As commodity prices have leveled recently, we have consumers modifying their food purchases due to much higher prices for many staples. The financial press has featured plenty of articles on the high prices for gold, oil, corn and other key commodities. Many restaurant chains have increased their menu prices to offset the higher cost of goods sold.
In the short term, savvy restaurant managers can boost profit through strategic menu engineering analysis. Imagine your food purchases are 5% higher for the same sales level. If you raise selling prices by 5%, you can cover the higher cost of sales and increase profits by holding overhead and labor costs low. With a check average of $18 and a 33% food cost, your cost of sales is $6 and your gross profit is $12. Raising the $18 by 5%, you would expect a check average of $18.90. The cost of sales would go to $6.30 in the same 5% rise. Your gross profit would increase by $0.60.
In terms of the original $18 check average, this $0.60 is an additional 3.3% of gross margin.
Tampilkan postingan dengan label trends. Tampilkan semua postingan
Tampilkan postingan dengan label trends. Tampilkan semua postingan
Kamis, 21 Juli 2011
Kamis, 30 Juni 2011
Corn Continues To Fall With a 10% Mid-Day Move
We end the month of June, the second quarter of 2011 and the first half of 2011 on a very positive note. At mid-day, corn futures were off 10% today. Speculators have bid corn prices up steadily since this time last year. As global crises provided upward pressure in oil prices, the prices of corn (used in domestic U.S. ethanol) have moved higher. Some of these positions unraveled today as a report cited greater planted acreage.
Earlier this month, corn futures peaked. The correction could wipe out the entire gain in prices for the year if the sell-off continues.
If restaurants leave menu prices alone, the lower corn prices should produce fatter gross margins.
The move lower has also produced a drop in wheat prices. These welcome price drops provide a bit of positive momentum as the industry continues the consolidation begun 3 years ago.
Selasa, 28 Juni 2011
Mid-Year Review 2011
We started the year in rally mode, hit the breaks in spring and enter the third quarter with the first signs of a correction in gas and corn prices. We expect our employment improvement forecast in the Outlook for 2011 will be achieved despite the seasonal bumps in the road.
The Dow Jones Restaurant Industry Index is up 10% since January 1st.
Source: Marketwatch.com
Corn prices, which have risen steadily for a year, corrected recently and this helped the restaurant index regain momentum. We should be above 700 by year end.
Source: Marketwatch.com
If you haven't raised your menu prices to cover the costs, you will continue to experience downward pressure on gross profit. We'd need oil prices below $75 to become optimistic. This is possible but not a lock by any means.
As we see a renewed search for productivity gains, tech companies serving the industry should find the phones ringing in the second half of 2011. The iPad has helped to create some buzz with menu and ordering apps joiningwine list tools in the App Store.
Source: www.topappreviews101.com
Seasonal summer resorts should benefit from pent up demand for real vacations. With geopolitical unrest abroad, the old fashioned American road trip could get a deep discount as gas prices fall post-Memorial Day.
The Dow Jones Restaurant Industry Index is up 10% since January 1st.
Corn prices, which have risen steadily for a year, corrected recently and this helped the restaurant index regain momentum. We should be above 700 by year end.
If you haven't raised your menu prices to cover the costs, you will continue to experience downward pressure on gross profit. We'd need oil prices below $75 to become optimistic. This is possible but not a lock by any means.
As we see a renewed search for productivity gains, tech companies serving the industry should find the phones ringing in the second half of 2011. The iPad has helped to create some buzz with menu and ordering apps joining
Seasonal summer resorts should benefit from pent up demand for real vacations. With geopolitical unrest abroad, the old fashioned American road trip could get a deep discount as gas prices fall post-Memorial Day.
Senin, 03 Januari 2011
Outlook for 2011
I expect 2011 will usher in a new wave of job creation. This wave will take the unemployment rate down below 8% by year end. Some of the job growth will take place in the Rust Belt.
During the holiday season, I traveled to Upstate New York. The General Electric plant in Schenectady was all lit up and there were way more cars in the lot than recent years. GE will be producing batteries. AMD will be opening a brand new chip factory in Malta. The roads have been re-engineered with rotaries to handle the expected traffic volume.
Restaurant dining has become less formal in recent years. I expect this trend to continue with greater speed. Diners want to get out more often than the past few years and they want to be recognized by the management.
