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News in Review
Market Reports
Food Quiz
Industry Discussion
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Food Cost and Break Even Point
By: Joe Dunbar
In speaking with many local operators (completely unscientific sample),
the consensus estimate is a 12% drop in revenue (year over year). This
is tough to swallow with the current trends in food cost percentages.
Since the cost of many commodities have risen, the impact of the
revenue decline has hurt more than usual. We haven't seen the typical
drop in ingredient costs which occur in many recessions.
These
higher food costs have caused the break even point to grow rapidly.
Many operators have seen a shift from 5 to 10% profit to a loss. What
can restaurant managers do to lower their break even point in this
challenging environment?
This is a time to promote people with
line authority and shed corporate staff. A lower fixed overhead expense
is the fastest way to lower the break even point. If you currently work
in a corporate staff position, try to get closer to the customer.
Abandon your desk post and go into the field. Find ways to improve the
efficiency at your locations.
I worked for 3 corporations on
either the internal audit staff or as the operations auditor. My travel
time averaged over 70% for a 10 year period. In each office, there was
a staff room and you were considered under-utilized if the Vice
President saw you in the room for over 1 week. My final travel
intensive job required close to 90% out-of-town work. When it was time
to come in from the field, my boss handed me my paychecks and gave me
the week off.
The return for my on site work was enormous. I
knew the key operations staff and many of the department heads on all
of our key projects. We worked together to solve many issues which
simply can't be handled by clever report analysis and endless meetings.
You'll find messy walkins, open back doors near closing, unopened boxes
of seafood and meat in the garbage, employees with substance problems,
invisible over-achievers, well-disguised under-achievers and you'll see
many other critical issues first hand.
Read More
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If you don't stand for something, you'll fall for anything.
-Steve Bartkowski
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View updated pricing and information each week on the website for the following food-commodity markets:
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Beef, Veal & Lamb |
View Detail |
Beef output last week rose 2.3% and was 1.4% larger than 2007. Many of the beef markets are softening now that Labor Day Holiday retail feature product has mostly been procured. Still, any forthcoming downward movement in the beef markets could be modest due to gains in export trade and surprisingly solid retail beef movement. The most recent US and Canada total cattle and calf inventory was 1% less than a year ago affirming forecasts for tightening cattle supplies and declining beef output in the coming years. Prices per pound FOB from USDA.
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Dairy |
View Detail |
July US milk production was 1.4% greater than a year ago due to a 1.4% larger milk cow herd and virtually even milk per cow yields from 2007. Dairy farmers added 4,000 milk cows to the herd during the month. With the recent decline in milk prices, dairy farmers may begin reducing the milk cow herd sometime this fall. The CME cheese and class III milk markets have declined during the past week and may be posing opportune contracting levels. The butter market could continue downward next month. Prices per pound, except Class I Cream (hundred weight), from USDA.
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Poultry |
View Detail |
The chicken breast and wing markets are typically trending upward this time of year. However, chicken production during the first 2 weeks of August is estimated to have been 5.2% greater than a year ago likely contributing to the depressed aforementioned markets. Still, chicken output cutbacks are projected to occur by late next month which should be bullish for most of the chicken markets. The chicken leg quarter market has achieved new record highs in recent days signaling that chicken export demand is solid. Chicken leg quarter prices usually move lower during the fall. Prices USDA, FOB per pound except eggs (dozen).
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Seafood |
View Detail |
The 2008 Newfoundland snow crab season has almost culminated with 97% of the quota landed to date. The US snow crab leg market remains inflated but output gains this year in Newfoundland and Alaska could lead to modestly lower snow crab leg prices in the coming months. The salmon markets remain elevated but history suggests that some modest whole salmon market declines may occur in September. Prices for fresh product, unless noted per pound from Fisheries Market News.
