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The average American diet is a one-way ticket to obesity (excluding those with manic metabolisms that are the envy of us all). Yet our country is making a conscious effort to change its culinary customs, with campaigns like Michael Bloomberg’s soda ban and Michelle Obama’s low-calorie school lunches. But the truth is, quality food comes at a price, and that price is rising.
It’s certainly no secret that throughout the last few months we’ve watched our grocery receipts soar, with the price of everything from produce to protein on the rise. The United States Department of Agriculture announced in August that food costs as a whole will climb 2.5 to 3.5 percent by the end of 2012.
There are multiple contributing factors, but the dominating cause is the drought that deteriorated summer crops, now dubbed the Great Drought of 2012. By the end of July, about 62 percent of the nation suffered from the lack of rain, making this the worst drought in half a century. The USDA declared natural disasters in more than 1,800 counties and 35 states — more than half the country.
Effects of the drought are widespread. Photo by iStockphoto/Thinkstock.
The drought even extends beyond America. Summer heat waves in Southern Europe were crisping crops from Italy to Ukraine. There is currently a monsoon failure in in India, accounting for the country’s first drought in three years. And as droughts in America and Europe elicit higher food prices, droughts in China and North Korea elicit more food shortages as populations rise.
The lack of water is the obvious issue here, but habitual summer heat waves didn’t help. Only from 68 to 95 degrees Fahrenheit is photosynthesis constant (humor this return to high school biology, OK?), but above 104 degrees photosynthesis ceases completely. During such high heat, plants are in thermal shock, pausing pollination.
The corn crop is especially sensitive to high heat. The tassel at the top of a stalk pollinates the silk of each shoot. In such high heat, the corn silk dries and browns, leaving the pollen with no opportunity to reach the kernel.
The U.S. is one of the largest producers of corn, and farmers planted more corn this year than any other since 1937. However, approximately 51 percent of the American corn crop is in poor or very poor condition. In August, the USDA projected the corn yield at a record 376 million tons. Just one month later, the dismal drought conditions necessitated a revised figure, reducing the yield by 47 million tons.
Why Are Food Prices Rising?
Increases in food prices are driven by dozens – if not hundreds – of factors, and the unprecedented demand challenges we’re witnessing in the food supply chain as a result of COVID-19 has affected the prices of some products in the grocery store. The Food Industry Association (FMI) conducted a detailed analysis of the reasons for the food price increases, following a report from the U.S. Bureau of Labor Statistics that in April recorded the largest monthly increase in food prices in the last 46 years.
The FMI said grocery shoppers can rest assured that a cost increase is not related to increased profits, and instead due to a spike in costs due to labor, lower capacity production, cleaning and sanitation protocols and even transportation demands.
This frequently asked questions document prepared by the FMI is meant to shed light on how food prices are determined in grocery and the role environmental factors play in determining food prices.
Is there a difference between cost and price?
“Cost is typically the expense incurred for creating a product or service being sold by a company. The costs involved in manufacturing might include the raw materials used in making the product. The amount of cost it takes to produce a product can have a direct impact on both the price of the product and the profit earned from its sale.” [Citation: Investopedia]
“Price is the amount a customer is willing to pay for a product or service. The difference between the price paid and the costs incurred is the profit. If a customer paid $10 for an item that cost $6 to produce and sell, the company earned $4 in profit.” [Citation: Investopedia]
How do grocery stores determine food prices?
Many variables go into establishing the price of foods in grocery stores, including costs to the grower, the processor, the manufacturer, the distributor and lastly, the retailer. Some factors, such as the cost of energy, get multiplied because they must be calculated into the costs experienced by each link in the food chain.
How are food price increases determined?
Increases in food prices are driven by dozens – if not hundreds – of different factors operating as a complex algorithm that can be difficult to fully understand.
Due to COVID-19, for example, in order to maintain social distancing practices many manufacturing lines have had to increase the spacing of personnel working the production, packaging and warehousing functions.
This generally results in lower production rates per employee, and longer production timeframes to produce the same amount of product as supplied pre-pandemic. Increased demand and reduced supply from hard-hit regions have also reduced the ability of manufacturers to get necessary materials, such as packaging, and has resulted in sourcing of higher cost materials and less opportunity for bulk buying.
These examples are a few to help contextualize environmental factors that influence food prices.
Do price increases during this pandemic influence grocers’ profits?
