Nearly 100% of Foodservice Manufacturers to Increase Prices in 2008,
Leaving Foodservice Chains Searching for Ways to Maintain Profitability
MEMPHIS, TN (Sept 12, 2008) - Despite cautious increases in menu prices, most foodservice operators are unable to combat the dramatic rise in food costs without cutting into profitability. Over the past year, the majority of all operators have raised menu prices by an average of just 5%, while their costs may have increased 60% or more. The primary challenge for foodservice chains is to give customers the quality meals they want at a price they are willing to pay without being squeezed financially.
"Faced with rapidly rising food prices, the answer for foodservice operators doesn't lie in pushing back on manufacturers and distributors alone," says John Krebs, president of Source1 Purchasing, "it's a matter of increasing efficiency throughout the supply chain while carefully orchestrating operations." To maintain or increase profitability today, operators must expand their partnerships to combine purchasing volume, align incentives within the supply chain, and control the elements that add costs. Everything from menu design, through the manufacturers and distributors chosen, to the supply chain and operations, can now be collaboratively managed. This ensures lower costs, efficient operations, and satisfied customers.
"The newest and most effective way to increase profitability is to use the web and technology to pull supply and operations together. Communicating requirements, specifications, forecasts, operational data, and supply chain performance is what drives improvement," says Scott Hoffmire, CEO of Source1, which pioneered such services for Best Western and others. With this advancement, operators can now orchestrate operations with a web-enabled management system that gives key people within the supply chain a single point of access to all operational data. And more efficient control yields increased profitability.
Vito Palmietto, Senior Director F&B Operations/OS&E Purchasing for John Q Hammons Hotels & Resorts has seen this increase in profitability first hand. "In the last year, by working together, we've achieved six figure savings from price reductions and from changes in product specifications by renegotiating contracts. We have also seen over a 12% reduction in distribution expenses while maintaining our high level expectations in operational performance," says Palmietto. John Q Hammons has worked with Source1 since 1997, and is now focusing on expanding into strong regional purchasing programs and improving its communications platform.
Source1 Purchasing is a leading supply chain performance management group serving restaurants, hotels and other food service markets in the United States. Source1 focuses specifically on cost management, savings, and operational efficiencies. Unique in the industry, Source1 is neither a GPO nor a consulting firm, but provides a comprehensive suite of services that empower operators to not only lower prices, but also reduce operating costs, ensure consistent product quality, and achieve higher customer satisfaction for their clients. Find them on the web at http://Source1Purchasing.com. |