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Pork |
View Detail |
Pork production last week rose .3% and was 7% larger than a year ago. Pork output gains compared to the prior year are expected to diminish as 2008 comes to an end and 2009 progresses. The June US and Canada total swine breeding herd was its smallest in 5 years. There is growing concern that a slowing Chinese economy could temper US pork exports in the coming months which may intensify any seasonal pork market declines this fall. Prices per pound FOB from USDA.
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Produce |
View Detail |
Lettuce shipments have declined which is influencing the lettuce markets higher. Due in part to a reduction in acreage, fairly volatile lettuce markets could endure into the first few weeks of September. The tomato markets remain relatively depressed. Existing tomato supplies are adequate and demand is fairly sluggish. Buyer engaging tomato prices are expected to continue. The Idaho potato harvest is getting underway but notable volumes may not hit the market for a few weeks. Sharply lower Idaho potato prices are anticipated next month. Prices shipping point unless noted (terminal) FOB from USDA
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Oil and Grains |
View Detail |
The grain markets are mostly bouncing higher. Grain market appreciation could occur this fall as the markets attempt to obtain farmer plantings for 2009. Prices per pound (oils) or bushel (grains) FOB from USDA.
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Canned and Frozen Food |
View Detail |
Tomato Products, Canned - The California tomato for processing harvest remains behind with the PTAB projecting 5.38 million tons to be harvested by August 23rd- 8.8% less than the 5 year average for the date. The markets are firm. Price per case (6/10) FOB from Supply and Market Report.
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Processed Fruits and Vegetables - The Idaho potato harvest is getting underway. A notable decline in Idaho potato acreage and rising farmer input costs are expected to cause relatively elevated French fry markets to persevere. Prices FOB per case from Supply and Market Report.
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Freaking out and appealing for help!!
Community member lunachic writes...
I have 10 years of experience as a server and bartender in restaurants
and bars throughout the country. I recently approached a new restaurant
for a server position, and was pleasantly surprised to be offered a
position as a F.O.H. Manager. WOW! Well, once the initial excitement
wore off, I began to panic.
The restaurant is going to be opening in the next couple of weeks, and
we are starting from the ground up. I have been given the task of
writing our...
Read More
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Selling another restaurants goods?
Community member rob0225 writes...
I own a bagel shop and was approached by another local restaurant that
they wanted to sell our bagels. I declined because of the concern that
they may not present them to our standards (we don't sell day old
bagels) and I don't want to be associated with 'bad' bagels.
I have a suspicion however, that they are buying bagels from us by the dozen and reselling in their cafe. Is this legal?...
Read More
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Need Advice on Concept
Community member Mark A. writes...
So, we have been open close to 3 months, still not making money yet.
But, I have been approached by individuals interested in my concept and
talking franchise or purchasing outright. When they first approached me
I brushed it off as a joke and think I replied with a chuckle and
something like "Guys let me catch my breath and get this one going
first." Well they are back and have come in twice this past week and
are serious about it. Has this ever happened...
Read More
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Members of the Parsley Family
I am a native to the Alps, but along with my 50 relatives have been grown throughout Europe and in the USA as well. We are all sweet members of the parsley family. I am totally consumable. From roots to seeds and stems to leaves there is always a use for us. I have both medicinal and culinary properties. Before dinner I am used to flavor the Vermouth in your perfect martini. During dinner my young shoots will be blanched and added to your salad, or perhaps the bread you are eating is made with dough from my ground roots. In Greenland my foliage is eaten as a vegetable. For dessert, you'll find my crystallized stems on the cake or used as a sweetener in stewed rhubarb or custards. After dinner it's my seeds that flavor your apéritif if you are drinking Chartreuse or Benedictine. Medicinally I am used as an anti-inflammatory, and I our sell Alka-Seltzer in China.
What am I?
The Food Quiz has is brought to you by Culinary Specialty Produce, a specialty produce broker that scours the world for the very best in specialty produce. Contact them at 908-789-4700 or by sending an email to info@culinaryproduce.com.
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