The Bread Box-Blog


Food costs

Food Costs Rise, Revenues Fall in 2016

Over all, food costs for publicly traded restaurants fell in 2016 as commodities dropped from record high prices. According to a quarterly analysis of restaurant industry performance from consulting firm BDO, the cost of sales in restaurants fell 0.6 percent to 29.1 percent of revenues on average in 2016. Dustin Minton, a partner with the firm, asserted that commodities are in restaurants’ favor. “Everybody’s good at managing cost of sales,” he stated. This is, ostensibly, good news.

Favorable Food Costs Offset by Falling Revenue

  The bad news, however, is that these favorable food costs are being offset by high labor costs for all companies in the food business. Restaurants and in-store bakeries alike face the same new challenges related to labor costs. These challenges arise as the result of a confluence of factors. Low unemployment rates have given rise to intense competition for employees. This combined with health care costs, overtime regulations, and increases in the minimum wage drive up wages and labor costs across the board. Interestingly, fast-casual chains experienced both the highest increases in costs and the largest decrease in same-store sales.On average, fast-casual chains’ same-store sales fell by 1.4 percent in 2016, and labor costs increased 1.3 percent to 28.4 percent of sales. One possible explanation for this is that many chains, such as Shake Shack Inc., are vigorously increasing wages to lure in better employees. These issues plague the entire food sector.

Reduce the High Cost of Labor and Simplify Your Supply Chain

  Baker’s Pride takes an innovative approach to reducing the high cost of labor that does not sacrifice product quality. We produce baked goods for in-store bakeries and tailor our products to meet customers’ exact specifications. Our customers avoid the high labor costs associated with baking from scratch by outsourcing to us, thus drastically simplifying their supply chains. Baker’s Pride also helps to reduce costs by providing co-packing services and private labels.Our teams of professional bakers produce a high volume of high quality products at high speeds. Baker’s Pride facilities utilize traditional baking methods while embracing modern technologies to meet the unique needs and preferences of in-store bakeries from coast to coast. To learn more, visit our homepage or contact us today!