Page 229 - Board Member Onboardin August 2019

The Producer Price Index (PPI) for Finished Consumer Mozzarella Sticks: Changed stick size and increased
Foods was up 3.3% in 2018 and the Consumer Price overall portion to consumer and lowered cost by $350 per
Index (CPI) for U.S. Food and Beverages was up 1.4%. restaurant per year through consolidating with a higher
(The PPI measures cost at the Producer level, while CPI volume product.
measures cost at retail).
In all cases, the above examples include changes in
FOOD product specifications, approval of new suppliers of the
Higher Shell Egg costs accounted for 50% of the overall same product, or leveraging existing suppliers to improve
increase in ingredient costs in 2018. While Liquid Egg costing, all with the intent of not harming the IHOP
costs were protected through forward hedges, we are customer experience.
unable to secure similar forward price protections on Shell
Eggs and after two years of low Shell Egg costs (20-30% These projects will help improve your cost structure
below 10-year averages), markets and costs rebounded to moving forward. More importantly, we have put together
be at their 10-year averages. a framework of improved collaboration and engagement
with these functions that will help drive smart, beneficial
On the positive side, CSCS negotiated agreements on savings opportunities to IHOP operators in the future.
Avocados and Bananas in 2018 that (along with lower
Avocado markets) helped bring costs of those items INDIRECT SPEND
down significantly and drove favorability across the entire We negotiated new agreements for “Phase 3” of our
produce category. lighting package review, lowering the cost of the Vibrancy
Lighting package by over 40%.
IHOP’s Vendor of the Year was J&B Group, the supplier
that assisted in the rollout and introduction of IHOP’s new We continue to improve our Linens programs by reviewing
Burger Patty in April of 2018. the marketplace, utilizing formal RFP tools, and levering
our volume to offer better options to our Members. Our
Our Procurement Team was heavily engaged in the new program with Aramark lowers cost by 10% versus the
Restaurant Profitability Management initiative throughout prior program.
2018. Working with cross-functional teams including
IHOP franchisees, Culinary, Marketing, Consumer Insights, We now have 200 IHOP’s engaged with Corrigo, which
Strategic Operations, and our suppliers, we identified over provides a software solution to help manage R&M costs.
50 opportunities the teams felt could deliver favorable This monthly subscription program enables you to track
costs at the restaurant level (without negatively impacting your assets for warranty and performance, provides access
guest perception on quality). 18 of those opportunities to service providers – both contracted by you, CSCS, or
were implemented throughout 2018. through Corrigo, and enables automated work flow from
placement of repair orders, through on-site activity, to
Examples of RPM projects: invoicing and payment. This system provides improved
visibility, control, and information to help you manage the
Applesauce: Moved from pouch to cup, increased portion middle of your P&L.
size, use national branded product, savings of $113 per
restaurant per year. Chase credit card users benefited from a significantly
Philly Meat: Developed and implemented a second source lowered processing fee negotiated with Chase by CSCS.
of supply and a product validated through Consumer We continue to work with IHOP, and the Pancake Board, to
Insights that saves $670 per restaurant per year. evaluate opportunities for your CSCS Co-op to add value to
Hot Tea: Evaluated alternatives and leveraged current your business.
supplier to deliver a savings of $110 per restaurant per
year with no change in product.

11