Combating the Trickle Up Effect

How do you keep food costs down and customer counts up in an economy where price increases outpace wage increases, where consumers are spending less because the basics are costing more, when the phrase, “When life deals you lemons, make lemonade,” seems more like a national anthem than an old saying?

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In February 2008, the average price of gas was a third higher than it was just a year earlier—the highest ever recorded at the beginning of a year according to the AAA. Increasing transportation fuel costs have caused food costs to trickle upward and have created greater demand for ethanol, which in turn has caused our food grain prices and commodities to trickle upward too. Increased heating fuel costs have raised the cost of living and doing business. As a result, a gallon of diesel fuel and a gallon of milk are about the same price.

According to Bureau for Labor Statistics from the National Restaurant Association (NRA), wholesale food prices rose 7.6% in 2007, the highest one-year jump in a generation (27 years), while menu prices grew at half that rate, just 3.7% overall. According to Technomic data, in 2007, 100% of manufacturers took price increases, on average 6%. And economic indicators—rising unemployment, more mortgage foreclosures, and waning consumer confidence—point to a slow 2008.

So what’s an operator to do in light of all of this gloomy news? Look on the bright side and make some lemonade, of course.

Tyson Food Service is committed to helping their customers keep the hearts of their menus beating strong during these uncertain economic times. The company’s Ideas @ the Heart of Value series of newsletters and microsites will help operators embrace new opportunities during these tight times with a refreshed sense of optimism despite what the experts say.

The Forecast: Partly Cloudy with a Silver Lining

One thing is clear; people need to eat, and work and lifestyle pressures certainly haven’t provided them any more time to cook at home. However, they are looking for ways to optimize their budgets while eating out. This opinion is shared by the NRA, which “anticipates…an ever-increasing demand for restaurant services,” and says that “although growth in 2008 will be more modest than in previous years…the industry is expected to post a real sales gain in the coming year.” Tyson Food Service is committed to helping chefs make that come true, to help them find silver linings among all the gloomy predictions.

For the sake of economic stewardship and distribution efficiency, Tyson Food Service will publish its Ideas @ the Heart of Value series electronically. Each volume will address a value proposition and offer menuing ideas and downloadable merchandising materials to use to support the users’ promotion of those items on the menu. The first of the six platforms is the Value Menu, and it offers ways to make this menu area work across many segments of business. These ideas are definitely not limited to QSR applications. The information is free to any operator who signs onto the website. The theme of the first volume is The Buck Stops Here, and the web address is www.buckstopshere.net. In addition to complete recipes and pricing suggestions, there are downloadable PDF files at the site that can be printed to promote the recipes as LTOs or regular menu items.

Each of the six value platforms is intended to help operators retain customers, show good value, and demonstrate that they understand their customers’ challenges too. Subsequent volumes will be made available on a monthly basis, and those who register at the site or through online advertising will be notified of the web address and subject upon publication. Upcoming value subjects range from affordable luxury to meal sharing, takeout to smaller portions. Readers can provide feedback and share their value experiences at fsconcierge@tyson.com.

According to Tyson Food Service, their purpose is simple. They want to create an open dialogue about generating better value, tighter control of food costs, and to show you value Working at the Heart of Your Menu.™

Go to www.buckstopshere.net to explore the first volume of Tyson Food Service Ideas @ the Heart of Value.