GENERIC GOODSTHE NEW APPROACH
F&B operations are based on three major pillars of equal importance; location, service and quality of offering. The quality of offering is determined by two key factors, namely the standard of the raw materials used and the skill in production.
Chadi Chidiac, managing partner of PROTOCOL, looks at purchasing and its impact on the bottom line
The Middle East market
For over a decade, significant importance has been given by operators in the Middle East to the quality of raw materials used in their recipes. Hence, all stakeholders, ranging from chefs, managers and owners to growers and guests, have become wiser and more knowledgeable about what to work with and order. Some major chains and operators have set up defensive strategies to counter price volatility and inflating costs of raw materials by integrating vertically. However, dealing with this issue is certainly no walk in the park, especially for medium and small-sized operators.
In particular, this phenomenon imposes challenging tasks on suppliers’ chains, which are constantly having to keep up with market dynamics by:
1) Playing the smart game of seasonality and price volatility, giving them a major advantage in a fiercely competitive market.
2) Maintaining stock levels to match demand without any potential gaps or deficit, which could result in the rapid switching of accounts to competitors.
3) Avoiding tying up large volumes of cash in stocks.
4) Playing the smart game of yield management by focusing on seasonality and price volatility, a crucial edge in a fiercely competitive market. Only 10 years ago, the demand for many ingredients was much lower and, in some cases, nonexistent. Examples include ingredients such as gin-infused salmon and wagyu beef for the high-end market or salmon gravlax and grass-fed Argentinian beef for mid-toupper-tier users.