BENCHMARKING Some companies, like Prestige Purchasing, can not only provide current and relevant data and insights to businesses, but also carry out benchmarking services to determine where costs can be reduced and savings made. “Despite the rising market over the past 12 months, our technology has enabled us to deliver significant savings for our clients through identifying areas where their pricing is not competitive com- pared with the market,” Allen says. “It is typical in a fast-changing and volatile market to lose track of where competitive market prices should be, especially if a business is purchasing hundreds or even thousands of products across a broad range of cat- egories, so our systems enable us to actively and effectively manage, report and demonstrate the savings and value we have delivered to
our clients’ profitability.” Looking ahead, thanks to a new part-
nership with Fourth and CGA, Prestige will be able to deliver even more powerful insights. The partnership will integrate data from the CGA Prestige foodservice price index into Fourth Analytics, along with market data from the Coffer Peach business tracker, enabling businesses to see how they are perform- ing against the market across a number of variables, while allowing them to cross-ref- erence the prices they have paid for different categories of product. “Businesses will be able to very quickly see those categories where they’re underperform- ing or overperforming the market and what that means in cash terms,” explains Shipley. “It gives that additional context and enables them to benchmark and act accordingly.”
BEYOND BUYING Cost control isn’t just about getting the right price – menu management also has crucial role to play. Pelican, for example was recently contacted by a multi-site restaurant operator that had found its gross profits (GPs) had been drop- ping and assumed its prices must have gone up. When the Pelican team started to investi- gate, it found that wasn’t the case at all. “When we analysed their purchasing data, we saw an increase in the purchase of chips,” Hudson says. “We were able to track these pur- chases to an individual site and advise the cli- ent of our findings. Due to this information the client was able to trace the excess usage to a new member of staff serving larger portions.” The solution was simple – re-educating staff on correct portion size. The system also
allowed the client to create specification sheets for each of its dishes, which are now being used as part of staff training to ensure custom- ers receive a consistent offering each time and the cost per dish remains constant. To give another example, systems like
Fourth Analytics can also look at dependency between products (how putting the price up on one product will influence other things). “If you know that when a customer comes in and buys a steak, they always buy a couple of side dishes or a nice bottle of wine too, you can start looking at what time of day they buy that and look at things like price elasticity or prof- itability vs popularity,” Shipley says. “If you’ve got a popular item that’s got a very inelastic price, you can increase that without affecting the popularity and sales of that product and still maintain your margin.”
Shipley has also found that how operators lay out their menu and engineer their promo- tions can have a big impact on costs. “If you highlight certain dishes on menus or place them on certain areas of the menu, people’s eyes are automatically drawn to them. So if, say, red meat has gone up but chicken prices haven’t, you can draw customers’ eye to the dishes where you’ve got less cost price infla- tion,” he explains, adding that when it comes to vouchering, the key to success is upselling additional products on top of the vouchered product. “By having all this data in one place you can model bundled promotions so you might be tak- ing a hit in one area but you’ll be making it back by getting addi- tional sales of other products.”
USING THE TECHNOLOGY RIGHT For
Shipley, it’s important to remember that different operators will benefit from procurement tech- nology in different ways. While some will focus on ordering better, others will look at controlling the gap between their the- oretical and actual margins, and while some will simply be fine-tuning already sophisti- cated procedures, others will use the system to entirely overhaul their procurement process. In the future, procurement systems will
be able to handle even more different pieces of previously disparate data. In fact, Fourth Analytics already looks at customer sentiment on social media.
“The key thing for me is application,” says Shipley. “It’s using the core applications well – whether that’s managing waste or monitor- ing your costs versus the market. What we try to do is bring all that together so operators can make intelligent decisions based on real insight. Where we’re going now is trying to give more insight and more context, as these systems can handle more and more data.”
“It is typical in a volatile market to lose track of
where competitive market prices should be” Shaun Allen
www.thecaterer.com
Top tips for cutting costs 1
CONSOLIDATE YOUR SPEND The first thing an operator should do is examine what they’re buying, who
they’re buying it from and how the ordering and delivery process occurs, Pelican’s Martin Hudson advises. “Perhaps surprisingly, some managers are unsure about these apparently basic questions, partly because it varies in different parts of the business or on different sites,” he says. “In such circumstances one of the first money-saving steps that can be taken is to consolidate buying so that better deals can be negotiated.”
2 3
PERFORM A BESPOKE TENDER A tendering exercise, carried out by procurement experts, will create
a transparent and auditable process that will achieve the best market prices across all purchase categories and let operators include price hold periods within a supplier’s contract. Hudson recommends a three- month fixed-price period for fresh produce, and six months for other food categories.
REVIEW YOUR PRODUCT LIST Remove complexity and duplication from your product list where it doesn’t
add value, allow team members to order only from an agreed contract list, and ask whether you could find cheaper – but equally high-quality – alternatives to your top-spend products. One Pelican client,
for example, was buying large volumes of sliced mushrooms, but was advised to switch to whole mushrooms and purchase a vegetable prep machine. The savings made buying whole mushrooms would pay for the machine in three months and thereafter the client would save 50% on mushrooms alone.
4 5
MANAGE YOUR MENU Menu management is just as important as the buying process itself. Many
systems will let you automatically model the cost of each ingredient and their impact on the whole recipe. You can then engineer cheaper ingredients. Go one step further by looking at dependencies between products and thinking about menu layout and bundled promotions to control your costs even more effectively.
MEASURE REGULARLY Independent benchmarking services and relevant market information such
as the CGA Prestige foodservice price index are the best places to start. The partnership between Prestige, Fourth and CGA will bring all the data together and allow you to compare the performance of your business with the performance of its competitors.
Technology Prospectus 2018 | 45
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