Grocery shoppers can rest assured that a cost increase is not directly related to increased profits, and instead due to a spike in costs due to labor, lower capacity production, cleaning and sanitation protocols and even transportation demands. The grocery industry maintains a net 1-2% profit margin, which has been consistent for more than two decades.
How can I address consumer perceptions on price fluctuations?
In addition to the numerous factors increasing costs of certain items temporarily, we also note that certain factors have led to consumer misconceptions even where prices have remained the same. For example:
- In order to increase output as much as possible many manufacturers have limited the number of SKUs on the production line to promote continuous running of lines. Often, these are limited to larger quantity SKUs so where a customer might be used to purchasing smaller quantities of an item, availability might be temporarily limited to those that are double the quantity but also a higher price.
- Many stores are also limiting promotions to help reduce the risk of the virus spread through coupons, the passing of phone applications to be scanned, etc., so customers regularly utilizing weekly deals are currently more limited in the ability to do so.
- Finally, with an increase in demand, lower cost brands such as store private label brands often sell out quickly temporarily leaving only higher priced brands. Although the prices of many of these products remain the same, the perception is often that prices have increased.
What is COVID-19’s Impact on Food Away from Home v. Food at Home?
Pre-COVID-19, .54 of every dollar was spent on food away from home. Now, most of that food dollar is being spent at home, effectively flipping the equation on household food spending. [CPI]
What are the best sources on food prices?
USDA ERS Consumer Price Index (CPI) – The Consumer Price Index (CPI) for food is a component of the all-items CPI. The all-items CPI measures price changes for all consumer goods and services, including food, whereas the CPI for food measures the changes in the retail prices of food items only. CPI is updated monthly.
USDA Disaster and Drought – USDA monitors daily droughts and disasters across the country. This page has the latest updates and resources.
USDA Economic Research Service –The ERS mission is to inform and enhance public and private decision making on economic and policy issues related to agriculture, food, the environment, and rural development.
The overall cost of most types of meat, poultry, fish and eggs has increased by 4.3%, the largest increase of any single grocery category. Various cuts of beef saw a 3.7% increase, while pork prices went up by 3% and poultry prices rose 4.7%.
In some areas of the country, the increases were larger — the price of ground beef in the Dallas-Fort Worth area of Texas increased by 14.5%, the price of chicken breast in Los Angeles skyrocketed by more than 26% and the price of orange juice is up 14.6%, according to Nielsen data exclusively obtained by NBC News.
Most alarming, perhaps, has been the increase in egg prices, which shot up a whopping 16.1% on average. In Boston, the cost of eggs increased by 24.2%, according to Nielsen data.
A class-action lawsuit filed in California at the end of April accused several companies, including farms and suppliers, of engaging in “the despicable and illegal practice of price-gouging of essential groceries, specifically eggs, in the midst of the ongoing and unprecedented pandemic.”
In response to the increased cost of meat, Tyson Foods, which processes a fifth of the nation’s beef, announced in mid-May it would be cutting prices on some of its beef products at supermarkets and restaurants by up to 30%.
Food Why is there a meat shortage if farmers have plenty of animals?
From menu planning to kitchen management and everything in between, you wear many hats in your day-to-day as a senior living foodservice operator.
. and HANDS UP if one of those hats also happens to be manager of budgets!
With so much on your shoulders already, the added worry of rising food costs and staying within budget may be starting to feel like an added burden that you just can&rsquot shake.
And you&rsquore definitely not alone with this concern.
In fact, last month, when the Senior Dining Association asked operators &ldquowhich budget item do you predict will increase most in 2021?&rdquo, &lsquofood costs&rsquo came out on top by a landslide at 48%.
Senior Dining Association Poll Results
While there&rsquos little you can do to control the average cost of food &ndash accurately predicting quantities and taking steps toward reducing food waste can help you get a handle on this growing budgetary concern.
By simply avoiding these common mistakes, you have the opportunity to save thousands on potential food costs, ultimately taking this unnecessary worry off your to-do list:
1. Not getting personal with menu planning.
Nothing puts smiles on your patient and residents&rsquo faces quite like personalized care.
. But what if we told you that personalization could also help you stay in budget? Because, the fact is, food costs and resident satisfaction go hand-in-hand.
Planning out menus that specifically cater to new and evolving resident needs and preferences is one of the best ways to save on food waste and make accurate predictions for future inventory orders.
