Making food that is not to order and that becomes a retail item without a guaranteed sale is a foreign concept to many foodservice professionals.
By Fran Duskiewicz
Here’s a scenario that happens often.
Your favorite source of grab-and-go food—whether it’s a supermarket or a convenience store with dedicated foodservice—continually seems to be out of stock of the item you are there to buy. Sure, if there’s a made-to-order option available, you can have one made for you, but that takes extra time out of your day.
You leave dissatisfied, feeling that you wasted time when your goal was saving time by buying a pre-prepared food item. You also lose trust in what should be your favorite source of foodservice.
Why is this more of a common occurrence than the exception? I believe it has to do with the differences between formal retail and foodservice management training, as well as retail and cost accounting systems. Category management approaches should be considered, too.
Retail Category Management 101 teaches that an out-of-stock is a deadly sin, especially with fast moving items, including perishables such as milk, bread and produce. You lose that sale and you might lose everything else that goes with it, not to mention eroding the customer’s trust. It’s better to experience some reasonable spoilage than to disappoint a customer and lose a sale. In fact, reasonable spoilage is often worked into the adjusted cost of goods and, therefore, the retail price. Retail category management and accounting accept waste as a reasonable risk.
The foodservice world is risk-averse. Risk adds cost and cost is the enemy. While retailers think in terms of gross margin dollars, cost accounting is all about cost percentages. Moreover, c-stores have moved on from being caught up in gross margin percentages, realizing that you must actually sell something in order to earn gross margin dollars.
Making food that is not to order and that becomes a retail item without a guaranteed sale is a foreign concept to many foodservice professionals. It’s counter-intuitive to everything they’ve learned about managing food costs. Therefore, they often become incredibly conservative in managing the grab-and-go sections of their departments. They breathe a sigh of relief when the pre-made items are gone. Why? There’s no spoilage. Instead of making more right then and upping the inventory of quickly moving prepared items the next day, they think “mission accomplished” and do nothing. The goal of maintaining a cost percentage has trumped earning more gross margin dollars.
There’s no one to blame here. It’s simply the intersection of two very different mind-sets and it can be remedied. Someone within organizations with highly evolved foodservice operations needs to create a form of foodservice category management that moves grab and go into the realm of retail sales. And someone needs to take ownership of examining the data generated from those sales and instituting practices that maximize the sales and margin dollars currently being lost. And, yes, also ensuring that customers shopping for those items are never disappointed.
Pre-made food items need to be in the price book with internally created UPC codes, which can be scanned through the point of sale (POS). Spoiled items should be scanned through, also, if for no other reason than to ensure fast moving items aren’t out of stock and that slower moving items are not being prepared at the same production levels every day simply out of habit.
These sound, data management practices—communicated to open-minded, less risk-averse foodservice managers—should result in improved foodservice profitability.
Look at many of our stores at 7 a.m. The parking lot might be full of construction and landscaping vehicles filling up their gas tanks, but also buying lunch from your pre-made section. They may not be near your store at lunchtime, but they still like your sandwiches, wraps, salads or whatever, enough to buy them from you and take them along in the ice chest. You simply cannot disappoint these people.
Or your customers might be a couple of retired guys heading to the beach for a sunset. Guys who want your really great pre-made Cuban or Sausalito sandwiches to eat on the beach. Only the Cuban and Sausalito sections are always empty.
Our industry can do a better job with managing grab-and-go offerings. Our livelihood depends on it.