Food Costs Predicted to Rise Dramatically During 2011

Multiple events have reduced the supply of certain foods, leading to higher prices for many of the foods on your menu or that are components of foods on your menu. Here is a brief explanation of the issues involved with the supply of six foods:

· Cocoa - the world's largest exporter of cocoa is the Ivory Coast where opposing candidates are locked in a struggle over a disputed presidential election. Both sides are curtailing cocoa shipments to prevent the other from gaining funds needed to run the government. In addition, an explosion at one of the largest cocoa processing plants in Europe has severely reduced processing capacity.

·Coffee - Mexico is the second largest supplier of coffee beans to Starbuck's and other chains. A freeze in the coffee producing areas destroyed about a quarter of the crop, leading to a shortage of high quality beans.

·Corn - The continued diversion of corn to produce ethanol has increased the price of corn, which is a major feedstock for beef, pork, and poultry leading to increased costs of corn, meat, eggs, milk, etc.

·Dairy Products - The Chinese use a large amount of powdered milk while clarified butter or "ghee" is used for cooking in India. Weather-related problems in Australia and New Zealand have badly damaged their dairy industries, resulting in a worldwide dairy shortage.

· Meat Products - As the cost of corn goes, so goes the cost of meat!

· Sugar - An explosion at a major sugar refining facility in the United States has sharply curtained US sugar production while increasing the price of sugar.

These cost increases affect all restaurants. McDonald's has recently announced that these cost increases affect something like 70% of the items on their menu and that they will be increasing prices to compensate. McDonald's is not alone. A recent national survey of restaurants indicated that more than 70% are planning price increases or menu changes in the near future as the whole industry struggles to remain profitable in the face of rising food costs.

If you have not carefully determined the portion costs of the items on your menu and determined your expected food cost, now is the time to do so. We urge all to track their food costs carefully and frequently and be prepared to adjust prices or change menu items as necessary.

Our associate, Phil Belanger, is ready and able to help you set-up and implement an inventory and cost control system. Call us at (413) 774-2786 or (617) 938-8668 to arrange to have Phil help keep your costs in line and under control.

We used to produce this newsletter once every four months. It cost us thousands of dollars in printing and postage to produce. It took time to layout, proof, print, prepare for mailing, and time to reach its destination. By switching to an electronic format we have cut our costs significantly, to the point where we can produce this newsletter monthly.

We produce and distribute newsletters for clients for under $500.00 a month, less that our competition, and less than the cost of a single ad in a major metropolitan newspaper. One of our e-mail accounts has over 4,000 addresses, so they are contacting their clients once a month for less than $0.11 each. You can't buy the paper or envelope to mail something to a client for that little. Furthermore, we can track when the e-newsletter is sent, when it is opened, and when and if it is forwarded. After several years, this client still has more than 24% of his customers opening the monthly e-newletters, even more opening e-blasts - short advertising pieces, and still more open the birthday or anniversary "cards" we send out for this client.

E-mail marketing works. But don't just take our word for it. The research firm Econsultancy recently published a report that stated that 42% of customers prefer to get information about restaurant specials and events in their e-mail compared to only 4% who want it via social networks. Study participants indicated that they were more likely to see e-mails than information sent over social networks. A number of participants said that they had not signed up for the restaurant's social network except by accident, while others stated that their children had signed them up. Since providing an e-mail address to a business requires more effort, there is a presumption of more interest in and greater connection with that business.

If you don't have the time to prepare and distribute your own e-newsletter, contact us to discuss how we can do this for you.

Note: If you are marketing to a "younger" market or if you want to get word of a short-lived special to your audience, by all means use social networks. If you don't have the time or expertise to do this, ask for a volunteer from your "connected" employees and make them responsible for keeping you connected with your networks.

Let's take a little trip back in time . . . Think back a few years and remember the McDonald's ads you used to see on TV. The vast majority of these commercials were for "Happy Meals^TM." Think about this and try to figure out why!

It was necessary to have a car to get to most McDonald's restaurants. If a child wanted to go to McDonald's, they had to get a parent or another adult to take them. So in theory, those ads would bring the child and at least one other person into the restaurants.

Recently, I attended a conference where a young entrepreneur reported on his experience with marketing to children. This young man gave out 300 coupons for a free kiddie cone at his ice cream stand at youth events and school.  Here are his results:

1)    240 of the youth who received the coupons came into the ice cream stand to redeem them. Since the stand was several miles outside of town, each child brought at least one adult with them and perhaps other children.

2)    30 coupons were turned in for free cones. The remaining 210 children wanted something bigger and purchased something more than a kiddie cone.

What are the lessons from this?

·Marketing to the youth market may be very effective in terms of increasing repeat traffic and increased sales.

·Your "exposure" may not be as great as you think it is.

·  Tracking the results of specific activities can help you make better decisions in the future.

We urge you to consider how you could adapt this idea to your business. If you need help with planning the program, preparing the materials, or tracking the results, feel free to contact us for assistance.