It&rsquos that simple: if you&rsquore able to personalize menus to your residents, you can operate with confidence that they&rsquore going to order certain recipes and enjoy them every time. That means far less meals being sent back or ending up in the garbage bin!
Here&rsquos some quick tips on making your menu planning process that much more personalized to your residents:
- Choose a foodservice management software that includes resident profiles where you can accurately track dietary needs and preferences and keep them right at your fingertips (more on this in the next point!)
- Ensure you&rsquore regularly consulting your Resident Committee on how they (and other residents) are feeling about your foodservice, and try to seek ways to include them directly in your menu planning process
- Keep the lines of communication open with your servers: What feedback are they receiving from residents? Are they often finding that they&rsquore leaving some untouched food on their plates?
2. Discounting data.
Even when you know your operations like the back of your hand, it&rsquos simply not possible to accurately track your purchasing or quantity needs without the help of data visualization.
Far too many foodservice operators make the mistake of eyeballing food purchases with little to no data to back up their decision. Meaning &ndash more food winding up wasted.
As mentioned above, keeping up with preference and dietary data is key to forecasting quantities and purchasing the right products at the right time. Plus, with the help of foodservice management software, you can visualize trends with your foodservice quantities and determine if you should be adjusting resident serving sizes (and how that affects your future orders).
Technologies like MealSuite help make this easy by forecasting menus based on historical trends within your business so you purchase and produce only what you need.
3. Manual temperature logging.
We all know that guilty feeling that comes from throwing entire meals or unused products straight into the garbage.
And the truth is, if you&rsquore not paying close enough attention to your kitchen temperatures and best before dates, even perfectly tracked inventory orders can wind up with that dreaded fate!
As of 2011, it was estimated that approximately one third of the global food produced for human consumption is wasted, with a major contributor to this stat being premature food spoilage.
So how do you take control of your food spoilage? We highly recommend looking into digital temperature tracking.
With Wireless Temperature Sensors, you can accurately monitor your fridge and freezer temperatures, automatically generating your digital logs. Let the sensors ensure you&rsquore in the &lsquoSafe Zone&rsquo and alert you immediately via text or email if temperatures go out of range.
Fridge and freezer malfunctions can cost you thousands of dollars in spoiled food and health citations. So, there&rsquos no better time to convert your temperature logging to digital to help mitigate that risk, while saving you excess time and paperwork.
4. Not giving leftovers new life.
This might be a bit of an obvious one, but we can all use a little boost of delicious inspiration!
Getting creative in giving leftover ingredients new life is a great way to mitigate waste that can come from leftovers and food scraps in the kitchen.
Here are a just a few thought starters:
- Stale bread? Make crunchy croutons!
- Leftover potatoes from the night before? Make a hearty soup!
- Worried you won&rsquot use your fresh veggies on time? Bring out the pickling jars!
- Leftover roast chicken? Make pulled chicken tacos!
5. Using wasteful show plates.
Are daily meal show plates eating at your food costs (literally)?
When it comes to why these plates could be costing you big time, the truth is in the math:
3 meals a day X 2 show plates X 365 days = 2,190 wasted plates per year!
Ditch all those plates and save the hefty food costs by instead showing your residents photos of meal options with a digital ordering system like MealSuite Touch.
With food costs rising an average of 2.6% each year in America, there&rsquos no better time to evaluate how your operations can start making changes to boost your bottom line. By avoiding these common mistakes, you&rsquoll be well on your way to staying in the black when it comes to your food budget.
Interested in a free foodservice management software cost-benefit analysis? Book a dining solutions audit with one of our technology experts, and they can work with you to determine just how much savings are in your future!
Why is the cost of food rising so rapidly?
In much of the developed world, it's all too easy to take a day's meals for granted. Breakfast is something you grab going out the door, lunch is a diversion, and dinner is an evening's entertainment. And while a trip to the grocery store may be a bit of a chore, it's far from a life-and-death situation. However, the rising cost of food threatens to change much of this.
This customer buys food at a grocery store near Frankfurt, Germany. Germany's consumer price index jumped 3.1 percent from March 2007 to March 2008, due to rising food and energy costs.
In the United States, even the poorest households spend only 16 percent of their income on food [source: The New York Times]. In other countries, especially developing nations, that figure reaches 75 percent and higher. Rising food prices may be inconvenient for some households, but in parts of southern Asia and Africa, a 25 percent rise in food costs can lead to starvation, riots and political upheaval.
