Food Cost Management
2. Monthly Price Checking
Each month, the price for all items bought both the current and previous month are compared. The goal is to identify items which experienced a larger than expected price change. If changes in market conditions do not explain the change then the supplier will be asked to address the reasons. The goal is to catch price issues between audits and let the supplier know that this customer is watching carefully.
Scott Noar, firstname.lastname@example.org, 856-295-1315
4. Identify Top Spend Items To Lower Costs
Each month we will list the top items that account for the most spend. By talking to your Food Distributor about these items you might be able to find like or better quality products at lower cost. This could have a big impact on your business and your spending. Estimates are that you might reduce your costs by 3% just by improving your pricing on your top 8 - 10 items. Each month's data will be added to the previous data to the relevance will improve over time.
1. Audits of the Food Distributors Costs
Savings for food purchases are based on the supplier marking up the cost by a set percent for each category. This is called a “Cost Plus” program. The price the client is charged is the suppliers’ cost plus a set percent mark-up for each category. See Lowering Food Costs.
ERA will conduct a Request for Proposal process to generate bids at lower mark-ups and thus lower prices. In order to monitor that the suppliers are using the correct percent mark-up as originally proposed in the suppliers’ RFP responses, Expense Reduction Analysts (ERA) will audit the suppliers costs throughout the year. This will insure that the correct mark-ups are being used.
Food prices change constantly. Food Service managers do not have time to check the price of every item in every order. This provides an environment for the food distributor to raise prices to increase profit. While it is impossible to control all prices, ERA uses layers of protection to minimize price excesses. The goal is to not only find errors but also, send the message that prices are being watched. This reduces the chances of errors being committed.
3. Checking Prices Between Locations
If there are multiple locations, each month the prices for non-perishable items purchased at multiple locations will be compared. If differences are found, the supplier will be asked to address the reasons.