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Rising food costs: The late night exchange

January 30, 2011

“Pizza, pizza, pizza! Everyday it’s pizza! I get so tired of the pizza that I eat for free as a benefit of working here. So, with a little ingenuity, our late night crew now gets a little variety in our diet. We worked out a little trade with the other late-night restaurants next door and across the street. We exchange a few pizzas for chicken, tacos, burgers and fries. Everybody’s happy!”

While investigating mysterious rising trends in food costs, I heard this kind of statement many times from employees, particularly those working the late night shifts. And no, not everyone is happy. The manager or owner is not happy with rising unexplained food costs. And the late night crewmembers are usually not aware of the negative effect on food cost in making food and then trading it. Exchanging food with competitors may not readily come to mind as a contributor to a food cost problem, nor is it usually addressed in policy.

Proper procedures in documenting the benefit of free or discounted meals for employees state the eligibility of the food, limitations or portions allowed plus the proper documentation or transaction recording of the employee meals.

If the restaurant owner or manager is an advocate of trading food with other restaurants, the proper arrangements should be made with the owner or manager of the other restaurants involved on what are reasonable and fair value exchanges. They also should state the proper policy, procedures, and documentation in recording those employee meals to offset the loss in food costs.

Even with exchange approvals, policy statements and documentation, the lack of enforceable controls will necessitate a tolerance for a negative hit on food cost. If you are investigating high food cost and have secured control of what goes in and out of the back door, and tightened up on cash management, take a look at late night operations, particularly at the possibility of food exchanges.

The early morning manager routines should include inspections of the outside trash corral and the clear trash bags looking for remnants of competitor food containers and bags. If the restaurant is equipped with cameras, take a fast forward review of late night operations as well. You may be alerted to many more issues than your crew eating your competitor’s food.