According to the World Bank, food prices have risen by 83 percent in just three years and will likely continue to rise [source: Cowen]. Governments have imposed tariffs and trade restrictions in an attempt to stabilize prices. In parts of Asia and Africa, food costs are already leading to social unrest. Global organizations like the World Bank and the United Nations World Food Programme are trying to alleviate the suffering. But why are food prices rising so rapidly?
While economists and critics place a great deal of blame on the growing biofuel market, experts identify a number of other contributing factors, ranging from global weather patterns to changing dietary trends.
So will people start pouring water in their cereal because they can't afford the cost of milk? In this article, we'll examine the many factors that are contributing to the rapid rise in food costs.
Biofuel Production and Trade
Biofuel production and trade are major reasons that demand is outstripping supply. Of the various contributors to rising food prices, biofuel production often receives the most attention. After all, it's a story of conflict between rich nations and poor nations, of environmentally-friendly advancements producing unforeseen negative results. Biofuel technology involves producing fuel from renewable, biological sources such as corn, soybeans, sugar, rice and potatoes instead of nonreusable fossil fuels. The two main types of biofuel are ethanol and biodiesel.
Freedom from foreign oil and a renewable alternative to gas -- sounds like a winning concept, right? The U.S. and several European countries thought so. They promoted ethanol research and gave farmers financial incentives to sell corn and other crops for use in biofuels. The problem, however, is corn that winds up in your fuel tank isn't winding up in anyone's belly. There is suddenly less product to meet customer demands for consumable corn -- this drives up the price of the product. In the United States alone, experts estimate a third of the country's corn crop now goes to ethanol plants instead of grocery stores and feed barns.
Rising produce prices then trickle down the production line to other items, leading to an input cost increase. Want to chomp down on some pork chops? Well, those pigs were probably fed on corn, which boosts the price of pork. Hankering for a corn dog? Now you have to contend with both elevated pork and cornmeal prices. Also, biofuel incentive programs have forced farmers to cease production on other crops to better focus on the ones supplying rich ethanol payoffs.
Trade factors also complicate matters by artificially raising food prices and limiting free trade. For instance, many countries place tariffs on imported or exported goods to give domestic markets and products a competitive edge. The U.S. actually pays some farmers to keep their fields bare in order to keep supply down and prices up. As global food costs rise, many nations are limiting exports to try to keep domestic prices from rising any further and to avoid potential food shortages at home.
But it's not just a matter of the world not getting enough to eat -- we're getting hungrier and looking for ways to satisfy bigger appetites. Read on to find out how our eating habits could be affecting the price of food.
Remember when Dr. Emmet "Doc" Brown returned at the end of "Back to the Future" in a DeLorean fueled by garbage? While similar, real-life biofuel technology is still experimental, many advocates argue that cellulosic ethanol derived from biodegradable waste, like switchgrass, trees and wood chips, may help save the day from food shortages and oil dependency.
More Consumption, Less Production
At heart, trade issues always come down to the principle of supply and demand, a game of tug-of-war between the producers and consumers. While issues on the supply side have certainly played a major role in rising food prices, experts also lay a portion of the blame on countless hungry mouths in the world.
There are approximately 6.7 billion people in the world, and the population increases by 78 million each year [source: Chamie]. To complicate matters further, analysts expect much of this growth to occur in Africa and Asia, where food prices are often highest.
Food price analysts also mention China and India's recent economic growth as additional factors that are driving up the cost of food. Large populations in these areas suddenly found themselves with enough disposable income to purchase meats and other pricey foods they were previously unable to buy on a regular basis, leading to more consumption. This follows an economic principle called Engel's law, which states that the healthier a country's economy, the more food its population consumes. A rise in the demand for meat means an increase in meat prices and an increase in meat production. This also ups the demand for produce, which is used to feed farm animals.
Some critics say rising food prices shouldn't be blamed on growth in countries such as India, but rather to the excess in countries like the United States. While the average Indian consumes 2,440 calories a day, the average American gobbles up 3,770 calories [source: Timmons]. Critics argue that if the average American cut down on how much food he or she consumes every day, global prices would drop.
