Sticker Shock!

Well... I wouldn't cry price gouging. We're in a period of high inflation, high energy prices, iffy governmental policy*, rise of food competition,  and loss of food production.

So, the big thing is to evaluate your purchasing strategy. Aside from the usual rebid more frequently and working the rep harder. Use fewer suppliers, order less frequently, and take advantage of early payment discounts are the three things that most operations don't do.

You might also examine if cash and carry for some or all of your items would be a good fit for your operation.

Have you done your menu analysis yet? I like starting with the BCG method if the menu items have been in service for a while http://knifesedge.typepad.com/knifes_edgerestaurant_ran/2005/06/stars_puzzles_p.html

*Seriously. The Fed classified milk and butterfat as a hazardous substance, so dairy producers have to build special containment levies and lagoons, etc. What do you think that's going to do to the price of butter?

 

In many cases it is cheaper to buy in a place like Costco plus you don't tie up all your cash in inventory. You can buy 2 or 3 items rather then cases, that sit on shelf. Play hardball with purveyors, play one against the other. Check out alternate lower cost entrees, introduce new dishes and ideas. Try not to over produce. Limited menu, where you can buy your big sellers in volume and demand a good price from purveyor. Increase vege and starch portion and cut don steak an ounce. Serve filling bread, it fills them up.Make most things from scratch its, cheaper and better.

 

You might also check out no roll beef for some applications.

Lol at serving bread. Make sure you stuff them AFTER they order.

Think limited menus are trending right now?

 

Me? 

I'm:

~downsizing potions...prices stay the same

~cutting use of dairy products

~using canola oil instead of blend (for cooking)

~aggressively sourcing proteins (without quality suffering)

~insisting on a scale being used/portion control

~taking chef jackets and towels home for laundering

~watching in house sales trends

~using cheaper cuts of beef (as in, the "add steak" to salad is primal sirloin, not strip loin)

~actually lowering the prices on some menu items, bigger gross profit items.  not sure it'll work.

~labor: sending everyone home early and struggling to get stuff done.

But yeah, prices are effed.  Cutting corners without damaging quality... it's not easy.

 

In many cases it is cheaper to buy in a place like Costco

Not just the warehouses, Ed. Sometimes it's actually less expensive buying from regular supermarkets than from purveyors. I see this all the time with small restaurant owners, but the real shocker was when I ran into the owner of a local barbecue joint who buys virtually all his pork products in the supermarket, "because the prices are much better."

There are all sorts of possible explanations for that. But the simple fact is, when a retailor can sell an item at a lower price than a wholesaler, sumpin ain't right!

 

sounds to me like the purveyors are following in the foot steps of the oil companies and everyone else. They mark things up based on %. If the formula for a restaurant is 300% of the food cost, then your prices will go up 3 times as much dollar for dollar. I am pretty sure they follow the same type of formula. And you will pay it because you have no choice. Restaurant owners/managers are going to have to be much smarter and better when it comes to advertising. You will have to pay closer attention to what your customer base is wanting, not really what you want to do. Your customers will pay more if they are getting what they want. If it wasn't true then Ruth Chris would not be able to stay in business when Applebee's has $10 steaks. It all comes down to paying attention to your target market. If you have the best Mac & Cheese and they want that, they will pay for it. Being a new place, you are most likely going to have to be stronger in the marketing department than other places, but you have the fact that you are new going for you! take advantage of that and make the most of it. Smaller menu and amazing chef specials. People will pay more for specials than they do for the regular food items, I see it at work every day. It truly amazes me how it works. 

Good Luck!

 

Quote:

Nice problem to have! /img/vbsmilies/smilies/tongue.gif
 

Just a curious question since I don't have any experience with seasonal restaurants, but if your clientele is heavily local, aren't you leaving a lot of business on the table during the off season? Weather too bad?

PS, picked up some pistachios from one of my local markets for 3.49/lb roasted/salted/unshelled.

 

Woah, neat set up.

What do you guys do in the off season? I read how back in the day the crews of NYC restaurants like Pavilion and Colony would migrate to restaurants in the Hamptons to follow their clientele.

