you every couple of days they’re going to feel guiltier about using any of the above tactics on you and your business; and are therefore less likely to do so.
Monitor Your Prices – Paying close attention to what you order and how much it costs is key in our business. If you’re not paying attention to your prices and they creep or spike then you, your food costs, and your business are in trouble. Alongside this, building a relationship with and communicating with your rep means that when you spot this you can bring it straight to their attention and get it sorted out quickly.
Check Market Prices – This is specifically related to price gouging yet can also inform you if your rep might be lying to you about market price creep to justify their price creep. Charging over the market price, i.e. price gouging, is a common tactic, especially when your special order single items for an event or a special dish you want to run. Check market prices before going to your rep to order, then you can know if they’re trying to price gouge you with these items.
Shop Around – The suppliers you use are not the only ones out there, and you need to keep your eyes and ears to the proverbial street to see if there are better options out there for you or not. Doing this will allow you to spot any discrepancies between the prices your potential new suppliers are offering and the ones you pay with your current suppliers. It will also entice your current reps and suppliers to provide you with the best products and prices in order to keep your business on their books and not someone else’s.
Food costs can be some of the most volatile things in a restaurant. There’re natural disasters, road accidents, and sustained weather events which can affect the price of product. These are unavoidable but the tactics above are implemented by suppliers and representatives with the sole purpose of getting more money out of your business. Follow our mitigation tactics and you’ll rarely fall foul of any of these cruel profiteering practices practiced by everyone around the world.