On our drive back, we stopped at a restaurant in Binghamton and the owner stood near the door greeting every guest. He was there as we left and we felt the traditional "Thanks for coming! Was everything OK?" seemed 100% genuine. I told him I really enjoyed the salad dressing and rolls. We ordered our salads with oil and vinegar and they offer guests a nice quality extra virgin olive oil and balsamic vinegar.
I'm going to try and patronize independently owned restaurants more this year.
There is a growing awareness of waste in the country. We will see the concern for wasted energy and clean water spread to food. Smaller portions and healthier options will be popular. Whole grain pastas, brown rice, whole grains in bread and rolls and locally grown produce will continue to get visibility in menus.
McDonald's starts the year with $1 for all sizes of coffee and soft drinks. The price pressure on non-alcoholic drinks will continue. Expect your guests to scrutinize their checks looking for prices on specials and drinks. If you price your soft drinks modestly and include the pricing on your menus, the move to complimentary tap water may start to shift back to revenue generating drink options.
With any economic uptick, we can expect market prices to increase. We ended 2010 with higher prices for gas and grains. These markets will be volatile with an upside bias.
I expect the comparable unit sales statistics to be positive in 2011. The strong concepts will see 5% plus growth. Don't expect an immediate turnaround. January is the month of New Year's resolutions which tend to give way around Super Bowl time.
During the holiday season, I traveled to Upstate New York. The General Electric plant in Schenectady was all lit up and there were way more cars in the lot than recent years. GE will be producing batteries. AMD will be opening a brand new chip factory in Malta. The roads have been re-engineered with rotaries to handle the expected traffic volume.
Restaurant dining has become less formal in recent years. I expect this trend to continue with greater speed. Diners want to get out more often than the past few years and they want to be recognized by the management.
On our drive back, we stopped at a restaurant in Binghamton and the owner stood near the door greeting every guest. He was there as we left and we felt the traditional "Thanks for coming! Was everything OK?" seemed 100% genuine. I told him I really enjoyed the salad dressing and rolls. We ordered our salads with oil and vinegar and they offer guests a nice quality extra virgin olive oil and balsamic vinegar.
I'm going to try and patronize independently owned restaurants more this year.
There is a growing awareness of waste in the country. We will see the concern for wasted energy and clean water spread to food. Smaller portions and healthier options will be popular. Whole grain pastas, brown rice, whole grains in bread and rolls and locally grown produce will continue to get visibility in menus.
McDonald's starts the year with $1 for all sizes of coffee and soft drinks. The price pressure on non-alcoholic drinks will continue. Expect your guests to scrutinize their checks looking for prices on specials and drinks. If you price your soft drinks modestly and include the pricing on your menus, the move to complimentary tap water may start to shift back to revenue generating drink options.
With any economic uptick, we can expect market prices to increase. We ended 2010 with higher prices for gas and grains. These markets will be volatile with an upside bias.
I expect the comparable unit sales statistics to be positive in 2011. The strong concepts will see 5% plus growth. Don't expect an immediate turnaround. January is the month of New Year's resolutions which tend to give way around Super Bowl time.
Minggu, 05 Desember 2010
Morningstar Perspectives Features a Knowledge@Wharton Study
Warming up for my Outlook 2011 post, I discovered the excellent Perspectives column on Morningstar.com. This week, they clipped a study by Knowledge@Wharton on Post-Recession America. The study uses information from the recent census.
A startling statistic is the number of Americans living below the poverty level. One in seven people are living on incomes deemed below the poverty level. This is the highest rate of poverty since they made these statistics available in the 1960s.
Friday's unemployment rate increase to 9.8% is another reminder of the very slow pace of the recovery.
Back to the Knowledge@Wharton article, they cite falling incomes and birth rates. The drops were measured using 2009 vs. 2008.
I would characterize the mood of the article as somber but they had a hopeful ending for the poor. They expect the poverty rate to decline quickly as the employment picture brightens.
A startling statistic is the number of Americans living below the poverty level. One in seven people are living on incomes deemed below the poverty level. This is the highest rate of poverty since they made these statistics available in the 1960s.
Friday's unemployment rate increase to 9.8% is another reminder of the very slow pace of the recovery.
Back to the Knowledge@Wharton article, they cite falling incomes and birth rates. The drops were measured using 2009 vs. 2008.
I would characterize the mood of the article as somber but they had a hopeful ending for the poor. They expect the poverty rate to decline quickly as the employment picture brightens.
Langganan:
Postingan (Atom)
