Nestlé

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Facing the Facts: Foodservices Industry Forecasts 4.9% Growth in 2022*

COVID-19 continues to shake up the food industry. But Nestlé's focus on agility, efficiency and dependability is the right move. A cloud-native digital pricing solution can help by automating lower-value tasks, unlocking key insights and driving growth. Especially right now, as the fight for manufacturing capacity to meet surging retail demands threatens the restaurant and hospitality sectors. With margins continuing to dwindle, your first instinct may be to cut costs. But, is this the best move? Before we talk about a better strategy, let’s look at the margin leaks that may be taking a bite out of your bottom line.

*According to the International Foodservice Manufacturers Association

A Foodservice Industry State of the Union

External Factors Draining Profit

Despite Nestlé's great resilience and dependability during the worst of COVID – there are a number of factors out of your control that may still be impacting your margins right now. Here are a few:

  • Currency Fluctuations
    Exchange rate fluctuations and a decline in export and import activity are having an effect.
  • Fast-Changing Consumer Needs

    Both a rapidly evolving digital landscape and increasing nutrition, health and wellness concerns.

  • Supply-Chain Shutdowns

    Energy and commodity price increases and raw material shortages are creating slowdowns.

  •  Increased Safety Requirements

    Huge undertaking to enhance employee safety and plant sanitization per new pandemic protocols.

Internal Factors Possibly at Play

These are the common factors at many companies, regardless of industry, that cut into profits. You might spot a few familiar ones.

  • Lack of True-Cost Visibility

    Discounts. Commodity increases. Diverting inventory. Are you really keeping track of all the costs?

  •  Lack of System Integration
    You can’t get accurate data for all sides of your business if your systems don’t work together.
  • Slow & Manual Customer Quotes

    A lack of alignment and tedious manual processes impact how quickly and accurately your sales team can quote.

  • Rebates A Mystery to Sales

    A sales team who doesn’t understand the rebates your company offers could lead to lost revenue.

Minimizing Loss and Improving Margins.

Yes, Even Now

Before you jump to discounting your prices, consider this. A recent McKinsey study found a 1% increase in price (if demand stays consistent) increases operating profit by an average of 8.7%. The opposite also holds true. So what can you do instead?

Start with data. Get a clear understanding of where money is leaking and exactly how much revenue is gained from every transaction.

Gather intelligence. Avoid the hype and rely instead on what your customers are saying.

Don’t rush to drop prices. Pricing software can help you find weaknesses and opportunities.

Test for full visibility. Testing different market strategies shows you exactly how any small change will impact your bottom line.

Launch your strategy. Choose the best test strategy for your overall goals and circumstances.

What Your Foodservice Operators Want from You Right Now

One of the best ways to help your customers is to understand their mindset. Here are a few ways food operators are looking to respond and modify their business models post-pandemic.

  • Greater supply chain transparency and tracking to understand their supply chain and sourcing risks. This is a move many operators have already taken and will continue.
  • Increased focus on disaster planning, including contingency planning and risk mitigation.
  • Increased domestic and local sourcing to reduce the risk and dependency on foreign suppliers.
  • More packaged solutions that lower labor requirements.
  • Stronger long-term relationships with suppliers to reduce risk and avoid costly changes.

Podcasts: Dig Deeper with These Recommendations

Want to learn more about pricing’s effect on your bottom line and what to do during times of crisis? Listen to a few of our favorite pricing podcasts.

Pricing Strategies for Uncertain Times

Harvard Business Review's conversation with pricing expert Rafi Mohammed.

Listen Now

Novus CPQ Series

This series is an oldie but a goodie. Learn directly from top pricing execs and professionals.

Listen Now

Impact Pricing Series

Learn how to sell value rather than price with tips and tricks from pricing experts.

Listen Now

The Professional Pricing Society

From rebates to negotiation skills to successful pricing transformations, learn from the best.

Listen Now

Soundtrack: Your Rich Tunes Playlist

Love it or hate it, money is what makes business go round. This rich tunes playlist is just what you need for a little inspiration.

Presentation: Helping Us Thrive Again

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Ready to Explore A New Pricing Strategy?

Carolina Alvarez

Business Development Representative, Food & Beverage Book A Free Session

Ryan Fritz

Senior Account Executive, Food & Beverage Book a free session

Spread the Word.

Invite your team to this Nestlé resource hub.