Managing the Impact of Restaurant Commodity Price Swings

Produce prices are in constant fluctuation. This is no big deal for a restaurant if the shift is small, but can make a massive difference if the price jumps significantly—especially if the commodity is one of your most used items. You can’t control the changing costs of commodities. You can, however, employ some strategies to help manage the impact of those changes. Here are a few techniques to help ameliorate the impact of commodity price swings in the best way possible.

Have a Clear Picture of Which Commodity Items Are Driving Your Highest Costs

In most restaurants, it’s usually about 20% of the commodities that are driving 80% of the costs. When it comes to managing commodity prices, these items are the most critical to focus your cost saving efforts on. Don’t get side-tracked pinching pennies on items that have a negligible impact on your overall costs. Focus on the big guys, and then take the time to shop around, compare prices between produce suppliers and find opportunities to negotiate better deals.

Want to Know When the Next Restaurant Commodity is Going to Soar? Keep an Eye On the News

Commodities prices are affected by what is happening globally, and no one can predict when the next fluctuation will come. That said, keeping an eye on the news can at least provide some indication of the next big price increase and can help you be prepared to handle it. Whether it’s a drought in the Bread Belt, frost in Florida or civil war in Columbia, commodity prices are going to be affected. Knowing where your main commodities are coming from and monitoring the news from those areas will go a long way toward giving you a head start in dealing with the forthcoming price increase that occurs when disaster strikes.

Consider Restaurant Purchasing Contracts Instead of Managing Produce Orders In-House

Another way to manage commodity costs is by partnering with a purchasing company. There are a number of benefits to doing so—not the least of which is negotiated rates, as well as buying and consulting support. Restaurants who have purchasing contracts are protected from being at the whim of dramatic shifts in commodity costs throughout the course of the year. When deciding to enter into a purchasing contract, shop around and get a number of proposals as a tool to negotiate the best deal. Know your specifications to ensure that you’re getting comparable price quotes from suppliers and distributors. Look for fixed contracts to best manage commodity prices over time.

The downside of purchasing contracts is that you’re not free to shop around for a better deal until the contract is done. If you know that the price of a produce item is likely to go down, look for shorter-term contracts. When your contract is up, be sure to take a fresh review of available alternative options before signing the contract for another round.

No one can guess what will cause one item to spike while another stays static, but we all know how much those fluctuations can effect our bottom line—especially when they are unexpected. Taking the time to be aware of which commodity items could cause the most risk in your restaurant business if prices fluctuated, monitoring the news from areas where those commodities come and considering purchasing contracts to lock in better prices are all great strategies to help manage the impact of commodity cost fluctuations.

3 Tips to Reduce Restaurant Waste

According to the EPA, America produces around 250 million tons of solid waste per year. That figures out to about 4.5 pounds of trash created per person per day. Do you know how much waste your restaurant produces?

The odds are good that there are tons of waste (literally, over time) currently being produced by your restaurant that could potentially be recycled, composed or otherwise diverted from the landfills. Waste reduction is more than just the feel-good factor of attending to social and environmental responsibilities though—a good waste management plan also affords a number of cost saving opportunities. Here are three tips for reducing your restaurant’s waste production.

Measure & Manage the Cost of Restaurant Waste Disposal

The first step toward managing your waste-stream is to track the amount your business is currently spending on waste disposal. Set up a simple spreadsheet and log all of your waste expenditures. Doing so not only gives you an opportunity to identify trends over time, but also presents you with several waste management opportunities. For instance, you can determine if you are being accurately billed for the services you require, gain a clearer picture of your operation’s waste system and identify ways to adjust operational practices. This will help you take advantage of inventory and utilize recycling opportunities.

Give Your Restaurant a Thorough Waste-Stream Audit

Now that you know what your waste disposal is currently costing you, it’s time to get a handle on what you’re throwing away. Do a detailed analysis of the quantity and type of trash that is created and break it down into categories (paper, plastic, metal, glass, organic, etc.) Examine the overall life cycle of the items being discarded and get a pound for pound record of what’s going out the door. If you don’t want to do this yourself, hire a consultant or contract with your waste vendors. A good audit will uncover opportunities for waste reduction, diversion, recycling and re-using and can show you how to save money with a waste management plan.

Recycling and Food Waste Reduction in the Restaurant

The environmental and cost-saving benefits of recycling are well known, and according to the National Restaurant Association, around 60% of restaurateurs are already recycling at least a portion of their waste in some form or fashion. If you haven’t already examined the recycling options in your area, there are a number of both free and consultation services available to help you.

It’s a rare restaurateur who likes to see good food go to waste, so when it comes to food waste reduction, most restaurant owners are all about it as well. Donating food can be a great way to garner both tax incentives and goodwill in your community. Work with your local food rescue agency (a food bank, mission or hunger relief agency) to determine what kinds of food they can receive. As a general rule of thumb, cooked foods can be donated, as long as they have not been served and have been cooled down and stored according to food safety guidelines. According to CNN news, just 5% of America’s leftovers could feed 4 million people for a day. Can you imagine the impact your restaurant’s leftovers could have on your local community?

