IFDA SMart Minute: Price is king in foodservice

Jay Whitmer of Cleveland Research will open the 2015 Smart Conference with some perspective from an independent industry research firm. In this final SMart Minute for 2015, Whitmer was asked what he saw as major movements in foodservice.
One item on Whitmer’s mind is that price is king. “Price just matters more than it ever did since the costs of running the business just keep going up. Even though the volatility of food costs has been painful over the last few years, that’s now becoming a more favorable situation for the restaurateur than it was in the recent past.”
It’s the other cost elements like labor and healthcare that are creating pressure on operators, said Whitmer.
“The increasing costs of running a restaurant are something that creates much more of a price discussion. Price transparency just matters a heck of a lot more,” said Whitmer. While Whitmer did not define what transparency means, he did say one of the big concerns he hears from restaurateurs is that prices change so frequently that operators feel they have “to shop things around.”
Cleveland Research recently brought together a “retreat” where different participants in the foodservice chain could have open discussion on issues like digital media and how it affects the dining out decisions of Millenials. Whitmer said one independent operator at that gathering who is quite a force in Cleveland shared that, in recent times, price has become a large issue.
“He said he had never had to really zone in on price as much as now and that his decisionmaking had to change because of that,” said Whitmer.
A second item Whitmer sees is a “structural shift toward contracts and away from everyday street pricing, which has significant profitability indications for all distributors,” he said. Whitmer is not referring to restaurants with two or three units, but regional chains that have built to 20 or more locations. He sees these “mini-empire” successful independents as a significant growth area of the business, and likely a bit of a game changer over the coming years.
That raises some questions in Whitmer’s mind.
“What does that mean and how do you engage them on the front end, how do you service them in the middle, and how do you retain their business on a go-forward basis? That to me is one of the themes I will talk about as a significant shift for foodservice,” said Whitmer.
Take part in this conversation at IFDA SMart 2015. The conference is scheduled for July 12-14, 2015, at the Ritz-Carlton New Orleans, New Orleans LA.
Click here for full conference information.