Restaurants Spurn Food Contracts For Spot Market

augustus 04, 2008
Higher prices and shorter lengths for food contracts are forcing some restaurants to reconsider locking in prices for ingredients and instead buy chicken, beef and other goods on the spot market, exposing themselves to volatile costs.

Major food suppliers are responding to a runup in commodity costs over recent months by cutting back on the maximum length they're willing to offer their goods for fixed prices or offering contracts at rates so high that it makes more sense to buy on the open market.

The strategy to buy at the market rate could save money for restaurant operators in the short term but injects another variable into an industry already facing uncertainty from weak consumers and additional rising costs for energy and labor.

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