Straight from DSRs who know their stuff.
If there’s one person who really wants you to succeed (besides your mom and your banker) it’s your DSR. With the average rep visiting 15 to 20 operations each week, they see and hear it all in your marketplace. We asked Dave Miesse, a consultant and host of DSR Live!, a podcast talk show produced for the Association of Foodservice Distributor Representatives and two top DSRs—Todd Hauser of Martin Bros. Distributing Co. in Cedar Falls, Iowa, and Michael Hirsch of Ben E. Keith Foods in Dallas—what advice they’re offering customers facing soaring food costs and declining customer counts.
- Don’t cut quality: Their top recommendation, in unison, is to resist the urge to save money by cutting quality. “As tough as it is right now, the wrong thing to do is to start making changes that compromise the quality of your menu and/or your service,” Hirsch says. “Stick to your game plan. You might put a little less on the plate, go to a house brand on pineapple juice or make other internal changes to cut costs, but don’t cut quality of key ingredients. There’s always a reason why something’s cheaper and it usually comes down to quality. If you really need to find alternative products, work with your DSR to bring in samples and carefully evaluate substitutions. Don’t just change brands or grades based on price.” Miesse puts it this way: “When you cut your quality, you cut your throat.” Nonetheless, he says, he does see more operators today reaching for that knife. “Instead of buying the $19 case of fries, they’re going for the $11 fries. They’re buying house brands. They’re looking for cheaper everything.” Good DSRs, he says, can help review the menu and look for ways to control costs, but they will always counsel not to start cutting quality.
- Reengineer: Instead of nipping and tucking on quality, Hauser recommends strategic menu reengineering. Studying and readjusting portion sizes is the best place to start. “We looked at how people were ordering at one of my accounts, where the quality is high and the portions are huge. A lot of patrons were splitting entrees—say, a signature pasta dish at $19.95. The operator reduced the portion size and took the price down to $13.95. Now, instead of ordering one and sharing it, they’re ordering two.” Tweaking protein portions is recommended, as well. “Going from a seven-ounce chicken breast to two three-ounce portions, for example, can lower your plate cost by maybe 30 cents. It also increases your plate coverage, which lets you cut back a bit on sides,” Miesse says. The easiest way to uncover menu reengineering opportunities is to spend an hour during peak service times on the dish line. “We tell the bussers to bring everything back and we analyze what’s on those plates, documenting anything that’s more than one ounce,” Miesse says. “If customers aren’t eating it or taking it home, it’s adding unnecessarily to food cost. Then we ask why? Is it the wrong portion size, the wrong recipe, the wrong brand, the wrong ingredient?”
- Raise prices: Nobody’s keen on raising prices right now, but it has to be done, says Hirsch. “Eight restaurants in my market closed in the past six weeks. Most were afraid to raise prices. You can do it smartly and gradually, but you can’t wait this out hoping that prices are going to go back down.” Hauser agrees. “The key is not if you do it, but how,” he says. “Sharp operators usually don’t just raise their prices on existing menu items. Rather, they make some change to justify a new price. Maybe it’s a new side dish, sauce or marinade. The idea is to keep the menu fresh and not just jack up prices and expect customers to understand. They might, because they know costs have gone up, but it also might be just enough to send them to the place down the street.” Hauser also suggests using graphic design elements to steer customers toward high-profit dishes. Simple boxes and icons placed next to those items on the menu do the trick, he says. “It’s psychology. Make it look special on your menu and you can gear people toward your most profitable items.”
- Consolidate purchasing: Let’s say you use four distributors, each making two drops a week. That’s eight orders to coordinate and place, eight deliveries to receive and put away, eight invoices to process and four checks to cut and mail. Even in the best of times that’s inefficient. Today, however, with virtually every distributor levying per-delivery fuel charges, it’s an even bigger drain. “Larger customers who use us as a prime supplier can avoid surcharges, but the little guys, many of whom still like to have lots of distributors calling on them, can’t,” Hirsch says. “They’ve got to get a handle on their buying practices. They could lower their costs by using fewer distributors and ordering less frequently. There’s no reason they need a truck pulling up every day. If a drop is under $500, we have no choice but to include a surcharge.” Miesse adds that processing and packaging technologies today ensure longer shelf life on perishables, reducing the need for multiple deliveries. “Operators often say they don’t have enough storage space to buy bigger loads less often, but doing so can really cut costs. I’ve seen some who understand this go out and invest in a $3,000 walk-in to expand their storage space. It can pay for itself in six months through better pricing, reduced surcharges and labor savings,” he says.
- Tap technology: Time to stop the hand-holding when it comes to placing orders, say DSRs. If your distributor offers online order-entry, use that technology and save the time your rep would normally spend taking your order discussing menu R&D, business-building and cost-saving ideas. The same is true for paying bills. Many distributors now offer online bill paying programs that eliminate paperwork, saving time and money spent on envelopes and postage. “Anything you can do to reduce your operating costs and give you more time to spend in your kitchen, in your dining room and with your customers is important right now,” Hauser says. “Use your DSR as a fresh set of eyes, as a partner, to help you figure out how to do that.”