05.19.17
by

Why Have More Than One Supplier?

Restaurant Management from Foodcst: Food Pricing for Restaurants – Food Costing Comparison for Chains and Single Locations

Why Have More Than One Supplier?

We get asked a couple questions all the time that really aren’t software questions. They’re more operational questions in general for restaurants or for caterers. And those two questions are:

  • Why should I use more than one vendor? If I already have a supplier of food, what does it matter if I have more than one supplier?
  • If I do use more than one supplier how do I keep track of that with the pricing as they send me their updated pricing or order guides or if I order online or something like that. How do I manage these kinds of things?

Those are two really, really great questions and we want to show you the reason why it’s important in the business of running restaurants.

And, of course, FoodCst is in the business of providing a solution for people to compare food pricing.

Here is the diagram that shows the process that very much is outdated. It’s what most restaurant owners are still using 1) to compare their food costs, 2) how they’re looking at past spending and 3) how they know when there are price changes.

 

 

Why Use More Than One Vendor or Supplier?

So the first question that we were going to address is, “why should I use more than one vendor?”

Well let’s assume that you’re in a restaurant and either the chef or owner or even a couple of people are in between doing the ordering. In some instances, it also may just be a single operator.

  • You will have a food vendor that may be a national brand like US foods or Reinhardt or Sysco or somebody like that.
  • There is a sales person assigned to you from the vendor.
  • That salesperson has your order guide with all of the items you order … whether is 50, 200 or 1500.
  • They take your order weekly or more often based on the latest pricing they have.
  • They have your order delivered.

If you are a good operator, you have struck a deal and will get the pricing from one or two vendors. In some instances you may even be able to get a guarantee of the lowest prices or fixed pricing on some items. There’s all kinds of different ways that that can be done.

The thing that most people don’t realize is that, like in the grocery store, as seasons change or other economic factors occur, the prices in your food changes. So most restaurants that we speak with actually don’t look at the changes in that pricing. They just assume that their salesperson is going to give them the very best price possible.

What many owners don’t realize, though, is that this sales person makes their money on the margin between what they’re selling to the restaurant and what their company is purchasing that food for. That margin affects how the sales person gets paid. The more margin they create, the more money in their pocket.

So obviously they want to provide good pricing to customers (i.e. restaurants) but they don’t want to give too low of a price because that affects them personally. This isn’t bad or wrong .. it’s just the nature of the business.

 

The Power and Plague of Comparing

The other reason why you don’t want to use one vendor is because items in order guides will get overlooked.

Your vendor, over time … or because of the type of restaurant you have … is going to know what the primary items are that you’re going to look at for pricing. The assumption by the purveyor is that an operator is neither going to have the time or patience to review 150-300 items each week. As a result, operators focus on the top ten or twenty items that they are really paying attention to to.

So if you’re a pizza place your salesperson and food vendor will know you are looking at flour, tomato sauce, mozzarella cheese, etc.. They will also know that there is a lot of stuff at the bottom of that spreadsheet or online portal that you’re not paying attention to.

Therefore what happens is that sometimes there will be price creeps on the bottom section of your order guide and you end up paying two three four times for paper towels than you started with and you don’t know it … so having more than one vendor helps to keep everyone honest because you have comparative pricing.

 

The Reason to Compare (Because you need to weekly compare!)

The natural method of doing to first make sure you have 2 or more vendors… having more is generally recommended. By the way, make sure to tell each vendor when you want THEIR truck to arrive so that it fits your schedule.

But with 3 or 4 or 9 vendor, the administrative work gets tough for a business owner or operator. Imagine (or don’t imagine … because you live it everyday!) that you’ve got six purveyors and you’ve got 150 items. Well, that’s 150 x 6 = 900 … and you’ve got to compare all these items every single week! I know.. You don’t do it… who wants to do that! Just hope for the best.. I’m sure it will all work out. (I’m kidding.. It doesn’t work out).

Everybody selling you food realizes you don’t have time to do this. The result is you will have price creep and you will also see price fluctuation. There will be what we call non-essential price hikes so those are items that typically are in the bottom third of your order guide, that maybe the vendor or somebody else has raised the prices there because they realize you’re not going to see it.

Many owners are simply are guessing at what they are paying. They’re just saying, “Oh yeah, X vendor has the best pricing because Steve takes me to play golf or he stops in here from time to time.” This is the nice guy business from the 1940’s through the 1990’s … the way people bought cars, airline tickets, got hotels … and a million other things.