Rising food costs are due to more than just changes in how much we eat or what we do with the crops. In some cases, high prices are due to forces beyond human control. The recent drought in Australia (the worst in the country's recorded history) drastically reduced its rice production -- crops which normally feed 20 million people worldwide [source: Associated Press]. Droughts in Eastern Europe have similarly hurt grain and corn production. Other major harvests were disrupted by floods in West Africa and North Korea, deep frosts in China, and droughts throughout Africa. Many experts worry that these are not freak weather occurrences, but are symptoms of climate change.
Halting the global rise in food prices is no easy task with so many intertwined causes. Efforts are underway to increase the production of high-yield crops in developing nations, as well as increase wages to cope with the increased cost of living. Governments and global organizations are busy adjusting ethanol subsidies, tariffs, and trade restrictions to reduce food shortages. On the consumer end, the responsibility largely falls to the individual. Could you change your diet to help alleviate hunger, starvation and social unrest on the other side of the globe?
To learn more about biofuels, climate, global trade and other factors affecting rising food costs, explore the links on the next page.
Don’t Let Protein Costs Put a Hole in Your Profits
Center-of-the-plate proteins are some of your most expensive ingredients. Discover five ways to keep your costs down while satisfying consumer expectations.
Beef, pork, chicken, seafood, and so on are often the most expensive items on the plate, but with food costs rising even faster in recent months, every operator ought to have some strategies for lowering costs on these traditional center-of-the-plate ingredients.
Not coincidentally, many of the following pointers will also convey a healthier image to your menu, and help you with product utilization.
Reduce portion sizes – With snacking on the upswing, many consumers are replacing three big squares with smaller, more frequent meals. Reducing portion sizes—and perhaps even menu prices, depending on the circumstances—not only saves money on ingredient costs, but also addresses the growing trend toward snacking. This approach can also serve to decrease the overall calorie and fat content of menu items—an important consideration now that menu labeling has become such an issue.
Leverage bar menus, shareable specialties, and half-portion options, as well as such selections as salads or pasta with just a few ounces of protein.
Get Started: Check out these recipes for delicious entrée salads like Chicken Teriyaki Salad and such pasta specialties as Shrimp and Kale Penne Alfredo and Whole Grain Mac and Cheese with Peas and Ham.
Focus on produce and grains – For many chefs, vegetables have become the focus of menu specialties. They’re more creative (how many ways can you cook a steak after all?) they enjoy a healthy nutritional image and are also perfect for seasonal and local/farm-to-table positioning. Most of all, though, they’re lower in cost, all of which adds up to real value on the menu. The best news? Customers, including non-vegetarians, are looking for them. Growing awareness of Mediterranean-style diets and USDA dietary guidelines (which suggest that three-quarters of every plate comprise grains, fruits, and vegetables) underscore the health benefits of the move to less meat. And with so many interesting fruits, vegetables, and grains available, there’s no shortage of them.
Compose menus and plates with an emphasis on creative side dishes and substantial garnishes, like artisanal pickles.
Get Started: Learn how to cook ancient grains for a variety of end uses with this convenient guide.
Experiment with “lesser cuts”– Not every piece of meat can be a premium cut—a chop, tenderloin, or boneless chicken breast. It’s not possible, and it’s not even all that interesting, especially with a pricey bell-ringer like beef. In fact, many chefs admit to being more inspired by a country sparerib or a culotte steak than they would ever be by a pork loin or a Porterhouse. These prime cuts, good as they can be, are better when cooked simply, whereas a piece of flanken short ribs, a chicken thigh, ground pork or a lamb breast that needs to be marinated, braised or otherwise manipulated can be much more fun for both the cook and the customer. By the same token, underutilized fish such as redfish, mackerel, wild keta salmon or carp is not only more sustainable, but it’s also become increasingly more desirable than products like swordfish and crabmeat.
Introduce new cuts and preps as featured specials and limited-time offerings (LTOs) to gauge customer interest.
Get Started: Braises, stews, and other slow-cooked, tenderizing cooking methods for alternative cuts of meat are easy with Maggi® Seasoning and bases and Minor’s® bases, including Gluten Free Bases.
Leverage leftovers – Trim, overproduction, odd sizes, and other “leftovers” are far too valuable not to turn them into saleable new menu items. They can even be planned for, in the sense that tonight’s double production of Yankee pot roast becomes tomorrow’s Reuben sandwich or beef barley soup. Use broken shrimp and the ends of fish filets in tacos. Shred cooked meat for ravioli or vegetable stuffings. Unsold rotisserie chicken can be repurposed in a spring roll appetizer or salad. Sliced pork makes an excellent sandwich, especially when treated to an exciting sauce. You get the idea.
