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Labor: The 800 lb. Gorilla

Today, savvy operators can trim food cost a percentage point here and there with best practices while still maintaining quality. The labor market, on the other hand, is perpetually unveiling a new rock bottom.
gorilla pacing in green grass

AD 80. That’s when the famous Pasta Puttanesca dish was created, according to our tour guide at the Colosseum in Rome. The story goes that it was made from inexpensive ingredients – garlic, olives, capers – that could be prepared quickly to feed the prostitutes that worked in and around the Colosseum. It was the fast food of its day. Here we are almost two thousand years later, and food cost and labor are still the name of the game.

The Labor Issue

Today, savvy operators can trim food cost a percentage point here and there with best practices while still maintaining quality. The labor market, on the other hand, is perpetually unveiling a new rock bottom. I personally know dozens of fresh food retailers that have been asking for years, “how much worse can the labor market possibly get?!”, only for it to get worse.

Advances in unattended retail and FoodTech in general have been a major lifeline for fresh food companies. Technologies like self order kiosks, food delivery and fresh food vending machines have opened the door to new, more sustainable business models. It’s still a wild west in this world of fresh food retail as the technology evolves to meet the demands of the market.

In our conversations with fresh food retail operators, there is a strong interest in new solutions but a clear lack of personnel to implement new food technologies. Maintaining the day to day operations takes every ounce of bandwidth from the team. Even when a plug-and-play technology removes the server or cashier from the equation, there can still be a struggle to maintain staffing levels. The bottom line is that the puttanesca does not cook itself.

three side by side bowls of diced red bell pepper, diced white onion, and diced yellow squash

A long time industry solution for minimizing labor has been purchasing value added ingredients. For example, buying artichoke hearts that are cleaned and marinated versus buying raw artichokes. For labor intensive and higher skill set ingredients this can be a smart trade off.

This trend has grown into buying value added dish components to further displace the labor burden into higher food costs. In this scenario, the operator purchases the marinated artichoke relish as a ready-to-eat component or the entire artichoke kale salad at wholesale price. The beauty of this model is that the operator can either embrace the brand partnership or complete the dish with their signature finishes that customers crave.

Labor Savings Beyond The Cashier

In the world of the smart vending machine, we are seeing this play out in two ways.

  • Operators purchase white label meals at wholesale price so kitchen labor is limited to finishing touches or possibly eliminated altogether. Many distributors like Sysco, US Foods and regional produce companies have created fresh meal programs to fill this fast growing demand.
  • Operators partner with complimentary brands to create a micro food court inside their smart vending machines. Each brand can occupy shelf space in the microstore with shared logistics. It can be an easy win for fresh food companies in a shared kitchen or with kitchens in close proximity to the food vending machines.

From watching these scenarios play out, we suggest focusing efforts on those aspects of business that truly matter to your customers. They’ll love your signature Greek dressing without caring so much about who crumbled the feta. From AirBnB to Uber, the world is finding new ways to shift the paradigm, trim the fat and connect people with what matters most.

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