Foodservice Distributor Electronic Reports - What to ask for & Why

Electronic Reporting comes in many shapes and sizes. Depending on the Foodservice Distributors that you purchase from, the complexity and breadth of information that is reportable vary greatly. Large broadline distributors such as US Foods and Sysco, have the ability to provide foodservice operators with detailed information on purchases. Sysco many times refers to their usage reports as Satrak’s which simply stands for Sales Tracking. Other popular titles which for all intensive purposes mean the same are velocity reports, volume reports, usage reports, historical data reports, purchase volume reports and descending dollar (descending $) reports to name a few. These reports are easy to run and free of charge and hold a wealth of information.

What to ask for: when asking for velocity reports, it is extremely helpful to request reports in excel (.xls) or (.csv) formats. Reason being is that you can open the reports in an excel spreadsheet and manipulate the data using any and all excel functions. I find the Data-Sort function to be quite helpful in moving large sections of information around quickly and accurately. Besides format, there are also certain pieces of information to request within the report. Keep in mind that different distributors, whether broadline food distribution suppliers, vendors such as Edward Don or Dade Paper and manyother produce, meat and niche purveyors refer to the same information under different headings. For any report you will have to also ask for a specified time period. For Example: 01/01/09 to 06/15/2009

This list is what I request on reports from Vendors:

SUPC or Distributor’s Item Code #

Mfg ID – Manufacturer ID #

Vendor Name (This tells you which manufacturer is behind your Distributors Branded lines of products)

Vendor #

Brand

Item Description – Item Name

Pack Size

Case Qty – Case Quantity – Volume – Usage

Splits (Reports how many individual items you purchased from splitting open a case)

Catchweight (the amount of pounds you purchased of a product)

Total $ - Total Sales

Average Price – This is the average price you paid for each individual item over the reporting period

With this information comes the ability to uncover information within your foodservice establishment. First, from an owners perspective it is nice to view everything your staff orders from time to time. Also, having access to historical trend information with volumes and pricing information for the items in which you purchase, you are provided with accurate knowledge as to which vendors to contact in order to contract on your high use items. With this report, you simply sort into a descending $ format, take your highest use items which will inherently contain the most leverage, convert splits and catchweight items to realize the accurate Average Price Paid over a period time, and you know have the necessary information to contact vendors, brokers and or manufacturers with regards to contracting on food and non/food items.

Another nicety is being able to uncover the manufacturers behind branded labels such as Pocahontas or Sysco Imperial or Sysco Reliance products that is derived through the vendor information from the report. Pack sizes help you in converting purchases when costing out a menu or new recipes. Pack sizes used in conjunction with average prices can give you a platform when considering the Yield Value of comparable products. There are many instances where a more expensive product is less costly because of the usable portion. For instance, the “Book of Yields” CD-Rom version comes with a table of over 200 different yield amounts in Ounces for 6/#10 Cans. Splits have their own set of difficulties depending on your program with various distributors. Most distributors up charge products for splitting a case and selling it to you. However, if you have a distribution agreement specifying this does not take place than you should be okay if you have auditing capabilities. Utilizing this report will help you to figure out if you should have just purchased a case of olive oil last month or really ordered 6 individual Gallon bottles. Obviously cash flows may play a role in certain purchasing choices.

One last comparison that I personally like to watch is a price variance report at the end of each month. With the reported information from month 1, I compare the like items purchased in month 2 in a side by side comparison to see the price increase or decrease for every single like item purchased. Honestly, for those operators saying there is no time for this nonsense, with some basic excel knowledge this comparison takes under 5 minutes to generate each month. The price variance report in addition to $ increases and decreases helps to uncover trends. If your report shows that butter, eggs, milk, cream and sour cream all increased from one month to the next, then that is pretty good evidence of how the entire dairy market is reacting under certain market conditions. The information provides a good lead in to identifying market trends and increasing your foodservice education.

Electronic Usage Reports provide information which leads to knowledge. And as the old adage goes – Knowledge is Power!

Wilton Marburger

www.foodservice-friends.com

Costing Out Soda & Free Refills in Foodservice - How to Price Soda

A traditional box of syrup or B I B (bag in the box) holds 5 gallons of syrup. Let's say a five gallon BIB of your favorite Cola costs $50. The ratio of syrup to water is 5 to 1, meaning for every gallon of syrup served, 5 gallons of water is also used. In other words if you serve an entire BIB to Foodservice customers you have served 5 gallons of syrup + 25 gallons of water for a grand total of 30 gallons of product. As we know, there are 128 oz in a gallon. Therefore, 128 oz x 30 gallons yields 3,840 oz of product. To take this one step further, I am accustomed to getting around an 98.5% yield out of each BIB. Because I pay for 100% but only use 98.5%, my costs increase concurrently. To figure out the real usable product we will take 3,840 oz x 98.5% and the true amount of product to be sold is now = 3,782.4 oz.