Spend a little time developing second uses for some of your protein-based menu items.
Round out all your menu categories – With many customers grazing their way through the menu, the traditional entrée section holds less importance. A distinctive selection of appetizers, soups, salads, sandwiches, snacks, and side dishes not only allows customers to mix-and-match their own custom meal, but these kinds of items often are less dependent on expensive proteins and carry lower food costs. A two- to four-ounce portion of steak would never fly as an entrée, for instance, but it’s more than enough in a flavorful salad or a sandwich. Put that same portion of meat into an appetizer satay, and you also open up the possibility that your guests will order additional items to build a whole meal.
If it’s appropriate for your menu concept, add sandwiches and burgers to your entrée selection for an item that’s lower cost—to both you and your customers.
Get Started: Shrimp is a luxury ingredient, but the portion size is small in this super-flavorful Shrimp & Cheese Grits recipe.
Investigate alternative sources of protein – Not for vegetarians, per se, but for any customer who’s looking for something different or a little lighter. This includes recipes centered on eggs, cheese, beans and lentils, protein-rich grains like quinoa, and other plant-based proteins such as tofu and seitan. This is especially true for meatless versions of popular menu items. Veggie burgers, for instance—whether patties or whole portabello mushroom caps—appeal to dieters and the budget-conscious, as well as to customers who eschew meat for ethical reasons. Bean and cheese dishes can be flavorful, unusual, and exciting in fact, many ethnic cuisines heavily feature specialties that are meatless, or that use meat as more of a condiment. And many egg recipes are versatile enough for every daypart.
Poke around in international and vegetarian cookbooks and on websites for meatless recipe inspiration.
Get Started: Introducing ethnic menu items can be intimidating because of the prep and ingredients involved—unless you rely on Maggi Thai Style Red Curry Paste and Minor’s sauces and flavor concentrates.
How To Practice Food Cost Control To Undo The Effect Of Rising Food Prices
Food cost control may be defined as the process of managing the cost of raw materials and ingredients in a restaurant so that the rising cost of food does not influence the restaurant budget beyond controllable levels. In simpler words, it is the processes undertaken to keep food costs in check. You can practice food cost control and manage the food prices at your restaurant through these methods:-
(i) Sales Forecasting
Sales forecasting refers to studying your average sales data of some months to chart out your average sales, expected footfall and fast-moving dishes under normal circumstances. Sales forecasting is central to food cost control as it will give you a rough idea of how much inventory is moving and what is getting you money. Once you understand this trend, you can tweak your ordering strategy, revise your menu in a way which saves you money and only order items that are actually needed at the correct quantities so that wastage at inventory level is minimal.
(ii) Inventory Management
If you manage your inventory right, you can beat the rising prices no matter what. When you manage your inventory, you reduce wastage, order only what is needed, use your ingredients well in time and order the correct quantity of raw materials. But managing inventory to this level manually can be taxing, and so we suggest that you leverage some technology. POSist’s inventory management module is an all in one feature that you would need to get your raw materials in place. The stock-in and the stock-out feature will tell you your stock at the beginning and the end of each day. Using this feature, you can deduce which ingredients get used the most and order them in bulk to save money. At the same time, you will be able to manage your perishable items better.
The POS integrated tool will notify you as an ingredient nears its expiration date. With this knowledge, you can push the dishes with the said ingredient to recover your investment. The variance report feature will also give you the variance between ideal and actual stock consumed at the outlet. With these reports, you can track and manage wastage, improve your yield from each ingredient and also keep a close check on internal theft.
As you manage your inventory, your wastage will reduce, and you will order only what is needed, thus optimizing your ordering process and reducing your food cost.
(iii) Yield Management
The amount of product you can draw from raw material is called yield. For example, to make chicken steak, only chicken breasts are used. Rest of the chicken is of no use for the dish. Hence the yield of chicken is reduced to chicken breasts. Yield management is the process of maximizing yield from a single ingredient so that more dishes can be made using the said ingredient and the need to order more is reduced.
You can manage your yield by effectively storing and accounting for the ingredients that have been used to produce a single dish so that the same raw material may be used for other dishes as well. At its core, yield management is understanding how much of the raw material is actually going to be used for preparing a menu item.
