Article contributed by Mike Berman, COO, Day & Nite/All Service
In another age of turbulence, Gerald Ford hadn’t been in office for 3 full months when on October 8, 1974 he addressed Congress declaring inflation as public enemy #1. The Ford Administration’s ensuing Whip Inflation Now campaign was more ridiculed than effective, but in 2021’s equally turbulent environment hospitality is well served to organize its efforts and rally all resources to seriously whip damaging inflation now.
With food and energy prices leading the pack, the Bureau of Labor Statistics recently released June 2021 Consumer Price Index is more than another inflationary ripple, the data shows rapidly rising uncontrollable expense tides. When added to the severe labor issues foodservice is presently battling through, impact of these escalating prices is more profound in this sector of the global economy battered by Covid than any other. As if this isn’t bad enough, eye-popping, stomach-turning June Producer Price Index spikes serve as a leading indicator the cost of doing business will only continue to rise, most likely at accelerated rates. Digging out your old Whip Inflation Now buttons from the mid-1970’s won’t help, but there most certainly are numerous inflation fighting strategies and tactics hospitality professionals can and really must take.
Market forces will dictate a not insignificant portion of all rising costs are beyond foodservice’s direct control. Driven by severe supply and demand imbalances, old standbys like discount for bulk purchases just don’t carry the same weight in the current inflationary era. Recognizing a very high percentage of managers have never worked in an inflationary economy—heck, in all probability a very small percentage of Total Food Service subscribers even remember Gerald Ford’s WIN buttons—rapidly adjusting your budgeting and planning approach will be critical for successfully getting out ahead of and controlling expenses. This essential adjustment requires isolating and concentrating on controllable expenses, where aggressive and creative methods for generating more favorable economies of scale will determine outcomes.
As always, smart, expansive use of technology plays a critical role for delivering more favorable economies of scale. Foodservice professionals must quarantine all low to no value creating tasks, relieving (expensive) labor from even marginally time-consuming activities by incorporating technology. For instance, how many hours does your staff spend each month placing service calls or looking to get status updates from your service providers? DNASLite, a proprietary mobile app developed by the Day & Nite family of companies in-house lab is one example of practical technology sure to deliver more favorable economies of scale.
Although volume purchases may not have the same clout, density emerges as a most powerful force for creating favorable economics. Servicing commercial HVAC, Refrigeration, Cooking and Plumbing equipment, Day & Nite/All Service/Popular Plumbing/Performance Air Mechanical covers a broad range of vital categories in traditionally fragmented fields. Multi-site businesses have the ability to leverage capacity + range to capitalize on this consolidated offering as primary means for reducing inherent labor and transit expenses. Reducing the number of vendors for these necessary functions further reduce controllable cost of doing business for single site businesses to large chains.
Day & Nite’s internal research team’s guidance from early Covid days is even more prescient in an inflationary economy. Historically, a large segment of the foodservice industry considered preventative maintenance agreements as a debatable luxury. Energy costs will always be at inflation’s leading edge, superbly maintained equipment always runs more efficiently than machinery operating to fail. Allocating marginal funds for preventative maintenance heads off the substantial uncontrolled energy expense increases everyone is now feeling that are sure to escalate without interruption.
Gerald Ford’s Whip Inflation Now campaign featured a pledge people signed and mailed back to the White House. It took almost a full decade and 2 presidents later to curb inflation. Let’s learn from history by truly whipping inflation now—in its earliest stages—by taking easily available, practical steps guaranteed to deliver high-impact economies of scale. Email email@example.com to get action from the Day & Nite family of companies capabilities and pledge to whip inflation now!