how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.

Question

how huge food companies like Cargill and Mcdonald’s, etc. protect themselves from extreme price changes.

In: 858

Answer 1

Oh! I actually used to work in restaurant accounting! Granted we had like 500 locations not the thousands you’re asking about.

We didn’t. When eggs shot up it went from number 3 ingredient expense to number 1. Our margins took a big hit for a couple of months but eventually prices stabilized. In the markets cost stayed higher we looked at our metrics and decided if we could accept the lower margin or not. I imagine it’s similar at larger chains they just have a much stronger negotiating on rates from vendors than we would.