Beating food inflation without compromising on quality or brand

Presented by: Glen Combe

Date: 20th January 2009

‘Beating Food Inflation without compromising quality or brand’Insight into the role e-procurement can play in keeping costs down without sacrificing brand standards or quality.

Who are iTradeNetwork?

2002 Launched in the UK as mymarket.come-Procurement portal for Foodservice in the UK

2006 Rebranded as Makella

2007 Acquired by Amphire Inc.Global provider of SaaS solutions to the foodservice industry

2008 Acquired barbox.comUK’s leading e-procurement portal for the licensed trade

2008 Merged with ITN$229bn of orders handled every yearWorlds largest procurement management systems company within hospitality

•e-Sourcing•e-Procurement•Rebate Management•Spend Intelligence

•Reduction of supply chain costs•Increased revenue•Improved compliance•Improved trading partner relationships

Category Management Approach to Cost Reduction

Range Management

Menu Reviews

Aggregation

Collaboration

Dynamic Procurement

GP ManagementGoods receivingInvoice validationStorage & handlingStock & wastage managementMeal preparation

Performance visibility

Situation Analysis - Where are we today?

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5.00

10.00

15.00

20.00

25.00

30.00

35.00

Bread andcereals

Meat Fish Milk, cheeseand eggs

Oils and fats Fruit Vegetablesincluding

potatoes andtubers

Sugar, jam,syrups,

chocolate andconfectionery

Food productsnec2

Coffee, teaand cocoa

Mineralwaters, softdrinks and

juices

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Situation Analysis - Where are we today and in the future?

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$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Jan

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Mar

03,

200

6

May

05,

200

6

Jul 0

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Sep

01,

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6

Nov

03,

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6

Jan

05, 2

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Mar

02,

200

7

May

04,

200

7

Jul 0

6, 2

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Sep

07,

200

7

Nov

02,

200

7

Jan

04, 2

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Mar

07,

200

8

May

02,

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8

Jul 0

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Sep

05,

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8

Nov

07,

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Jan

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Mar

06,

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May

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Jul 0

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Sep

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9

Nov

06,

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Jan

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Mar

05,

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May

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Sep

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Mar

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May

06,

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Weekly All Countries Spot Price FOB Weighted by Estimated Export Volume (Dollars per Barrel)

ICE Brent Crude Futures (Dollars Per Barrel)

NYMEX Sweet Light Crude Oil Futures (Dollars per Barrel)

1. Staff must take 25 percent less wages

2. We must have no guests

3. No casual entertaining, theatres or outings for pleasure; No taxis; Only third class travelling

4. No wines, spirits or cigars

5. Not one single new article of clothing for at least a year

6. No newspapers except The Times and one feminine weekly

7. If any golf, no caddies

8. No Christmas, birthday or wedding presents

9. Rigid economy in food; no soups, entrees, sweets (crystallized fruits, &c.), or fruit, beyond what is thought necessary for health, except from our own garden; only joints, plain puddings, and simplest food

10.Strict economy in coal, gas and electric light.

The Times, February 3rd 1916

Supplier Cost Base

Re-tender

Margin

Variable Costs

Fixed Costs

Incurred by your suppliers when you place a purchase order, e.g. raw materials

Does not vary in relation to volume sold, e.g. overheads

Case Study

Who?•Multi brand client with annual food spend of £6m•Mixed skill levels across the operating units

Why?•Reduce food costs and the cost of purchasing service provision• Improve visibility•Straightforward ROI model• Improve consistency of brand standard implementation

What?•Change in purchasing service provider•Acceptance of change•Mitigation of 11.36% inflation

•GP Improvement of 0.97% on food purchases, total saving of £568k per annum

•Service fee saving over £150k per annum

• Improved communication, training and operational support to units and more consistent delivery of brand standards

How is the £718k pa made up?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Service Cost Saving

Range Management

Aggregation

Collaboration

GP Management

By taking positive action one operator has managed to avoid the impact of rising food costs being felt so widely across the industry.

What is stopping you from doing the same?

Absolutely nothing!

Thank you!