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Financing

The challenge of raw material costs

food waste pile

Right now, operators believe that food costs are up. “But if you work through the actual PPI numbers, they are flat over the last five years,” says Joe Pawlak, managing principal for Technomic. However, perception is reality. And more than two in five operators have said that, of all factors, higher costs have most negatively impacted their operating profit in the past five years; 44% think it’ll continue be the top hindrance over the next five years.

The biggest reason for the price hikes: an increase in commodity costs, followed by distributor consolidation. But in the face of rising costs, operators have to find a way to manage their P&L. Here are some different strategies operators are employing to manage the cost of raw materials. 

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