But all of a sudden all of those kinds of systems were automated.

Now you can get real transparency and real clarity before you go buy a car or before you go get a hotel room or airline ticket. No one thinks twice about it .. the industry changed … because it had to.

You are the person taking the flight. Your vendor is the airline. And FoodCst … well, we are Orbitz.

This the reason why you should use more more than one vendor. But how can you easily keep track of the pricing for more than one vendor? Well some people do that by comparing very complicated spreadsheets. This is certainly a way to do it, but we’ve taken that very complicated method and made it instant and painless.

You can watch this section of the video to show an example of how we simplify this process for our customers:

This is what we believe is the answer to a looming problem that every restaurant faces. Yes, you can do this manually with spreadsheets, tabs, formulas and lots of time. But how nice would it be to eliminate the chance for mistakes, get yourself back valuable time and know that you can achieve a very important part of your business process with just a few clicks?

  1. You are protected from price creep
  2. You have quick glance at price fluctuation
  3. Your will be aware of non-essential hikes
  4. You prevent yourself from having to guess.
  5. You can guarantee you get the best price on your order guide every single order

Have Questions About Food Cost Software? Comment Below And I’ll Answer Them!

We’re always check on our blog for new comments ….

So if you need help solving problems with food pricing or food cost comparison, feel free to comment and I will pop back on and answer them as soon as possible.

Comment below now!

The post Why Have More Than One Supplier? appeared first on Foodcst: Food Pricing for Restaurants.

Source: http://ift.tt/2rApF5c

02.13.17
by

Web Version Now Available

Restaurant Management from Foodcst: Food Pricing for Restaurants – Food Costing Comparison for Chains and Single Locations

We are happy to provide the first version of the web interface for our customers. The new dashboard includes quick glance reports as well as product updates. The following are features unique to the web version:

  1. Order Import — A single click now allows customers to import their orders into FoodCst. This method gives a quick option for customers to upload a CSV with their order numbers, which is especially helpful for purchasers that are aggregating orders from multiple locations.
  2. Purveyors — In order to support our customers management of requests from purveyors who would like to bid the inventory with new pricing, we have provided a hands off approach. We will provide video training on this feature in the coming weeks.

The post Web Version Now Available appeared first on Foodcst: Food Pricing for Restaurants.

Source: http://ift.tt/2lDrqii

01.25.17
by

4 Things to Look for When Purchasing Food Costing Software

Restaurant Management from Foodcst: Food Pricing for Restaurants – Food Costing Comparison for Chains and Single Locations

4 Things to Look for When Purchasing Food Costing Software

FoodCst on InstagramHere are the four most important things to consider when purchasing food costing software.

First of all, let’s define what we mean by “food costing software”.There are 2 types of this software:

  1. The first calculates recipe costs, menu costs and most have inventory management systems plus features like recipe scaling.
  2. The second type of food costing software is one that automatically compares vendor pricing to help you CONTROL purchasing costs.

What Qualifies as Good Restaurant Software?

Test 1: Does It Save Me Time?

So first let’s review the software that helps you when calculating plate and menu costs.The first to is, “Does it save me time?”

Remember, time is money! Many Chefs and restaurant owners make the false assumption that just having software means it will save time. This is simply NOT true! There are many reasons that software could actually make you spend MORE time with your menu costing. For instance, the software may be poorly designed, clunky, hard to understand or it may not be compatible with your existing technology. So before you buy, check out online reviews or ask for a live demonstration to ensure that your software purchase is money well spent!

FoodCst on InstagramTest 2: Is it Accurate?

The second consideration is whether or not the software is accurate. This should be a no brainer, right? If someone is selling a product designed to do a specific task, like costing a recipe, it should do so accurately. In our experience, this is not always the case. Again, look for online reviews or talk to someone who has actually used the product you are considering.

Test 2: Is it Cloud Based?

Next, ask yourself if the software is cloud based.

Cloud based technology is infinitely superior. When using the cloud you get automatic updates, disaster recovery, better security and you can work from anywhere. In addition, with a cloud based program you don’t have the large capital expenditures associated with older technologies. Overall, cloud based technology is much more flexible and affordable.

FoodCst on InstagramTest 2: How Much Does it Cost?

