Whether you’re buying mass quantities at commodity prices or you’re picking up ingredients for the day at your local Costco, it’s important to be a savvy ingredient buyer. Lowering supply cost is a high-impact lever for improving financial performance, but conversely, being inflexible or unresponsive to market changes can sink a business just as quickly.
We devoured this article from The McKinsey Food Institute on methods that businesses can use to source ingredients more efficiently and increase cost savings. The reminder that “leading food players invest time and effort to find out what [ingredients] should cost” was a needed one. As a food entrepreneur, you should know your supply chain better than anyone, including what goes into your product’s ingredients and inputs. It’s easy to be misled by a supplier when you don’t know what goes into their costs as well as yours.
For our restaurant friends, this Toast Restaurant Blog article has a similar theme but a more concrete set of steps. You may think that as a smaller business, you have less buying power and your ability to control costs is lessened – but that’s simply not the case. Small businesses can be flexible, make sourcing changes, and respond more quickly to price fluctuations than the behemoths can. Rejoice.
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