Dec. 3, 2013
In their continual search for ways to cut food costs, buyers often become the worst type of shopper: They shop by total case cost rather than by yield.
How often have you been sucked into buying a product simply by comparing case costs?
What we all have to understand in this purchasing process is that food cost isn't everything if you are just looking at case prices.
Case shoppers make me cringe and make your bottom line shrink.
Too often buyers pat themselves on the back for buying a comparative product based on the case price without looking at the yield. In doing so, they neglect the true cost of the serving that will eventually be made in their kitchen.
It is a true example of comparing apples with oranges. What may seem like a great deal, in effect may actually be costing you a lot of money — removing as much as 15 percent from your bottom line.
For individual buyers who manage their specs and pricing diligently this may not be a big issue. But for franchise companies who must manage the egos of dozens of buyer/owners, it can be very disconcerting and a constant problem. Franchisees have a tendency to micromanage their business and often are not equipped with the same purchasing and operational experience of their franchise management team.
We are all aware of the franchisee that employs too many distributors or spends his valuable time running to the local Restaurant Depot because of some deal he may have found. What he doesn't often know or consider is the ultimate cost of said deal.
Take chemicals, for instance. While they may produce similar results quality-wise, one batch of chemicals may demand more dilution than the other upsetting the eventual yield of the product and your bottom line. This issue arises in all sorts of products, from kidney beans to hamburger meat, produce to all sorts of supplies and paper goods.
What becomes essential is the ability to equate and thus have full comprehension of case price with value.
The philosophy is simple: Price does not drive quality. Such a purchasing philosophy will filter down to other ways of saving money and maximize the value for the spend, thus running a lean and effective operation.