WATT PoultryUSA - December 2014 - 22
22 ❙ WATT POULTRY USA ■ CUSTOMER PROFILE/MARKETS reduction strategies: » Resize portions of the product that is causing the cost increase » Modify the specification of the offending product and/or other unrelated products » Use ingredient "extenders" (cheese, seasonings, etc.) » Apply pressure on suppliers to control costs » Increase the intensity of commodity hedging and risk management activity » Reduce costs of other non-food items in restaurant P&L - cost reductions of last resort are labor (second to last) and facilities maintenance (last resort) » Combination of the above Cost-reducing product modifications can, in some cases, be attractive to foodservice patrons. "One such offering at Burger King is a stuffed burger that includes cheese, pickles, pimentos, and a number of other things in the burger sandwich. There's a lower percentage beef and higher percentage of other things. The sandwich actually has a higher weight, but cost is reduced and it can be sold as a premium product." More hedging and risk management In the current cost-inflationary environment, Burger King has stepped-up activity in purchasing organizations for forward contracting and hedging of raw materials. This is usually done along with manufacturers of finished goods. It includes cross hedging raw materials with futures contracts plus buying and holding of raw materials for future manufacturing. "RSI is doing a lot more proactive forward contracting for raw materials, particularly on non-beef products like chicken and eggs, dairy products and others," Hoffman said, "However, opportunities to cross-hedge, forward contract or implement fixedpricing contracts are more limited Maximize performance and profitability with the latest breakthroughs in feed enzymes Stay informed with the launch edition of INNOVATINGFEED Find the latest edition here: www.innovating-feed-dsm.com See us at IPPE booth A1529 Powered by
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