Practicing yield management at your restaurant will lower the need for raw materials required to produce the same amount of dishes, thus reducing your food cost.
(iv) Portion And Recipe Management
Following standard recipes and portioning your food will also conserve your inventory, reduce the need for extra raw materials and thus bring the food cost down. Recipe standardization is followed all through the US but is mostly seen in QSRs. While other formats also have set recipes for their dishes, the control is not as strict. This creates loopholes, and the ingredients are then susceptible to wastage which will only increase your food costs. Hence we urge you to invest in a recipe management tool which can be integrated with your POS software.
At the same time, practicing portioning at your restaurant is crucial. Not only is it necessary for customer satisfaction and to keep wastage at bay, but it also helps in controlling food costs. The most profitable portion size combinations can be determined using food costs and customer satisfaction. Once you know the portion that you must give for each dish, train your staff to stick to it. Over-filling or under-filling plates will impact your inventory figures and all your price control calculations and strategies. At the same time, it will also lead to either wastage or customer dissatisfaction.
(v) Waste Control
Finally, to keep your food cost in check, you must keep your food waste in check. Food wastage will not only add to your food price and inventory needs, but it will cost you double. This double costing happens as now more raw materials will go into producing a single dish while the wasted ingredients will have to be re-ordered. To manage food waste in your restaurant kitchen, start by tracking where the food is wasted. Divide it into categories and start by controlling one category at a time. The categories in which food waste can be divided are:-
As your wastage will reduce, your reordering needs will reduce as well, since you will be able to use the same batch of ingredients to produce more dishes. For some smart food waste management tips, click here .
We know that the economy is bad and it is a difficult time for restaurant owners in the USA right now. Follow these smart food cost control techniques, and you will surely see a rise in your restaurant profits and a dip in your restaurant food costs.
How are American Consumers Handling Rising Food Costs?
Consumers are coping with rising food prices in various ways. A recent poll shows people are clipping coupons, buying fewer name brand items, and shopping at discount/warehouse stores in an effort to keep the household budget in the black. Results of the poll are as follows:
Additionally, several consumers left comments in response to the question about how they are coping with food prices that are increasing. Here are some of their comments:
- “I still go to the same stores, but I definitely buy more store brands. A person has only so much money to work with and you gotta eat!”
- “I’ve always clipped coupons bought generic brands. I also grow veggies in pots or in the garden.”
- “I think it’s a shame hard working citizens have to work twice as hard to keep the same shirt on their backs.”
- “Here in the U.S. we spend only 10% of our income on food compared to other countries that are as high as 90 percent. As a farmer, we strive to grow safe, high quality food. The cost of processing and transportation has the biggest effect on the prices we pay as consumers. I urge you to buy fresh products and local products. 82 percent of U.S. agricultural products are produced on farms owned by individuals, family partnerships, and family corporations. Non-family corporations account for only 18 percent of U.S. ag product sales.”
- “If a product does not say ‘Made in the USA’ we do not purchase. We use coupons and mostly shop at warehouse stores. We eat fresh fruit and vegetables grown in the USA.”
- “I am a dairy farmer and small egg producer and our income has risen very slightly and is not covering our feed costs. Farmers are not to blame for rising food costs. If people truly knew how we raise our animals to ensure the most safe, affordable food in the world they wouldn’t think we were so evil.”
- “We are older and try to eat as healthy as we can but it is hard to pay the high cost of fresh fruit and vegetables. We try to use coupons or buy generic brands.”
- “I grow my own vegetables and can them. I will soon look into buying from local ranchers as well.”
- “I don’t have to do anything differently because I’ve always clipped coupons, shopped sales, and bought off-brands. I think most Americans could probably go with eating less food anyway.”
- “Something has to be done about raising corn for ethanol. It doesn’t lower the cost of gas but food prices are rising.”“We ain’t seen nothing yet. Wait until the cost of the new ‘food safety’ bill takes hold.”
We asked Dr. Helen Jensen, an economics professor at Iowa State University, about the survey results and her thoughts on how American families are dealing with the higher cost of food. Click below to hear her comments.
Most years see major events that impact food prices. Some recent years that saw such impact include:
2020: The COVID-19 Pandemic
In 2020, the COVID-19 pandemic sent food prices up by 3.3%. Most of this was driven by a 4.4% increase in meat, fish, poultry, and eggs. Dairy products, up 3.8%, were also a substantial contributor to the rise.