The last consideration when purchasing software for your restaurant is the price. There are huge variations in the cost of such software. Many of the older companies that have not switched to the cloud charge a LOT of money to purchase their software. Having said that, there are now companies that now offer cloud based programs that are available for a monthly service fee. The great thing about this type of software is that if you don’t like it, you simply cancel your subscription! But be careful, some subscription software companies make you sign a long term contract with no easy way to opt out.

Recap:

So there are the four things you should look for when purchasing food costing software; the kind that helps you cost your menu.

As for the second type of food costing software; you know, the one that instantly compares vendor pricing to ensure you are lowering your purchasing costs? Well, that’s why we invented Foodcst.

Have Questions About Food Cost Software? Comment Below And I’ll Answer Them!

We’re always check on our blog for new comments ….

So if you need help solving problems with food pricing or food cost comparison, feel free to comment and I will pop back on and answer them as soon as possible.

Comment below now!

The post 4 Things to Look for When Purchasing Food Costing Software appeared first on Foodcst: Food Pricing for Restaurants.

Source: http://ift.tt/2jyiUfY

01.18.17
by

5 Steps to Calculate Food Cost

Restaurant Management from Foodcst: Food Pricing for Restaurants – Food Costing Comparison for Chains and Single Locations

5 Steps to Calculate Food Cost

Do you know how to calculate food cost? Well, if you don’t, you’re not alone. Today we’re going to show you exactly what food cost is and how you calculate it.

Food cost is a number usually expressed as a percentage but it can be thought of as a dollar amount as well. In short, your food cost is the dollar amount of food used in a certain period in relation to food sales in the same period.

Here are the 5 steps to calculating food cost.

Step 1: Take An Inventory

Take an inventory. This involves counting all of the food on your shelves and then assigning a dollar value to the food. To determine food cost you have to have two inventories; one from the end of last month and one from the end of this month. You can take an inventory weekly or monthly, just always take on same day, like the last day of the month.

Step 2: How Much Did I Spend On Food?

The second step is to find out how much you spent on food for the month. Let’s pretend we are working on food cost for the month of March. Starting with March 1st, add up all food purchases for the month. Now you have your total food purchases for March with a total of $30,000.

Step 3: Calculate Cost of Goods

Now, Calculate what is known as your Cost of Goods abbreviated as COGs. This number tells you how much food, in dollars, you used in the month. Not how much you spent, but how much you used! The formula for determining cost of goods is last month’s inventory, plus food purchases minus this month’s inventory. In our hypothetical situation let’s say that the inventory dollar amount for the end of February is $8,500. Remember the end of February is same as first of March. At the end of March, you took your inventory and it was $9,900. So following the formula we add $30,000 (your food purchases) to the beginning inventory, $8,500 and we get $38,500. Now subtract the end inventory of $9,900 and you get your Cost of goods sold which is $28,600.

Step 4: Get Your Food Sales Report

Now we need to know how much food you sold in March. Food cost is simply a ratio of food sold to food used. We know the food used, that’s your COGs. The get the food sold, you will need to get a Food Sales Report from your POS system or from your accountant.Let’s pretend you sold $100,000 of food for the month of March.

Step 5: Divide Cost of Goods by Food Sales

The last step to calculate your food cost is to divide you COGs, or food used, by the food sales. Then apply the % style to this number to see it as a percentage. You now know your Food Cost! Our COGs number is $28,600. $28,600 divided by our food sales of $100,000 is .286. When we apply the percent style key, we get a food cost of 28.6%. That’s a pretty good food cost!

Recap:

So there you have it; 5 steps to determine food cost. Here is the total formula. Write this down so you have it handy. To determine food cost: Beginning Inventory plus Food purchases minus ending inventory equals COGs. Now take your Cost of goods and divide that number by food sales, apply the percent key.There is your food cost!
So if you haven’t been calculating Food Cost, now you know how. It wasn’t really that hard, was it?

Have Questions About Food Cost Software? Comment Below And I’ll Answer Them!

We’re always check on our blog for new comments ….

So if you need help solving problems with food pricing or food cost comparison, feel free to comment and I will pop back on and answer them as soon as possible.

Comment below now!

The post 5 Steps to Calculate Food Cost appeared first on Foodcst: Food Pricing for Restaurants.

Source: http://ift.tt/2k0T2ZT