 

Whew glad I'm not the only one that gets a headache every week buying food.  I actually buy half of my food from Sam's Club and the other half from US Foods.  A lot of my bread that I just use for breakfast toast I get from a cheap local grocery store for about 70 cents a loaf, instead of 2 dollars a loaf from US Foods.  It's cheaper for me to buy ham at walmart than anywhere else... It just doesn't make sense.  I was complaining to an old family friend a few weeks ago about prices (he works for a midwest supply company called Hawkeye Foods) - he said, as a salesman, he's allowed to increase prices by 30percent for his commission alone... that's ridiculous, however when you purchase online the rates are significantly lower.

So I set up an account online with US Foods and do all my ordering through the net now, no more salesman in every week.  Of a typical 800 dollar invoice I'm now closer to 700, sometimes 600.

I know my place isn't a high end place having to deal with fresh salmon, tuna, etc... so maybe my experiences wouldn't work the same as a mom and pop place. 

 

KY Agreed supermarkets are cheaper on many occassions.

 

So here is my question... have you asked your customers what they think is a better option for them? Smaller portion or a pay hike for the current size? Has anyone ever done a larger and smaller portion on the menu? How did it turn out? Demographics plays a huge part in marketing. I feel your pain. It really comes down to choices. Some people do not feel like they have "gotten their moneys worth" unless they get a 24 ouch porterhouse and throw the other 2/3 of the steak in the garbage or fed it to their dog. 

You know your customer base better than I do. I know a lot of people that would rather have leftovers the next day because your food is so amazing. It is a really tough call. Good Luck Joey

 

I've been having the same problems mentioned above.  Between the fuel prices, value of the dollar, and weather conditions it's been rough.  Supplies are always up and down but the increase of staple foods is what caught my attention as different. For my demographic it's important to have options.  I try to keep the menu a decent mix in both size and price structure.  I'll sell lots of the cheaper stuff during the week and high end entrees all weekend long.  But honestly my new menu changes are totally price/cost related. 

 

Sales reps????  Trust?

I do a lot of business with one large pastry supplier, he comes in once a year to drop off a claender and tells me what has went up.  Past tense, went up.  Pehaps I don't know?  Supplier puts opn a large pastry and chocolate show, bring in big name Chefs , I get no word of it through the supplier, but through my friends.  I call up, make my reservations, smile at the  rep when I walk in, and darned if I didn't get the half of the prizes given out during that show. 

Since the last 15 years I'e been running my own business.  Most purveyors fobb off the newbie sales reps on the small independant guys, to train them up.  Yo tell them why the "new" chicken is a bit cheaper than real chicken, well, if it's 18% pump it should be, but I don't buy that garbage.i  What's pump?  Oh dear.  How to read a Julien code. 

Want to save some money?  It'll cost you in the short term, but pay off big in the long term, 

- Build a shed and buy in spuds and onions, they'll keep well. 

-Pop up a remote 6 x 6 walk-in freezer and buy in large quantities,

-get in uht milk and cream for the longer shelf life

-get in frozen raw dough and proof and bake your own breads.

-buy in local fruits and vegetables.  Freeze, dry, pickle, and cure. 

Yes it's labour, but it's your labour and you're not waiting with bated breath for the delivery truck  wondeing how you'lll get screwed if  some bigger account wants the items you ordered.

One way or the other it'll cost

 

Doubt it, but then I've never actually been in a mall-wart neither./img/vbsmilies/smilies/smiles.gif

You should be congratulated and praised for buying locally.  Not only smart, but supporting the community and financially smart as well.

I have some luxuries you don't have, as I am in the middle of a large city, and I can choose whomever I want to.

Stopped catering 4 years  ago and am now concentrating soley on chocolate and pastry.  Go through a lot of chocolate, some months as much as 200 kilos, and before I wised up, I was buying in only weekly or monthy quantities.  For a staple like chocolate, this is a big no-no, and the purveyors saw my big, red, shiny butt sticking out.  Prices would fluctuate like crazy, purveyor's B.S. would flow like water. 

Like I said, I finally wised up and bit the bullet. Dealt direct with the head office in Toronto and am now buying in 6 mth quantities.  Rented storage space specifically for this too.  It is a financial burden, buying in such large quantities but the benifits are pretty good.  For one thing, I'm not paying the purveyor's prices, my prices stay very stable with the mnfctr in Switzerland informing in advance of any price changes, so I can buffer myself a bit before th prices do change