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Perishable Thoughts — Wasted Turnips

Jim Prevor’s Perishable Pundit, May 20, 2009

“A lot of chefs don’t have a natural sense of economy. I was with one guy the other day and I had to show him how to peel a turnip, because the way he was peeling turnips, he was throwing half of it in the garbage. It’s not about being cheap. It’s about being proper.”

Daniel Boulud
Former executive Chef at Le Cirque
Founder, Daniel, Café Boulud
DB Bistro Moderne, Bar Boulud, DBGB
Co-Founder Dinex Group
Winner James Beard Award Restaurateur of the Year 2006

We stumbled across this quote in an article inThe New York Times, titled From Frisée to Finance, It Has to Be Perfect. The article focuses on the prospective opening of DBGB. Daniel Boulud is famous for his upscale restaurants but this new place, on the lower east side of Manhattan, offers less expensive food and a more casual atmosphere.

We thought it a worthwhile quote because it epitomizes what we have said so many times over the years and what we encourage friends in the industry to think of when they are confronting a recession.

When times were good, we would sometimes get approached by retailers looking to run a shrink-reduction program. We saw quite a few of these in action over the years and never saw one work — not if by work you mean increase profitability of the retail operation.

Part of the issue is that one shouldn’t actually aim to reduce shrink; one should aim to increase profitability. In floral, if one puts all the flowers behind closed-door cases, one may reduce shrink by extending shelf life, but one so reduces movement by putting up a glass barrier between the flowers and the consumer that sales and profits typically decline substantially. So, in cases such as this, shrink is a good thing… one wants more shrink… one wants those flowers out where consumers can grab them easily.

Similar losses are found in produce. If you incentivize produce managers to reduce shrink, they reduce assortment, buy less of everything and order the bananas grass green. Yes, shrink may go down, but so do sales and profits.

The right way, or as Daniel Boulud explains it, the “proper” way to reduce shrink is to ensure that the whole operation is following good operational practices. Is ordering being done properly? Is rotation being done properly? Are the coolers all checked to be operating properly? Are markdowns and sales handled properly? Looking for mistakes in the operation is more likely to reduce shrink while maintaining sales and profits than looking to reduce shrink.

Of course, this retail lesson applies equally to all business. If sales aren’t what they should be, don’t just hysterically cut things, look strategically at your organization. Is it running “properly”? Perhaps you have a division that really should have been closed 10 years ago! Now you don’t have the excess cash flow to support it, so you have to look at it with clear eyes.

But that is the goal, looking at your business with clear eyes to identify what is being done properly and what is not. If we do it right, we come out of the recession with a solid base to build on.

In good times or bad, there is no reason to waste a turnip. What a shame that it takes a recession to get us to pay attention to the wasted turnip in our operations.

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