Page 11 - Pancake_Supply_Chain_Co-op_Inc._2016_Annual_Report

MARKET BASKET
Category Annualized 2016 Spend / Store Annualized 2015 Spend / Store $ Chg 2016 vs. 2015 Fav/(Unfav) % Chg 2016 vs. 2015 Fav/(Unfav)
Beef $45,164 $46,303 $1,139 2.5%
Pork $43,900 $41,446 ($2,454) -5.9%
Eggs $37,412 $47,311 $9,899 20.9%
Bakery $36,388 $36,772 $384 1.0%
Poultry / Seafood $28,341 $28,474 $132 0.5%
Grocery $28,278 $26,861 ($1,417) -5.3%
Dairy $27,455 $27,760 $305 1.1%
Beverage $15,409 $15,090 ($319) -2.1%
Potatoes $14,388 $14,196 ($192) -1.4%
Paper & Packaging $9,809 $10,223 $413 4.0%
Oils $8,478 $8,904 $426 4.8%
Coffee $7,362 $8,976 $1,614 18.0%
Grand Total $302,385 $312,314 $9,930 3.2%

Food feels will be an exciting new product introduction.

Eggs continued to be the primary cost story in 2016, with markets/ CSCS, working with the cost containment committee, led cost
costs beginning a move down in December 2015 (more quickly than savings initiatives on vinyl gloves (alternate source) and register rolls
the industry anticipated) and moving to extremely low levels through (specification change) that reduced costs on these items by 25% and
2016. Not only did the egg layer industry aggressively re-populate 20%, respectively.
their operations to increase production capacity (supply), demand did
not return to pre-AI levels as some consumer demand was lost and Furniture, Fixtures and
commercial users formulated away from eggs and did not return. Equipment
The result of the 2015 Avian Influenza can be summarized as having
severe impact to the industry and its customers – winners and losers CSCS continues to be a part of the Development Committee
– and an industry that now has better controls in place to protect supporting our members on NRO and remodel elements. In 2016,
against the spread of the next biosecurity threat. Debbie Hudson led value engineering, specification rationalization,
and alternate sourcing efforts that removed $16,000 in cost per
Pork costs were up after a very soft year in 2015 and favorable store on 189 Short Stack remodels, and $44,000 per store for 119
forward positions for IHOP. While costs were generally higher for all Full Stack remodels.
pork cuts in 2016, demand (and cost) for bellies for bacon continue
to be volatile and most impactful. We offered the ConserveWell, a dipper well alternative manufactured
by Server products that eliminates a half million gallons of water
Beef costs were down slightly in 2016 as supply of beef finally use per restaurant per year. In addition to being an important
showed improvement after years of supply constraint driven by conservation initiative, the return on investment on this piece
drought and high feed costs. With improved conditions over the of equipment made for a great opportunity for the 600+ IHOP
past two to three years, growers have retained and added to the cow restaurants that purchased. CSCS continues to work on energy
(birthing) supply and we are seeing slight increases in the number of efficient equipment options, including low flow rinse nozzles and
cattle at increased average weights – all leading to what should be fryers. We feel there is a significant amount of value we can
continuing favorable beef costs for the next several years. provide our Members in better identifying total cost of ownership of
equipment.
While dairy costs in total were slightly favorable, butter costs
were higher in 2016 as consumer demand for butter continues to Services
increase.
CSCS now offers over 30 service programs/offerings. In 2016, we
Packaging & Indirect added a UPS package shipping program, launched the new IHOP
uniform program, and updated the DirecTV and pest programs. Our
CSCS played a key role in the supplier development of new system spend increased by 13% in 2016, with over $170,000,000 in
packaging that will be implemented into the IHOP system in 2017. service program participation by our IHOP and Applebee’s Members.
The CSCS category management team brought strong experience in
packaging to help position for a successful transition to what IHOP

9