The federal government declared a national emergency in March. Many people stocked up on groceries and began cooking at home instead of eating at restaurants. This escalated demand for food-at-home. Exports and imports were disrupted as countries closed their borders to stop the spread of the virus. Food supply chains were constrained, leading to lower supply.
Meat, fish, dairy, and eggs were especially affected by the shifting economy brought on by the pandemic.
2018 and 2019: Climate Disasters
Food prices rose 1.6% in 2018. Hurricanes caused temporary price spikes in the production of pecans and chickens.
In 2019, food prices rose by 1.8%. The U.S. experienced 14 separate billion-dollar disasters including three major floods, eight severe storms, two hurricanes (Dorian and Imelda), and one wildfire event.
2016 and 2017: Dollar Impact on Food Costs
In 2016, food prices were expected to rise by 1% to 2%. Instead, they rose by 0.3%. Egg prices fell 21.1% from their excessive 2015 level, contributing to a lower-than-expected rise in food prices.
Food prices rose 0.9% in 2017, nearly hitting the USDA expectation that food prices would rise 1%. Producers were able to export more food, limiting supply and increasing domestic prices.
Oil prices also were expected to remain moderate in 2017. They rose instead, increasing trucking costs.
2015: Impact of Avian Influenza
Prices increased by 1.9% on average. Beef and veal prices rose 7.2%. Egg prices skyrocketed by 17.8% because of avian influenza, but fish and seafood prices dropped 0.9%.
2011-2014: How Calamities Affected World Food Supply
Food prices rose 2.4%. Prices of specific types of food rose thanks to weather conditions. For example, drought in the Midwest drove up beef prices by 12.1%. The California drought, one of the worst on record, resulted in higher prices for fresh fruits, vegetables, and nuts. Fresh-fruit prices rose by 4.8%.
Food prices rose 1.4%. Beef and veal prices rose 2%. The 2012 drought forced farmers to slaughter cattle that had become too expensive to feed. It takes several months for commodities prices to reach the grocery store. As a result, most of the drought's effects occurred in 2013. The hardest hit were fresh vegetables and poultry, which rose 4.7%.
Severe droughts increased food prices, which rose by 2.6%. Prices for beef, veal, and poultry rose significantly, but prices fell for fruits and vegetables. One reason was higher transportation costs as oil prices hit their second-highest price since 1987. That was caused by threats of military action when Iran threatened to close the Strait of Hormuz.
Prices rose by 3.7%. Massive wildfires in Russia devastated crops in 2010. In response, commodity speculators drove prices even higher to take advantage of this trend. They drove corn, sugar, and cooking oil prices higher. Droughts in the southern United States reduced hen output, raising egg prices. Japan's earthquake reduced fishing capability, lowering seafood prices.
2008: The Great Recession
Food prices rose 5.5% according to the Consumer Price Index for food. It was the largest single-year increase since 1990.
Commodity speculators caused higher food prices in 2008 and 2009. As the global financial crisis pummeled stock market prices, investors fled to the commodities markets. As a result, oil prices rose to a record of $145 a barrel in July, driving gas prices to $4 a gallon. Part of this was caused by surging demand from China and India, which escaped the brunt of the subprime mortgage crisis. This asset bubble spread to wheat, gold, and other related futures markets. Food prices skyrocketed worldwide. As a result, food riots by people facing starvation erupted in less-developed countries.
Outlook for the future
If the principal driver of higher American drug spending is higher pricing on new, blockbuster drugs, what does that bode for the future? “I suspect things will get worse before they get better,” Ms. Sachs said. The push for precision medicine — drugs made for smaller populations, including matching to specific genetic characteristics — may make drugs more effective, therefore harder to live without. That’s a recipe for higher prices.
Democratic politicians have tended to be the ones advocating governmental policies to limit drug prices. But recently the Trump administration announced a Medicare drug pricing plan that seems to reflect growing comfort with how drug prices are established overseas, and there’s new optimism the two sides could work together after the results of the midterms. Although the effectiveness of the plan remains unclear, it is clearly a response to public concern about drug prices and spending.
CVS also recently announced it would devise employer drug plans that don’t include drugs with prices out of line with their effectiveness — something more common in other countries but unheard-of in the United States. Even if these efforts don’t take off rapidly, they are early signs that attitudes might be changing.