Article contributed by Mike Berman, COO, Day and evening/All services
In another era of turbulence, Gerald Ford had been out of office for three full months when he addressed Congress on October 8, 1974, declaring inflation the #1 public enemy. The Ford administration follows Whip inflation now campaign was ridiculed more than effective, but in the equally turbulent 2021 environment, hospitality is well served to organize its efforts and muster all the resources to seriously beat the damaging inflation now.
With food and energy prices leading the pack, the Bureau of Labor Statistics recently released: Consumer price index June 2021 more than another inflationary ripple, the data shows rapidly rising uncontrollable cost tides. Added to the serious labor problems currently facing food service, the impact of these escalating prices is greater in this sector of the global economy ravaged by Covid than in any other sector. As if this wasn’t bad enough, dazzling, stomach-turning June Producer price index peaks serve as a leading indicator that the cost of doing business will only continue to rise, most likely at an accelerated pace. Digging out your old Whip Inflation Now knobs from the mid-1970s won’t help, but there are certainly tons of inflation-fighting strategies and tactics that hospitality professionals can and should adopt.
Market forces will dictate that a significant portion of all rising costs is beyond foodservice’s direct control. Driven by serious supply-demand imbalances, old standbys like bulk purchase discount just don’t carry the same weight in the current era of inflation. Recognizing that a very high percentage of executives have never worked in an inflationary economy – well, in all likelihood, a very small percentage of Total Food Service subscribers even remember Gerald Ford’s WIN buttons – adjusting your budgeting quickly – and planning approach will be critical to successful cost escalation and control. This essential adjustment requires isolation and concentration on manageable expenses, where: aggressive and creative methods for generating more favorable economies of scale determine the results.
As always, smart, extensive use of technology plays a vital role in achieving more favorable economies of scale. Foodservice professionals must quarantine all tasks that create little to no value and relieve (expensive) labor from even marginally time-consuming activities by integrating technology. For example, how many hours does your staff spend each month making service calls or receiving status updates from your service providers? DNASLite, its own mobile app developed by the Day & Nite family of companies in-house lab is an example of practical technology that is sure to deliver more favorable economies of scale.
While volume purchases may not have the same impact, density emerges as the most powerful factor in creating favorable economies. Commercial HVAC, Refrigeration, Cooking and Plumbing Equipment Maintenance, Day & Night/All Service/Popular Plumbing/Performance Air Mechanical spans a wide range of vital categories in traditionally fragmented areas. Multi-site businesses have the opportunity to leverage capacity + reach to take advantage of this consolidated offering as a primary way to reduce inherent labor and transit costs. Reducing the number of suppliers for these necessary functions further reduces the manageable costs of doing business for single-site businesses to large chains.
The guidance of Day & Nite’s internal research team from the early Covid days is even more forward-looking in an inflationary economy. Historically, much of the foodservice industry viewed preventive maintenance agreements as a moot luxury. Energy costs will always be at the forefront of inflation, well-maintained equipment always works more efficiently than machines that break down. Allocating marginal resources for preventive maintenance leads to significant uncontrolled energy costs that everyone is now feeling rising and that will escalate without interruption.
Gerald Ford’s Whip Inflation Now campaign featured a: promise people signed and sent back to the White House. It took nearly a full decade and two presidents later to curb inflation. Let’s learn from history by really beating inflation now – in its earliest stages – by taking readily available, practical steps that are guaranteed to deliver large economies of scale. Email [email protected] to get action from the Day & Nite family of companies and promise to drive inflation now!