The Wall Street Journal had an interesting article about the fast food giant, Wendy’s. They decided to launch a new menu that included Blackberries. While it sounds simple enough, that sourcing endeavor took 3 years and involved more than 30 growers. When implemented, this will have a ripple effect on the Blackberry Market.
While operations like Wendy’s, McDonald’s, Burger King and others may not seem like operations that would have any association to a hotel food and beverage operation, in some cases the decisions they make can and do affect your bottom line.
When you consider that McDonald’s alone feeds over 1% of the world’s population on any given day (roughly 70 million people per day) you are quick to understand how decisions they make impact the economy.
Let us take an example of the Avocado. As a chef you decide to make a new menu featuring the wonderful Avocado. The following month the Avocado becomes trendy so a few fast food / fast casual operations decide to create features as well. From the time your menu rolled out you could realistically see prices for your featured product jump from $5-$20 per case over a relatively short period of time. Depending on your price point, this could break your profitability for that menu.
Some brief points to take from this discussion on The Power Of Purchasing Power are:
• Understand the basics of supply & demand
• Understand how large buyers affect the market
• Understand that the food market includes hotel, restaurants, country clubs, B & I accounts, grocery, C-stores, fast food, fast causal……starting to get the point?
• Realize that purchasing power/volumes, not the prestige or quality level of your operation, dictate pricing. The More You Buy, The More Purchasing Power You Have.
• Most importantly, do the research on the items you place on your menus
Until Next Time…
The Boutique Lifestyle Lodging Association (BLLA) is hosting its 2015 Leadership Symposium at the Fairmont Miramar Hotel in Santa Monica, California, from October 21-23. The theme this year is “Boutique Inspiration… Independent Spirit… Lifestyle Leadership.”
Hotel F&B’s President and Publisher, Jeanne Bischoff, will moderate a panel discussion called “Where Does it Come From? The Demand for Local Ingredients” with Geoffrey Sagrans, President of Localecopeia–an organization that connects regional farmers with nearby foodservice operations. Sagrans is also Assistant Director of Materials Management at The Breakers Palm Beach. Additional chef panelists will be announced shortly.
Other panel discussions during the three-day symposium include: Boutique Lifestyle Executives; The Blurring of Brands; Hospitality Tech; Evolving Retail Strategies; Online Travel Agencies and Boutique Hotels; Digital Marketing, Customer-Facing Luxury Product Lines; Boutique Hotel Finance & Development Update; plus much more.
The 2015 BLLA Hospitality Awards gala will also take place during the symposium on October 22. For more information and registration details, visit: http://bit.ly/1LeSQkZ
Buying ingredients here and there from local and regional purveyors, to work into menus, is now common practice, but have you considered arranging with a local farm to more or less be your hotel’s own farm? This type of relationship allows a hotel to blow up the old backyard garden concept to a very beneficial extreme.
Shortly before Executive Chef Adam Mali left the Mandarin Oriental in San Francisco earlier this year to become regional executive chef, Twitter, at Bon Appétit Management Company, we spoke with him about F&B at the hotel—which since has been brought under the Loews umbrella and rebranded as the Loews Regency San Francisco. Regardless the moves made by Mali and the hotel, in its ownership change, since, a key F&B partnership the Mandarin held is a good case study for looking at a bigger picture in local sourcing.
Brasserie S & P at the Mandarin had been known for using fresh local foods on menus. But sometimes a relationship with a supplier can grow beyond mere purchasing. The hotel established a partnership with a farm an hour north called Canvas Ranch, which would grow what the Mandarin wanted.
“We get to suggest things and plan crops together,” Mali told us in February. “The vegetables are some of the best I’ve ever encountered. It goes along with what we’ve been doing in terms of sourcing locally. They’re excited to do this for us. It’s a beautiful farm. It’s coming onto our restaurant and banquet menus. One of the things we do that’s a little more innovative than some is that we’re incorporating this into our banquet menus. Even if it’s a corporate function, people are excited about where the food comes from.”
This type of extreme partnership—essentially turning a local farm into a major, semi-exclusive supplier—is similar to the arrangement at the Omni Homestead in Hot Springs, Virginia, which partners with a local farm to basically be their own personal supplier, rather than just selling them a few things. The relationsihp allowed Mali at the Mandarin to do more local product in banquets, because he could get more quantity, he said.
Think of it as adding a new department to your hotel F&B: the supplier department.
Whether reading about it in the New York Times or discussing it with colleagues at work in passing, you have probably heard about shortages in the Egg Market.
As a quick background on this, a number of chickens have been stricken with the Avian Flu. This highly contagious influenza can kill entire flocks of chickens. Prior to this, one of the last major Avian Flu outbreaks was in China. Many of their farms had poor sanitary conditions causing the quick spread of the disease. Various strains of the influenza virus exist in birds. However, the mutated strains are the ones accounting for the bird kills. Another factor leading to the spread of the disease is the proximity of the flocks to one another. With our wonderful factory farms chickens are basically on top of one another. This allows for the efficient spread of the disease. A New York Times articled cited the killing of some 38 million infected birds.
The primary effect of this decline in supply is with liquid and processed eggs. When you consider that most manufacturers and hospitality operations use some type of liquid or powdered egg product, the impact is far reaching. Buyers are trying to source alternative product overseas. However, supplies from these supply markets take time to arrive into the states.