Getting a clear picture of your restaurant’s waste-stream from entry to exit is smart, both financially and socially. Take the time to see where your restaurant business could stand to lose a few pounds!

3 Strategies to Keep Restaurant Opening Costs from Ballooning Out of Control

Restaurant buildouts are expensive, and opening costs can quickly get out of hand. Without careful planning and preparation, it’s easy to get in way over your head and quickly find yourself struggling for a life-preserver. Here are a few strategies to keep your up-front development costs low and help you gain some control over ongoing operational expenses.

Give Expert Evaluation to the Restaurant Location

Restaurant location is one of the most critical choices you have to make. Be sure to carefully evaluate whether or not the neighborhood can support your concept before investing. Furthermore, ensure that the structure itself can serve your needs. Can you efficiently produce your menu, serve your guests and monitor your dining room with the existing layout? Is the seating capacity the right size for the goals set in your business plan? It’s a good idea to bring in experts to help with the evaluation, especially those who are familiar with local building codes. They will see things you may not, such as the gas and electrical systems, proper venting of exhaust, the overall soundness of the structure and whether or not anything is going to need replacing.

Look for Lease Agreements with Concessions

All of this information will help you be a shrewd negotiator of the lease as well—another important aspect of controlling opening costs. Obviously, you want to be working with property owners who are flexible and fair; people you’d like to stay in business with a long time. Ask for a lease with a rent-free concession before the restaurant’s opening date to provide some cushion in case of last minute fixes or permit delays. If you’re sinking a lot of money into the building for renovations, approach the property owner about subsidies for the improvements you make to the building. If the opening of the establishment adds substantial value to the premises, some owners will even be willing to contribute some financial assistance to the venture.

Work Directly with Restaurant Architects and Builders—Plan for Maximum Efficiency

Sometimes a fresh coat of paint and new décor is all that is needed to open your restaurant’s doors. If renovations are in order, however, don’t miss the opportunity to plan the perfectly designed restaurant by working directly with your architects and builders. While it’s nice to find an architect with restaurant-specific expertise, the more important qualifier is how well he or she knows the local building codes and is able to bring your idea to life. Design for maximum efficiency in the layout of your kitchen and dining areas. Don’t make your servers and kitchen staff walk a mile to have what they need at hand. Review all plans with a fine-tooth comb. Now is the time to catch mistakes in design—changes made down the line can get costly.

Once you have your plans, it’s time to collect your builders. It’s smart to utilize a contractor for their carpenter contacts, project management and permit expertise. If you want to save a little on contractor costs, interview and get quotes from the plumbers, electricians and HVAC specialists yourself.

Opening a new restaurant can be an expensive and risky endeavor. With careful and strategic planning ahead of time, however, both cost and risk can be managed more successfully.

Success Strategies for a Restaurant Mobile App Launch

The use of mobile applications in the restaurant industry is on the rise, and for good reason. A good mobile app can serve as an ordering and payment platform, a loyalty program, a data collection service and customer communication forum all rolled into one. However, when it comes to choosing a mobile application to best serve your restaurant, you’ve got some choices to make. Here are a few success strategies to utilize and factors to consider.

Lay the Groundwork Before Launching Your Restaurant App

Before bothering to launch a mobile application for your restaurant, make sure that you’ve laid the proper groundwork to ensure its success. Clean up your image online (reviews, general customer sentiment), ensure your website is fully optimized for mobile (and thoroughly tested!), and that your membership program or “e-club” is in place. Most restaurants already have some form of user profile option that allows customers to save their information for faster ordering. Your mobile application is just a larger, potentially more useful extension of that. Take the time to run a social media monitoring campaign to learn what your customers would most like to see in your restaurant’s mobile app. Utilize the opportunity to gauge their interest in, and receptivity to, joining your mobile program and to discover valuable features and functionality that you may not have thought of.

Which Features Need to Be Present to Ensure Maximum Functionality in a Restaurant App?

Speaking of features, it’s smart to make a list of what you want. Consider what features should be present in the mobile application so that it serves the restaurant’s needs with maximum functionality. The most basic of mobile applications serves as an ordering and payment platform. It should also be both affordable and branded. Ideally, it additionally includes a loyalty program, the ability to shape the technology over time, run customer campaigns, provide interchange savings and supply an extensive collection of data, not to mention integrate with the POS.

Customized Restaurant Application or Third-Party Solution?

Now that you know what features you want, the next choice is whether to go with a customized mobile application developer or a third-party solution. Which you choose depends on the needs of the restaurant business. Those that just need a basic ordering and payment service will be fine with a third-party solution. Additional functionality in third-party providers is available, but varies widely, and it can be difficult to find one perfectly suited to your particular business.

Those who want to take their restaurant app to the next level will want to go with a customized application developer, if the means to do so are available. A custom app developer can build pretty much any feature you can imagine into your restaurant’s mobile app. If you decide to go with a custom developer, bring your wish list of mobile functionality and work closely with the developer to make it come to life in the most efficient and practical way.

Restaurant mobile applications represent an opportunity to track consumer behavior, collect data and connect with our customers at a level that was never possible until the digital age. Investing in the development of a mobile application for your restaurant can be a powerfully effective way to engage your customers and improve your bottom line.