DELCO FOODS
NOVEMBER 2021 VOL. 26, NO. 11
KEEP YOUR CUSTOMERS COMING BACK By Peter Thor, BFC
RAISING PRICES; DO’S AND DON’TS By Peter Thor, BFC Everybody predicted a slow recovery to the economy- true! But once some states opened, political pressure resulted in all states opening within weeks. Pent-up demand, fueled by months of inactivity and government subsidies, resulted in unprecedented consumer demand for restaurant meals. The supply chain of growers, processors, and logistics had been largely constrained for 18 months during the pandemic and is still struggling to return to pre-pandemic production levels. Worldwide shortages also created export demand which lifted prices for most protein and dairy items. Facing higher ingredient costs across the board, restauranteurs are also confronting worker shortages and significantly higher labor costs. The combined result is a crisis not seen in a generation. To work the problem, what actions should a local restaurateur take? What are competitors doing? Can the business survive if costs continue to rise and revenue doesn’t? These questions and more face nearly all operators today. As has been well documented, more than 100,000 restaurants have already permanently closed. Recently, cost basis for key ingredients have increased substantially, getting press calling attention to inflation. In our industry, it is well documented, basics increased year-over-year. Beef + 120% Pork + 16% Poultry + 55% Soy Oil + 110% Pizza Boxes + 35% The key question is whether ingredient costs will stay high, or not, as we enter winter months and vaccination rates increase. Our expectation is “yes” for several reasons. Supply chain issues are not going away as safety and distancing requirements in production facilities are unlikely to change and may become more stringent. Grain and feed costs and labor shortages will limit supply of all proteins, and strong international demand have led to higher domestic prices. (continued on page 2) A PROUD DISTRIBUTOR OF BELLISSIMO
While good food is still the best advertisement, no restaurant operator can afford to ignore the business side of the industry, and this includes creating an effective marketing strategy. Critical for success for independent pizzerias are loyal (repeat) local customers. Your menu is one of the best marketing tools you have, and it costs almost nothing. Refresh it regularly and pay attention to changing costs and new items, adding limited offers, and remove slow and unprofitable items. It’s always good to create some excitement; and one good way is with a contest. Running a contest is great for business in a number of ways. It (continued on page 3)
MARKET UPDATE Dairy
PRICE
LAST MONTH
DIFF
Cheese Blocks
$1.807
$1.797
$0.010
The cheese block market was the highest since January and the barrel maket was the costliest since May. In the last five years, spot butter prices averaged 3.6 percent lower in October.
Beef
PRICE
LAST MONTH
DIFF
50% Trimmings
$1.034
$1.230
($0.196)
Packers put together a relatively robust performance, moving 657,000 head through plants. While we’re looking for continued downside ahead, the better news might be that the 50s broke back below the $1.00 mark.
Poultry
PRICE
LAST MONTH
DIFF
Wings (Jumbo)
$3.092
$3.126
($0.035)
The chicken market is weakening, with the weekly Southern States Parts report revealing a $2.65 whole wing price with the Northeast market holding below the $3.00 area. We continue to look for lower prices ahead. As of 10/15/21
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