Trends in Restaurant Food Cost

2/6/13  |  By: Doug

Every year restaurant owners try to anticipate the trends for the coming year. Although we’re already into February, it seems timely to take a look at some of the trends in restaurant food costs and the causes behind them.

Costs are Rising

A number of factors are conspiring to drive costs higher. Rising energy prices affect the costs down the line, and particularly impact the transportation costs involved in bringing food to your restaurant. As new healthcare rules come online, all businesses will feel the need to pass those costs on in the form of higher prices.

Probably the most important cause of rising prices is the increase in commodity prices. The cost of feeding and keeping animals and properly maintaining crops is going up for a number of reasons. There was a major drought last year, which combined with the increase in energy prices put significant pressure on commodity prices. Importantly, the continued use of corn for energy decreases the supply of corn available for food production.

Local Equals More Expensive

The trend toward "local" menu items continues. Customers today equate local with fresh. The problem with that is the word local has been overused. If restaurants only purchase local foods for the sake of them being local, they often pay more for equivalent product. While local products can help drive sales, the owner or purchaser has to make sure that, considering the additional time and labor involved, not to mention the sometimes lack of reliability, that the local products are worth the extra cost.

Restaurants Fight Back to Keep Food Costs Down

A couple of things that will help keep restaurant food costs in line, regardless of the establishment, are relationships with your suppliers and with your customers. Restaurants are consolidating their purchases and reducing the number of suppliers. In fact, studies that show that by cutting down on the number of your suppliers, and thus increasing your purchases with the remaining suppliers, you can obtain better prices.

With their customers, restaurants are doing more research, asking their what their customers want, and trying to eliminate wasted food. Restaurants and their chefs will have to start being more creative, looking to substitute different, less pricey, ingredients that won’t affect the taste of the meal.

The trend toward higher food costs will put pressure on restaurants’ profitability this year. Restaurants will need to keep a close eye on their numbers, and calculate their food costs frequently, to make sure the bottom line doesn’t erode.

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