Price increases, order shortages, and manufacturer communications were passionately discussed during IFMA’s Restaurant Live Conversation which took place on February 7, 2023. Moderated by IFMA’s Charlie McConnell, featured speakers included: Tom Hannon, President of Sky Co-op, Cincinnati; and Matt Schweitzer, Chief Revenue Officer for HiBar Hospitality, Austin, TX.
The two mid-size organizations buy for 186 restaurants and have combined annual purchases of $165 million. Sky Co-op is a purchasing co-op for Skyline Chili and several other brands in Ohio and Kentucky; HiBar Hospitality operates Hopdoddy and Grub Burger restaurants in Texas, California, Colorado, Georgia, and other states.
Both organizations are being nimble to offset inflationary price increases. “Our customers just want quality food that tastes good,” said Schweitzer. “And sometimes we are guilty of overthinking.
For a long time, we refused to purchase a less expensive cooking oil because we thought that would affect the taste of our fries. We eventually changed and customers did not notice.”
Hannon pointed out that the reduced cost of auxiliary materials, such as soufflé cups, gloves, and straws are offsetting higher prices on oil, eggs, and produce. Plus, the inflation has caused the company to rethink some historical practices to save money. He said, “We have always printed a secondary bag that goes inside our outer bag. We thought, ‘Why continue to do that?’ Whether in the restaurant or at home, the customer already knows where the food is from.”
Schweitzer said that better communication with manufacturers and distributors is key. “If a supplier tells me he is raising prices, I will immediately RFP the product; no questions asked,” he commented. Not surprisingly, the price increases often shrink or disappear.
Both Hannon and Schweitzer noted that consistent information helps them better manage their businesses. They are okay with a contract that states there will be price increases at a specified time.
Hannon said, “When I have accurate pricing information, I can plan. Surprises are what drive me and other operators crazy.”
Schweitzer blames manufacturers for some of Hopdoddy’s staff turnover. “If they are hired to come to work, unpack and inventory purchases, that’s their job. Opening the order and finding there is no orange juice or mustard causes stress that they did not sign up for. And they quit.”