Food-Cost Management a Challenge for Farm-to-Table Concepts

Learning to live with the uncertainties of Mother Nature represents one substantial and inescapable trial for operators when they join the farm-to-table movement. Finding creative ways to manage any increased food costs associated with these fresh, locally sourced products represents the other key challenge. Food costs can spike not only from higher prices but also from unsatisfactory yield and unnecessary waste.

fes1711 feature food cost webAs for Mother Nature, seasonality is one issue, primarily with produce, and the impact of weather on a harvest is another. Joe Ackil is the procurement manager for B.GOOD, a 55-unit fresh-food chain based in Boston. He points out that each unit has its own fresh menu. "In North Carolina, we have a different menu than Boston because the seasonal items are available at different times," he explains. "We'll start a menu item — say, local strawberries — in North Carolina and then work our way up into Boston." This flexibility runs counter to the convenience of fixed menus of traditional fast-food or even fast-casual chains.

One bad spell of weather can damage a harvest, wreaking havoc on supply. Maine wild-blueberry growers project a smaller harvest this year due to dry weather. The Georgia peach crop could be down 70 percent to 90 percent this year because of a warm winter and a late frost. A compromised growing period can severely limit the time that restaurants can feature certain fresh items on their menus.

Despite the inconsistencies of supply, both commercial and noncommercial restaurants offer fresh, locally sourced products. On the noncommercial side, college and university foodservice remains ahead of the curve. As these programs successfully educate students about the benefits of farm-to-table products — healthier, tastier and supportive of the local economy — they ensure that the trend will continue as the students graduate.

Operators respond to the challenge of managing food costs with the same creativity that they apply to the challenges of Mother Nature. The methods of controlling costs, not only when the products cost more but also when they are subject to yield and waste issues, vary significantly. Cost control strategies range from maximizing yield and minimizing waste to portion control.

Yield and Waste: The Max and the Min

One way to maximize yield and minimize waste is to make use of what ordinarily would be thrown out. At Yale University, for instance, Adam Millman, senior director of operations, says the culinary team uses scraps left over after prep of soups and sauces. The team uses mushroom scraps in burgers and makes burgers from pea protein. This innovative approach has even produced rutabaga pastrami.

The menu at Yale is 80 percent plant based. In addition to creative use of trim and scraps, Yale's foodservice team purchases some 100-percent-yield fresh products, like diced onions. Millman chooses to focus on quality, not quantity. Reduced portion sizes of proteins can balance any increased cost of local plant-based products, keeping the overall cost of goods stable. He says Yale achieves "seasonal extension" by purchasing large quantities of certain items, like tomatoes, and freezing them for use in recipes like salsa later in the year.

B.GOOD's Ackil says the chain uses a back-of-the-house inventory management system that produces a weekly waste log documented by staff. This approach to managing costs increases awareness of yield and waste among all unit managers at the company. The reports serve as teaching points in manager meetings to determine the reason behind significant waste. "We'll say, 'Why do you think that happened? Are you over ordering? Are you over prepping?' They understand when they see the numbers. Communication is key," he explains. That type of data management takes a lot of work, he adds, but it creates discipline and focus among the managers with the result of minimized costs.

The UMass Dining Services team also uses a back-of-the-house waste-tracking system. The system has saved UMass three-quarters of a million dollars over the two-plus years the university has been using it, according to Ken Toong, executive director of UMass Auxiliary Enterprises.

When there is waste, the program tracks it by identifying it, weighing it, photographing it, assigning a dollar value and producing a report associating waste with specific staff members. "Basically, we hold the employees accountable for what they are composting," Toong says. This has led to post-consumer waste of less than 9 percent, far less than most programs.

UMass preps most locally sourced products, from produce to poultry, in-house. Only three items, french fries, onions and carrot sticks arrive precut. A local farmer not only grows product but aggregates produce from other, smaller farmers. That farmer also cuts fresh chicken for the UMass team and makes jam from his berry crop.

UMass receives orders five to six times a week to keep inventory levels low. "Overproduction is our number one concern," Toong says. Just-in-time preparation serves as the solution to this challenge. A commissary prepares bakery items and sandwiches only. For all other offerings, multiple individually themed stations prepare food to order. UMass has 35 foodservice locations scattered throughout campus, ranging from residential dining halls and cafes to food trucks and markets.

