Culinology - May/June 2011 - (Page 27)

COST MANAGEMENT Erica Shaffer Menu cost management Food service operators employ old and new strategies to alleviate input cost pressures ising raw material costs have pushed food service operators to make changes in their businesses, influencing what diners see on the menus at their favorite restaurant. Food prices did decline in March before stabilizing in April. However, the relief came only after eight months of steady price increases. Bob Goldin, executive vicepresident of market research firm Technomic, Inc., Chicago, said high-volume raw materials that compose the largest portion of operators’ food costs — proteins, potatoes, produce and, to a lesser extent, grains — were just some of the ingredients that caused concern for menu developers. Food service operators resorted to various strategies to protect profit margins from volatile ingredient prices. Tactics varied by concept but included a combination of smaller portions, promotions, ingredient substitutions and price increases. “The challenge is going to be to offer food that tastes good using other ingredients — maybe lower-cost ingredients,” said R 27 I Bonnie Riggs, restaurant industry analyst for Chicago-based NPD Group. “If it doesn’t taste good, consumers won’t buy. If operators can work with their partners and come up with new products that have lower costs associated with them but are good value and taste good, consumers will purchase them.” Food service menu developers may look to other proteins to substitute for beef, although beef prices have held firm since March. “We’ll see slightly more chicken promotions,” said Eric Giandelone, director of food service research at Mintel International, London. “It is not only cheaper than beef, but it is also very margin-friendly.” Another strategy operators may consider is offering different choices in portions with prices adjusted accordingly — smaller portions and smaller prices, Ms. Riggs said. She added that restaurant operators won’t stop discounting any time soon because consumers still are looking for deals, and they’re still clipping coupons. She said it will be a challenge for food service op- erators to provide discounts without hurting profit margins. However, if they don’t offer deals, they won’t drive traffic to their tables, she said. The fast-casual segment offers an example of how to balance value and profit margins, “Some operators who have locked in prices for their heavy-use food items haven’t necessarily felt the full effects of rising food prices.” Bob Goldin, executive vice-president, Technomic, Inc. the analysts said. Panera Bread and Chipotle Mexican Grill have both grown during the recession. “One of the things fast casual has been able to do, with the exception of a few, they have very tightly focused menus,” Mr. Giandelone said. “In some cases even more tightly focused than a typical fast-food restaurant, so their ingredient costs are — at least on a volume scale — lower because they’re not having to store and buy as many different types of ingredients as say, a casual dining restaurant.” CULINOLOGY I MAY/JUNE 2011

Table of Contents for the Digital Edition of Culinology - May/June 2011

Culinology - May/June 2011
WELCOME - RCA welcomes Sosland Publishing Co. as new CULINOLOGY ® magazine publisher
Fast-casual segment sets the restaurant sales pace
Local, regional claims appearing on more menus
GLUTEN FREE - Specialized menu management
CALORIES - Counting calories
BEEF FLAVOR - Savory infl uence
COST MANAGEMENT - Menu cost management
2011 SHOW SHOTS - RCA Annual Conference & Culinology Expo
N.R.A. WINNERS - ‘And the winners are …’

Culinology - May/June 2011