Viewpoint — June 2008
The Times They Are A-Changin’
Written by Bob Gershberg, Managing Partner Dick Wray Executive Search
Oh, how we’d love to think high energy costs and soaring commodity costs are going to trend down as part of the cycles we’ve often seen in the past. I regret to be the bearer of bad news but $4 per gallon gasoline is here to stay and so too are lofty commodity costs as well. Demands from emerging markets in our new global economy have changed the rules. High distribution costs and ethanol production will assure continued upward pressures. We may see retreat from highs but year over year commodity costs will be higher.
Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone.
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'
According to the National Restaurant Association wholesale food prices increased 7.4% last year (versus a projected 0.7% increase), the largest spike in the past three decades.
USDA recently increased its forecast for FY08 food inflation to 5.5% versus forecasts such as the NRA's that projected a 1.3%.
Our industry leaders and pundits speak of the “Perfect Storm” as though it will soon pass. We think not. We are well advised to recognize these pressures are here to stay, but prudent to recall the basics of proper food cost control and train best practices constantly.
Work hard on your cost controls and be consistent with them.
And remember….operations excellence wins every time!
All the best,
Bob Gershberg |Managing Partner|
bob.gershberg@dickwray.com
(888) 875-9993 ext 102
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