To figure our soda cost we will need to uncover the $ cost per ounce and apply that to the soda sizes you offer. We will use a 20 oz beverage for this calculation. Knowing we get 3,782.4 oz out of a 5 gallon BIB we will divide into this quantity of 3,782.4 oz into our $50 BIB cost. Therefore, $50 / 3782.4 = .0132 This tells us that each oz of served product costs us $0.0132

For a 20 oz soda we will now take our pour size of 20 oz x $0.0132 and get $0.264 or basically 27 Cents per 20 oz soda. Now lets consider ICE! If you fill your 20 oz cup with ice to the brim, you will only be pouring about 8.75 oz of soda into the cup. Realistically your soda cost will only be 8.75 oz x $0.0132 or 12 cents per unit sold. To finish the cost out lets say we have a 7 cent foam cup, 1 cent lid and 1.5 cents straw to complete the package. Although these last three items will most likely be accounted on your Profit & Loss statement as paper goods, let's add them to the soda cost to realize the total cost involved with selling a 20 oz soda.

20 oz cup of soda with ice requires 8.75 oz of product or $0.12

20 oz foam cup cost $0.07

Lid for cup costs $0.01

Straw costs $0.015

Total Cost = $0.215 or rounded up $0.22 per soda

Next, take your sell price and subtract your per soda cost to realize gross profit. If you sell the 20 oz soda for $1.25 then you make $1.03 in gross profit and your attributable NA/BEV cost for the soda is $0.22 / $1.25 = 17.6% (18% to 20% is very common for Soda)

Refills

Lets assume that you see 60% of your soda-buying guests getting refills. To figure in this additional cost lets go back to the soda requirements in the first cup. We figured with ice that we would need 8.75 oz of soda in a 20 oz cup. Two cost busting scenarios will now happen. The guest will refill the cup with more product and almost always there will be less ice to take up space this time around. First, because of melting ice we will boost our soda requirement on refills to 10 oz as you can almost without fail measure this yourself and see that the requirements will be around 1.25 oz greater to fill the cup. What we have just determined is every time you sell a soda you are really selling 8.75 oz of product + (60% of guests x 10 oz) In other words 8.75 + 6 = 14.75 oz. Now we take our 14.75 oz x $0.0132 = $0.1947 or 20 cents a soda.

20 oz cup of soda with ice & free refills requires 14.75 oz of product or $0.20

20 oz foam cup cost $0.07

Lid for cup costs $0.01

Straw costs $0.015

Total Cost = $0.215 or rounded up $0.32 per soda

Refills are very popular in a number of establishments and there are certainly nothing wrong with them, many guests love it. Just make sure to reconsider your sale price to keep and ideally retrieve more gross profit and keep you soda cost around that 18% to 20% mark. If you priced your 20 oz soda with free refills at $1.75 then your gross profit would increase and you would retain $1.75 - $0.32 = $1.43 of GP$ Also, your % NA/BEV cost of goods for the soda would now be $0.32 / $1.75 = 18.3% Makes cents right!

Using Up Foodservice Inventory to Sustain Cash Flow

In Foodservice, inventory at it's roots are products purchased in order to prepare and sell for more money than what you paid for them. The variance between sales price and cost is gross profit. Some foodservice establishments have large inventories that become stagnant for a number of reasons. First, many catering companies purchase large quantities of products, whether it be food, beverages or disposables to serve functions with specific menu and service requests. Many times these purchases create challenges as large parties sometimes drop the number of guests or cancel functions altogether leaving the caterer with reduced cash flow and an increased inventory. This problem multiplies overtime leaving goods that were purchased 2 to 3 months prior sitting on the shelves and becoming lost and forgotten. This problem creates an opportunity as the goods sitting on the shelves from prior months have already been paid for. In other words, they can be viewed as free goods. Herein lies an opportunity to create new with old.

Steps to to use up Inventory to Sustain Cash Flow:
1) Have your team collect usage reports from vendors for the past month. This will tell you everything you bought to sustain current and upcoming business for the month period.

2) Have your team create a list of everything in your establishment that was not purchased over the last months period and how much you have on hand. This list will give you a "pantry" of goods that you need to get creative with.

3) Assess the list and challenge your team to create new menu items, presentations and sales techniques to sell the packaged "old goods" to recoup the cash sitting on your shelves.

You can use this opportunity to create an exciting challenge with possible rewards for your staff. Depending on the size of your excess inventories, it can be helpful to understand the amount of days of inventory you have on hand and also your inventory turnover ratio. More on these calculations later.