It is simple economics. Supplies have decreased while demand increases. Eggs are used in countless culinary applications. Add to the mix that egg product consumers are scrambling for alternatives, buyers are trying to stay ahead of the market and a little panic thrown in, we will have to see how the next few months present themselves. Since April, the wholesale liquid egg market has spiked some 300%. Market experts predict much of the same until the supplies are somewhat stabilized. Some reports I have read estimate market stabilization in upwards of 18 months.
The real irony with the story is that shell, or whole, eggs have not seen the same market spikes. Of course this will change with the supply shortages. However, shell eggs provide an alternative. Maybe now is the time to start buying those Free Range Eggs you looked at before? Consideration just needs to be given to the additional labor needs in switching to this specification.
Until Next Time…
Last week I went to my first school foodservice trade show. I did go in knowing who the target audience was. However, by the third aisle that eureka moment did hit.
The first two aisles were covered with pre-made, pre-packaged and highly processed foods. There were beautiful displays of chips, candy & fruit drinks. The chicken nuggets looked great. I believe they did actually have chicken in them. One stand was decorated with multi-colored energy drinks. Soft drinks decorated another booth with very creative marketing. By the second aisle I had passed Tony the Tiger and the Lucky Charms mascot a few times. People were lining up to take pictures with them. I quietly wondered if any of these people ever explored the ingredient list of a box of Lucky Charms. Spoiler Alert!!!…….It is a box of colored sugar with a number of preservatives.
By the third aisle I quietly said to myself….”Do we really wonder why our children are dealing with the health / obesity issues in this day & age?” We all know that children are not as active as they should be. However, a daily intake of pre-made, pre-packaged and highly processed food doesn’t even give some children a fighting chance. The subject of increasing fresh produce into the schools with limited budgets is a discussion for another day. The idea of just providing some basic whole, un-processed foods is not. Just introducing a plain grilled chicken breast over fried chicken nuggets once in a while would not break the bank. It would do wonders for some children who rely on their school meal as a prime source of their daily caloric intake. Some children living in “food deserts” never even see produce unless it comes out of a can. Read more of this >>
During my career I had the unique experience of working for a GPO (Group Purchasing Organization). This particular GPO focused on children’s summer camps. Coming into that position from my former position of procuring caviar, fish from around the world and prime steaks made my tenure at the GPO a real interesting one. Instead of buying Single Malt Scotches or a first growth Bordeaux I was purchasing tater tots, frozen premade pizzas and “bug juice.” We were working with camps that paid vendors on Net90 payment terms and foodservice distributors that knew they were the only delivery option available to some of the camps. Read more of this >>
If I would have told you 10, 20 or 30 years ago that industry giants like McDonalds, Burger King, Red Lobster and Olive Garden (to name a few) were going to someday deal with some of the same growth issues as mid-priced table service operations I would have been laughed out of the room. I would have been told that the industry giants had a business plan that could weather any economic storm. However, these people would have not yet known about the Gen X and Millennial generations. This younger demographic has seen a spike on the economic map. This generation runs at a faster pace. They don’t enjoy the traditional extended meals their parents did. They want instant gratification. This group also desires to know their food; to eat less processed and more real food. They are more focused on what they fuel their bodies with. This younger generation is not afraid to spend a little more money to get what they want.
A number of organizations have taken note. No better example of this than with Chipotle Mexican Grill. This Denver-based fast casual operation has a streamlined menu offering focusing on fresh, real food served quickly. What started as a small operation back in 1993 has grown into a worldwide business powerhouse with a cult-like following (much like that of Starbucks).
In my favorite Q & A format, Danielle Winslow, Chipotle Public Relations and Marketing took some time out of her busy schedule to educate us on Chipotle’s Recipe For Success. Read more of this >>
In August of this year USA Weekend ran a story called “Food is changing: what we’re eating, how we’re eating it and where it’s all coming from.” The opening paragraph of the article discusses where we have come from in our focus on food. The transformation of food in our society has left its roots of being, in some cases, an afterthought to one of greater focus. Today food is discussed, remembered, scrutinized, created, and enjoyed more than ever before. With a greater understanding from the public that “we are what we eat” there is true focus on what we are putting into our bodies. This greater focus will continue to impact how Americans eat and the effects in our industry.
The author of this story asked experts how they see Americans eating in five years. They had some very interesting responses.
The experts felt that over the next few years good food will start to taste better. One of the things keeping junk food manufacturers profitable is the fact that their food is just so much more appealing than healthier options. Another point brought up is that the demand for more local, direct food will increase. As the demand increases the cost per portion will go down; thereby making healthier foods more approachable to lower income families. The next point brought up was with branding. Packaged foods manufacturers have million dollar marketing campaigns for their products. They do it so well that children expect a tiger to give them a high five when eating their sugared flakes or, a leprechaun to paint rainbows around them when crunching on those puffed marshmallow charms. The experts feel that eventually the agricultural and health foods industry will soon catch on to strongly market their own products. Finally, THIS IS THE BIG ONE, Americans are going to finally start to understand that if they eat right (real food) they are not going to have to rely on the diet foods, sugar-free, fat-free, etc.. While it is true that we live a more sedentary life style, a number of the packaged foods we eat contain ingredients that add to the obesity epidemic…..I’m sorry, I shouldn’t have said anything. Big food manufacturers spend a lot of time & money to hide those details. Read more of this >>