Christopher Howland, purchasing and marketing manager, explains that UMass' foodservice team prepares food items but does not cook them. Culinary staff finish menu items in front of customers once they order. "We also roast our meat protein in stages instead of all at once," he says. "The bottom line is we want our food to be freshly prepared, just in time and made in front of our customers. This will ultimately reduce waste."

The just-in-time strategy also meets the needs and desires of the students, Toong says. "We did a study," he says. "Students want snacking. They eat six or seven times a day. They want quality, excitement, experience. They don't want a huge amount of anything. They go from station to station and assemble their plates."

As a side note, Toong is convinced that students who eat healthier are happier, are less stressed and have a higher GPA. The university recently conducted another study to prove this, with results to be announced soon. He jokes that UMass students "come for the food and stay for the education."

The Ugly and the Under-Loved

By using the so-called ugly or under-loved parts of fruits and vegetables, foodservice operators can address the issue of yield. For example, a piece of produce may have blemishes on the outside, which traditionally would destine the item for the trash bin, but the insides remain completely usable.

Howland says UMass often uses under-loved vegetables by purchasing "seconds" at reduced prices from local farmers and using the produce in soups, stir-fries or mirepoix. "They perform just as well as the number ones," he explains. "It's a win-win for us and the farmers. They are good quality; they are just not perfect. Otherwise, they are just as good as the number ones."

Last fall, NPR and the Public Broadcasting Service covered UMass' use of dogfish, which they call Cape Shark. Students have grown to love Cape Shark filets, which taste similar to cod and are an extremely underutilized, available and economically attractive species.

Communication is key when introducing unfamiliar foods. UMass uses digital monitors near the serving areas as well as signage and social media to educate students about the origins and benefits of the fresh products.

Preplanning Reduces Waste

For most operators, produce generally represents the number one farm-to-table category purchased by volume. For Ted's Montana Grill, however, it's bison. Ted Turner, co-owner of the concept with George McKerrow, is the largest bison rancher in the world. Over the years, the size of the herd has doubled from 30,000 to 60,000. McKerrow says that close to 40 percent of the bison that ends up being served in the restaurants come from Ted's ranches. "I believe that restaurants ought to cook fresh food from the market that is as close to them as possible," he says.

McKerrow says each restaurant grinds its own bison and beef in the morning for lunch and in the afternoon for dinner. Steaks are also cut on-site, with the exception of bison filets, which come precut. Maximizing yield, he says, requires appropriate forecasting.

"We have an eye on the financial side of things," McKerrow explains. "We make small batches all day long. We don't manufacture 20 pounds of bacon in the morning, and then, when you get your bacon burger at 7:00 at night, it tastes like it's been sitting on the counter all day.

"It's all about proper utilization of what you buy and not having too much on hand for spoilage," McKerrow adds. "We try to minimize the guess factor. We try to understand our flow of business and do proper forecasting so we can do proper ordering." The small batches control the waste and yield factor, he explains.

Proper planning mitigates waste factors altogether. "It's about understanding your weekly meal count, forecasting and then manufacturing in small batches continuously so you never have an overabundance of one thing and a shortage of another," McKerrow says. Ted's has not cut down on portion size; rather, they have raised menu prices as the price of bison has gone up.

UMass' Howland explains how the university's forecasting system works. "We leverage technology, a software application, to do our forecasting for production," he says. "Our managers put in service records for every item that they serve. They will also put in a patron count for that meal. The system then comes up with an acceptability factor based on the number of people served and the number of portions served. This number will then help with the forecasting of the item the next time it is on the menu. When forecasting, the manager will put in the projected number of people to be served for that meal based on the acceptability factor in the system for this item. The computer then generates a number of portions that should be made for that item."

Portion Control Helps Cost and Waste

At honeygrow, a fast-casual, fresh-food chain based in Philadelphia, signature products such as mixed salads and stir-fries are always made to order. Nearly everything from tofu to the eponymous honey is sourced locally. "We do about 1,500 pounds a week of tofu from a company near Allentown, Pennsylvania," says Kyle Brown, director of operations. "Being honeygrow, we also go through a lot of honey." The honey comes from farms in New Jersey and Pennsylvania. The chain also uses fresh-caught shrimp from the Gulf, specifically caught to the chain's order.

