Beef 'O’Brady’s and other chains are feeling the heat from rising food prices.

To protect bottom lines from unfavorable pricing trends, Melberth and other chain operators are looking for ways to become more efficient, particularly when purchasing and using foodstuffs. Many of the practices they’ve adopted are traditional fixes, such as watching for waste. Others involve new technology, such as inventory tracking systems that can improve efficiency. But the magnitude of the challenge facing operators—involving food, labor, occupancy and utilities cost increases on one hand and soft to negative sales on the other—makes it difficult to map adequate responses.

“I don’t have a crystal ball, but I do think that there will be some shakeout in the industry,” Melberth predicts. “If people get better at the craft of the business, they’ll survive.”

Minimum-wage increases can be anticipated (see sidebar, “Wage Advice”), if not easily absorbed. Rising food costs, however, are more volatile, making food purchasing and preparation the biggest focus for those looking to save on their bottom line. “Food costs are spiraling out of control,” says Arnold Dominguez, vice president of operations services at Lake Forest, Calif.-based Del Taco. “But there are some things that you can control.”

Instead of advocating volume cooking, Dominguez encourages employees to prepare smaller batches of food more often to avoid unnecessary food waste. The initiative was intended to make store-level employees more cognizant of their food use.

Del Taco’s Arnold Dominguez trains crew to measure cheese portions.

“It was one of those 'A-ha!’ moments,” Dominguez says. Now he hopes to find a similar solution for chicken.

When it comes to favoring simple solutions, Dominguez is not alone. Melberth coaches Beef 'O’Brady’s franchisees to monitor what they purchase carefully and to use portioning tools in the kitchen more often. “We have guys who portion bleach but didn’t think of portioning cheese,” he says. “Sometimes [those practices] get lost through expediency.”

To better track inventory, 40-unit Denver-based sandwich chain Spicy Pickle rolled out a cost-control system that tracks inventory and manages the costs of goods.

“You’re building your menu directly into the system,” explains CEO Marc Geman. “It knows what food items are being used when you build a sandwich. It will tell you what you’re using that seems to be in excess.” The system also acts as a scheduling program, tracking the number of employees needed for different shifts.

Steve Stoddard, CEO of Seattle-based multiconcept operator Restaurants Unlimited Inc., ensures that the company’s restaurants—including chains such as Top 400 member Kincaid’s Fish, Chop & Steak House and Palomino Restaurant Rotisseria Bar—consider menu design in their cost-saving efforts, as well.

For example, higher prices this year for Copper River salmon made the fish almost cost-prohibitive for Restaurants Unlimited to carry. But the company didn’t want to disappoint loyal diners who look forward to the short salmon season. To avoid maximizing orders of a dish with unfavorably high food cost while accommodating regulars who may want to order salmon, Restaurants Unlimited altered the menu’s Copper River salmon promotion. Rather than spotlighting the salmon dish by boxing it on the menu as in previous years, the company’s restaurants simply listed the dish as one of the menu’s entrée selections.

“We still want to put it on the menu, but we don’t want to enhance it,” Stoddard says. “It’s still there, still visible; it just doesn’t have lights and a marching band in front of it.”

Other menu changes might include listing four steaks instead of five and changing the order of menu items and the size of the menu print to showcase items that have more favorable food-cost ratios. But using inferior products or cutting back on portion size is where Stoddard draws the line.

“The most important thing is to stay true to your concepts and to the credos on which your company was founded and is operated on,” Stoddard says. “It is really easy to make short-term decisions that can end up having longer-term impacts on your business and reducing the quality of your business.”