“You’ve got to inspect what you expect to keep people honest,” Peters says. “The dishonest guy is going to get you.”
It’s not just employees, either. Theft by delivery personnel is also common, and it’s important to inspect inventory to ensure suppliers are delivering on their promise.
In one year alone, ArrowStream, a provider of technology solutions for supply-chain management, was able to recover more than $1 million in supplier overcharges for the casual-dining chain Applebee’s, says Roger Mullen, ArrowStream’s president and COO.
Watch the customers, too.
“If someone is getting a cup to drink water, you need to make sure they’re not drinking soda with that water cup,” Dunbar says. “Employees need to be trained to be on the lookout for that.”
To ensure crew buy-in, emphasize the cost of stolen products during training and offer incentives for employees who catch offenders.
Manage the Menu
As food costs increase, quick-serves might have to rethink what they put on their menus. First and foremost, that means getting rid of any low-sellers.
“You should definitely eliminate any unpopular items,” Dunbar says. “Quick-service menus should be very highly focused—the more highly focused the better.”
Ditching items that don’t sell makes the operation more efficient and cuts down on inventory that goes to waste.
Dunbar also suggests allowing for some flexibility in offerings. That way, if an ingredient in one item is hit with a price spike, a substitute dish can be brought in to keep costs down. During the winter months, when out-of-season produce is expensive, it might be wise to substitute soup for a salad offering, for example.
Buffet concept Souplantation and Sweet Tomatoes features eight soups daily. Only three are permanent fixtures on the menu. With about 100 soups in the company’s repertoire, it can alter the mix depending on which ones have a reasonable food cost at any given time, says Joan Scharff, the company’s brand and menu strategist. The same goes for salad fixings: If the price of roma tomatoes spikes, the brand can switch to a different variety, such as grape tomatoes, until the price comes down.
Smaller portions are something health-conscious consumers have been asking for, and with food costs going up, granting their wish is just good business for quick-serves.
According to the NRA’s 2009 Restaurant Industry Forecast, 61 percent of consumers say they would patronize quick-serves more frequently if a restaurant offered smaller portions at a lower price. But restaurants can also reduce portions and charge the same or more by reducing size while increasing quality.
“If you’re serving a 4-ounce regular burger, you could try going to a 3-ounce Angus patty and charge more for it,” Dunbar says.
Trouble can arise, though, if customers feel they’re not getting the same or better value for their money.
“Look what happened to Ruby Tuesday,” Dunbar cautions, citing the sluggish sales that plagued that casual-dining chain after it reduced portion sizes in 2004. The key, he says, is to understand what your customers want before making the change.
It might seem self-defeating to raise prices in a down economy, but experts say it’s a viable option to consider.
Hit hard by increased commodity costs over the past two years, Bojangles’ decided that at least some of the rise in prices had to be passed on to consumers. Between late 2007 and mid-2008, the chain raised prices across the board between 4 and 5 percent.
“We monitored our competitors, and we didn’t do one increase; we had several different increases over the course of the year,” Kibler says.
Customers, for the most part, took it in stride.
“There’s always a little bit of a sales mix shift that you can’t fully predict, but in general we had very little consumer reaction,” Kibler says. “I think our consumers today are very well-informed. They know everything is going up.”
The chain certainly wasn’t alone in its decision to raises prices. Last year, menu prices climbed 4.4 percent on average. This year, they’re expected to increase 3.6 percent.