Industry News | September 23, 2014 | QSR Exclusive Brief

Protective Contracts for Produce Pad Bottom Line


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Cutting costs can be key to the survival of a restaurant operator, but not all are aware of the best options to do so. A recently released survey conducted by purchasing partner Consolidated Concepts found 55 percent of the 400 restaurants questioned did not have protective contracts for their produce supply chain. And another 5 percent were unaware of the type of contract entirely.

“The produce relationship is so unique because there are going to be things that happen in the market place—droughts, heavy rain, it could be anything—and it’s really this insurance policy that’s key,” says COO Bruce Reinstein.

Reinstein says many operators approach purchasing produce like a bidding process, trying simply to find the cheapest option at a given time. However, produce commodities are very vulnerable, he says.

“Produce shouldn’t be looked upon that way; it should be looked upon as a multi-step process,” Reinstein says. “They have to look at quality first, food safety second, … and if they get all that, they will save money.”

And it’s important to look at produce with a discerning eye as there are many varieties even among the simplest ingredient, he says. For example, iceberg lettuce comes in both heavy and light varieties. While a heavy iceberg lettuce has more yield, it isn’t ideal for light dishes like Asian lettuce wraps, Reinstein adds. Determining what variety of a specific produce item is needed will also narrow the pool of growers as many tend to favor one variety over another.

“From there, you want to have as close to a fixed price as you possibly can to your specification,” Reinstein says.

Consolidated Concepts’ quick-service clients include Salsaritas, Mama Fu’s, and Ovation Brands. With this past summer’s volatile prices, the company was able to save its clients big bucks on all varieties of lettuce, Reinstein says. But operators can take their produce program into their own hands, too.

“Operators rely too much on distributors or things that cannot truly protect them,” he says. “When certain commodities go up, it changes your whole bottom line and can affect you the whole year.”

By Tamara Omazic

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