Lower food prices may help restaurants gain ground

Two years after a major drought increased feed prices, restaurant operators should see relief in the year ahead and capitalize on lower prices to pad the bottom line, according to a recent report.

Corn prices are expected to drop 20 percent in 2014, according to a forecast released in November by SpenDifference LLC, a chain-restaurant cooperative based in Denver.

“Corn is a major component of feed costs, specifically for proteins or center-of-the-plate items,” says DeWayne Dove, vice president of purchasing at SpenDifference.

The price cut in feed is translating into drops for meat. Chicken breast prices are expected to decrease between 5 and 9 percent, according to the forecast. Pork bellies are predicted to drop 13 percent, with other pork items coming down about 4 percent compared with 2013.

The price of beef, however, won’t be affected until mid-2015, Dove says, because of the 28-month growth cycle needed for production.

Quick-serve restaurants can find ways to save on food costs by integrating commodity information into marketing plans, says Brian Benjamin, senior director of strategic account management analytics and supply chain services at HAVI Global Solutions LLC.

“If the price of tomatoes is going up, try a salad promotion that has a recipe with less tomatoes,” he says.

Similarly, if prices are higher for beef and lower for poultry, he says, brands might consider promoting chicken menu items or rolling out limited-time offers to return profits at a lesser cost.