With the busiest time of year for restaurants, hotels, and pubs about to move into high gear, here’s hoping that Christmas 2016 brings everyone full tables and happy, well-fed customers.
Without wanting to be a party pooper, though, this year it’s going to be more important than ever for operators to keep a close watch on the prices they’re paying for the food coming into the kitchen in order maximise the profits generated by the meals going out.
That may not sound quite in keeping with the festive spirit, but it looks increasingly certain that many hospitality and catering businesses will be facing some sobering news in the first few weeks of 2017 as the bills for December spending come in.
The warnings being sounded on the impact of inflation have been getting louder. Justin King, the former CEO of supermarket business Sainsbury’s, told the BBC recently that a return to higher rates of inflation is inevitable, as a consequence of the fall in the value of sterling since the pro-Brexit vote in June.
He said: “Around 40% to 50% of what we buy is sourced abroad in a currency other than the pound, so with the current rates of exchange we could expect those things to be about 10% more expensive. And if that’s about half of what we buy, then that means something of the order of 5% inflation.”
Ian Wright, director-general of the Food and Drink Federation, backed up King’s comments with a forecast of food price rises during 2017 of “somewhere between 5 and 8%”. Also joining the debate is a coalition of the National Farmers Union, food producers and retailers, who have warned that the availability of seasonal and permanent employees from overseas is essential to the food supply chain in the UK.
Most caterers will be serving set menus during December, with many of their customers having signed up for the festive get-together with friends, family and colleagues some time ago. That leaves limited scope to vary the menu in order to get the best prices in the market.
There are plenty of examples of seasonal food lines that rely on products sourced from outside the UK. Even a Christmas turkey reared in Norfolk may well have been fed on imported grain. If you buy prepared products such as stuffed meat joints or marinated fish, the chances are that some or all of it is imported, as are many of the fruits and spices in a Christmas pudding. While some suppliers may have hedged their prices in order to hold the line this side of Christmas, others will have no choice but to pass on increased costs to their catering customers.
Even where input costs are already agreed, there are some simple steps operators can take to get the best value from their food spend during the peak December trading period.
- Contact pre-booked groups a day or so before the booking to check final guest numbers;
- Alongside set menus, use specials boards to offer any walk-in customers dishes made from the meat, seafood, fruit and veg that is best value from your suppliers. This can help to offset any dip in GP on the pre-planned festive menu;
- Implement strict portion control on set menus, ensuring all staff know how much of each part of the dish to plate up;
- Offer customers a smaller option for main courses – perhaps with a free top-up of wine for those who take the smaller choice;
- Bring buffet plates out in instalments, rather than put the full amount of food out at once;
- Don’t let kitchen procedures slip at busy times. As food deliveries arrive, rotate stock properly in cupboards and fridges so the shortest date products are always used first.
- Ensure key kitchen staff have a good grasp of margins and GPs when planning; dishes and preparing meals. If this is a challenge, encourage staff to download the FREE Lynx Purchasing GP Calculator App, available for Apple and Android devices.
Any steps operators take to maintain margins in December will make a real difference to business planning for the first few months of 2017, when trade is traditionally quieter and the impact of rising food prices on the catering and hospitality sector will start to become even more apparent.
As always, there will be opportunities as well as challenges. Finding and securing the best deals will take time and expertise, which is where Lynx Purchasing can help. Using our negotiating skills and our network of suppliers, we can get better prices on food and beverages, catering equipment, utilities and specialist services.
We wish everyone the very best for a busy and profitable Christmas, and we look forward to working with both current and new customers in the New Year!
- The FREE Lynx Purchasing GP Calculator App is endorsed by the Craft Guild of Chefs. It helps chefs to monitor margins, particularly specials, using their smartphone or tablet in a busy kitchen. You can download the app from the App Store or Google Play, using these links:
- For iPhones: Lynx Purchasing GP Calculator App for Apple iPhone and iPad
- For Android: Lynx Purchasing GP Calculator App on Google Play