Butter, milk, cream and eggs are the ingredients that give many desserts their delicious flavor and richness. But these are the same commodities that have been soaring in price in the last few quarters.
The not-so-sweet spot
Dessert manufacturers and their customers have had to dig deeper into their pockets to either absorb these raw material costs or raise prices on their own products and menu items.
“I’ve been watching dairy prices go up over the last months,” reports Jean-Ives Charon, founder of Galaxy Desserts. “Butter is now $1.70 a pound and chocolate and eggs are also skyrocketing. I try to negotiate volume discounts with my suppliers and not pass the cost on to my customers.”
The USDA Agricultural Marketing Service blames the basic laws of supply and demand for today’s high dairy prices. Although American milk production is up, international demand has escalated—a development the dairy industry didn’t fully expect. The Australian drought has caused a tighter worldwide supply and more U.S. exports are going to China, Russia and the EU. As a result, “nonfat dry milk powder [used in many manufactured desserts] and butter are double what they were a year ago,” says George Koerner of the AMS. He doesn’t expect things to improve at least until spring—the peak production period for cows.
Fall is an especially high-demand season. School milk purchasing resumes at full tilt and dessert and candy manufacturers gear up for the holiday season—both of which cut into supply.
What’s for dessert?
The NPD Group/CREST data show that 12 percent of restaurant patrons order dessert, so there’s lots of room to snag more customers. Here’s the percentage of meals that include the following desserts in the quickservice, family and casual sectors:
Soft serve ice cream: 2%
Hard ice cream: 1%
The scoop on product innovation
Ice cream is a penny business, claims Debbie Benedek, Sr. VP at NexCen Franchise Management, parent company of MaggieMoo’s, the 200-unit “treatery” chain based in Atlanta. To stay ahead of the competition—especially when the raw materials get pricey—innovation is key. “We’re constantly tracking consumer trends, exploring new partnerships that fit our brand [like cookie and candy companies] and looking for portable items that appeal to both kids and grownups,” she says.
When the craze for nostalgic, retro desserts hit a couple of years ago, cupcakes appeared on MaggieMoo’s radar. R&D caught the wave early and created the Ice Cream Cupcake. It’s composed of a layer of chocolate cake, dark chocolate ice cream, marshmallow cream and a coating of ganache. The original cupcake was a big hit and now franchisees are creating their own variations on the theme.
MaggieMoo’s proprietary premium ice cream mix is produced in two facilities, then sold to franchisees through five distributors to cover the geographically diverse locations.
Along with Marble Slab, another ice cream concept, MaggieMoo’s was purchased by NexCen Franchise Management earlier this year. In light of high dairy prices, this consolidation can leverage buying power across all the brands through negotiation of collaborative partnerships, securing of long-term contracts and locking in of lower prices, states Chris Dull, president of QSR for NexCen.
“In addition, we have a VP of supply chain whose sole responsibility is to monitor the dairy industry and control costs. This function is unique for a QSR brand,” he adds.
Star Chefs’ Pastry Trends 2007 report reveals that a sizeable percentage of pastry chefs source ingredients from within a 50-mile radius. That doesn’t surprise David Guas, longtime executive pastry chef at several Washington D.C.-area restaurants and founder of DamGoodSweet Consulting Group. Way before “food miles” became a buzzword, his focus was local and seasonal. Honey, goat’s milk, peaches, plums, strawberries and other of his standbys come from small producers in nearby Virginia and Maryland.
“My regular supplier can usually carry these products, but other times, I eliminate the purveyor and go directly to the individual beekeeper, goat farmer or grower. If you have time to make a few phone calls, you can establish a network and arrange deliveries,” Guas notes.
Guas transforms these local products into global desserts garnished with a dollop of comfort, such as his Asian-inspired Warm Ginger Lemongrass Pound Cake with Yuzu Huckleberries and Kaffir Lime Coconut Sorbet. He also enjoys collaborating with his savory chefs, either encouraging them to use rhubarb or honey in a special or “borrowing” their ingredients and equipment for inspiration. “I like to tinker with technique,” he says. “Circulators make great custards and braising machines and sous vide equipment can be handy for different dessert preparations.”
To control costs, Guas keeps an eye on price spikes for dairy, eggs, produce and other essentials, updating his database with new cost-outs twice a month. If an ingredient starts to go way up, he may readjust the dessert list, subbing grapefruit for limes, for example. Pastry kitchen staples, like butter, sugar and flour, are purchased in high enough volume to offset price fluctuations.