Brown feels fortunate that honeygrow has served fresh, local food since the chain's inception. He thinks it is more difficult for a business to switch to this type of food. "Because we started this way, we have tweaked our training and all of our programs and procedures to fit the farm-to-table model," he explains.

The tofu, honey and shrimp do not have the same yield and waste issues as produce or meat, where portion control plays a key role in managing the cost. "Portions are huge for us," Brown notes. "Our dishes are priced by component." They balance out any ingredients that might be pricier because of seasonality with some that cost less. Staff also weigh every protein — shrimp, beef, pork and chicken — and put each portion in a baggie, keeping it refrigerated until use. "We don't want a guest to get four ounces of chicken one day and one ounce the next, so it helps from a guest standpoint. But it also helps us big-time with food costs. I'd say portioning is the number one way we've been able to control costs."

honeygrow benefits from prepping some items at a commissary. "The locations that are within 100 to 200 miles of our Philly home base get commissary deliveries," Brown says. "There is a large kitchen attached to our headquarters where we make all of our dressings and sauces for the locations from D.C. up through Brooklyn. They get deliveries three days a week. The sauces and dressings have a three-day shelf life, and they are used right away. That's how we control yield and waste. The commissary kitchen managers oversee the process."

The fast-casual chain holds managers at each honeygrow unit responsible for ingredient yield and waste management. "Since we use all fresh product, we don't have freezers or microwaves," Brown notes. "Most everything has a 24- to 48-hour shelf life. It's very rare that we throw anything away."

UMass also has smaller protein portions, concentrating on quality. "We have the best quality, whether it is a beef tenderloin or a strip loin of grass-fed beef, and serve 2- to 3-ounce portions," Toong says. "Burgers are 3 ounces. We tell the students that it's quality, not quantity. No one is complaining."

Staff Training is Imperative

"Everything we produce has a step-by-step training tool," says B.GOOD's Ackil. He notes that the process doesn't necessarily require more experienced labor. "The experience comes into play with the buying, inspecting and making sure product is stored correctly."

Brown says honeygrow makes videos to train its prep teams. The videos demonstrate the prep process right down to the angle of the cut. "We have SOPs [standard operating procedures] for pretty much everything. Our trainers and culinary coaches visit the locations at least once a week to check in and make sure things are done properly," he explains.

Is Farm-to-Table Here to Stay?

The consensus among operators of the buy-fresh, buy-local movement is that it represents more than a trend — it's a shift in the way consumers want to eat. These consumers are thought to be more conscious of the nutritional and taste aspects of food produced closer to home and have a desire to know the origins of the ingredients they are eating.

Supermarket guru Phil Lempert, author of The Lempert Report, referenced a Nielsen Fresh Guiding Principles study that highlights the popularity of fresh food for consumers who prepare their own meals. Study results state that "high-velocity fresh retailers are growing faster than their low-velocity counterparts." So-called high-velocity retailers also sell more fresh items, with fresh foods accounting for 49 percent of total sales versus 27 percent for the low-velocity retailers.

Reasoning follows that consumers who buy fresh foods at retail carry that demand over to the dining-out experience, and vice versa, giving a boost to farm-to-table operators and suppliers in both arenas.

Foodservice operators have a more complicated relationship with fresh foods than retailers do, given the former's need to transform these ingredients into menu items. Operators continue to respond creatively to the challenges that purchasing fresh food presents, whether Mother Nature or increased costs arising from supply issues serve as the source of these challenges. A number of in-house strategies benefit food-cost management, such as greater economies through volume.

The greater the purchasing volume, the better the pricing, says UMass' Toong. He remains passionate about involving peers in the farm-to-table movement and adds that it's the right thing to do. UMass holds a Chef Culinary Conference every year that brings in culinary experts to teach and introduce new items to attendees from all over the country. Howland says, "We're trying to be a catalyst for making change happen."

Ackil agrees. "More people are getting involved," he says. "That's going to make it easier and more sustainable. Pricing will not be such a challenge because of increased demand. I just encouraged a competitor to buy from the same produce company as us because it will increase pickup and drop sizes." He adds that buying fresh and local "is the right thing to do. We want to support our local farmers. They are hardworking people, and we want to grow this farm-to-table program." 

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