Food Cost Management: Why Every Ingredient Has Two Prices

Richard Kemp has spent most of his career helping restaurants buy food more intelligently.

For twenty-five years, he worked on the distribution side of the industry, including as meez CEO Josh Sharkey's Performance Food Group representative long before either of them landed in restaurant technology. Today, as part of Buyers Edge's Consolidated Concepts division, he advises multi-unit restaurant groups ranging from 8 to several hundred locations.

His mission sounds simple: lower their cost of goods.

But when Kemp joined The meez Podcast, the conversation quickly moved beyond procurement. The real problem, he argued, isn't simply paying too much for ingredients.

It's that most operators only understand half of what those ingredients actually cost.

"It really provides the transparency and the clarity from the source of the farm to your invoice and what that price is."

That sentence neatly describes where procurement traditionally stops: at the invoice.

For most restaurants, that's where food cost conversations begin and end.

But an invoice captures only the first price an ingredient carries. The second ingredient cost isn't determined until that ingredient has been trimmed, portioned, prepared, and turned into a dish.

That's the number guests actually pay for. And it's the number that decides whether a menu item makes money.

Listen to the full episode: Free Money and explaining GPOs with Rich Kemp of Buyer's Edge, plus will AI actually make things cheaper?

Procurement Solves One Problem. Restaurants Have Two.

When people hear "group purchasing organization," they usually think about negotiating discounts.

That's certainly part of what Kemp does.

Buyers Edge has spent more than two decades building manufacturer agreements that now span roughly 500 manufacturers, more than 175,000 products, and approximately $75 billion in purchasing volume. Those agreements let operators access rebates and negotiated pricing they often couldn't secure alone.

What surprises many operators is how the model works. There isn't a membership fee.

Operators keep buying from their existing distributors. And the rebates and negotiated price deviations flow back to them, while Buyers Edge receives an administrative fee directly from manufacturers.

To identify savings, an operator provides roughly thirty days of purchasing data. That information gets matched against existing manufacturer agreements by manufacturer identification number, producing a report showing where money has been left on the table. It isn't unusual, Kemp says, to uncover $10,000, $30,000, or even $50,000 in annual savings.

So why don't more operators participate?

The obstacle usually isn't pricing. It's attention.

Some assume savings that size sound too good to be true. Others believe they already have favorable pricing. Many simply don't have time to evaluate another program while fielding calls from fifty sales reps and managing everything else. And this is, in Kemp's own words, a high ego business.

Operators describe themselves as short on margin. Kemp's experience suggests they're more often short on visibility.

The Biggest Cost Problem Isn't Negotiation

One of Kemp's most revealing examples has nothing to do with contracts. It comes from produce.

Unlike packaged goods, produce prices move constantly. Sometimes weekly. Sometimes daily. Sometimes several times inside a single day.

Most operators respond the only way they reasonably can. They collect quotes from two or three distributors and choose whichever number looks lowest.

It feels like smart purchasing, but Kemp points out an uncomfortable truth.

"Unless you're a produce guru, you're just accepting whatever price the produce distributor is selling it to you at."

Broader Market Visibility

Without broader market visibility, operators don't really know whether they negotiated well. They only know they selected the lowest quote they happened to receive.

That's where Buyers Edge's Fresh Concepts program changes the conversation. Instead of presenting one final delivered price, it breaks pricing into components.

• The grower's cost
• Freight
• The distributor's margin

Each layer becomes visible. According to Kemp, that transparency regularly produces savings between 5 and 12 percent. In one restaurant group operating roughly 80 to 90 locations, the analysis uncovered more than $200,000.

Restaurant Dive has documented the same issue from another angle, describing vendor SKUs that quietly rise and roll through unnoticed, and operators running a two- to three-point food cost variance for years without questioning it. That reporting cites National Restaurant Association data showing 82 percent of operators reported higher food costs.

The challenge isn't only paying more. It's recognizing when and why prices changed.

Food Costs Aren't Going Backward

As agriculture gets more efficient and supply chains get more sophisticated, shouldn't restaurants eventually see lower invoices?

"The invoice that I'm getting five years ago from the height of the supply chain issues during and post COVID are the same or worse. So I don't need to ask the question. I know the answer."

The broader numbers support his skepticism.

Restaurant Business, citing National Restaurant Association data, reported that total restaurant operating expenses have increased 36 percent over six years, while average wholesale food prices remain roughly 35 percent above pre-pandemic levels. In the same reporting, 42 percent of operators said they were not profitable during 2025.

Nor has the direction reversed. Wholesale food costs resumed climbing in 2026 after a brief easing, driven by higher transportation and warehousing charges. Beef ran 14 percent above the prior year in the first quarter and is expected to rise another 8 percent across the full year, according to Technomic.

Not Every Category Behaves the Same Way

When Kemp managed a book of 16,000 items, plenty of prices came down monthly or quarterly. Dry goods and paper products stay relatively stable. Produce, dairy, and proteins fluctuate far more aggressively.

Some items get cheaper. Others don't. But on the central question, he didn't pretend, and Josh's own summary at the end of the segment was that Kemp had proved Conway's point.

Which means operators can no longer treat rising costs as temporary, and the half of food cost they do control starts to matter more than it used to.

Every Cost Has Layers You Can't Negotiate Away

Procurement has natural limits. Restaurants can negotiate manufacturer pricing, join purchasing programs, or compare distributors and capture rebates.

But some costs simply come with moving food from a farm to a kitchen.

Fuel, warehousing, distribution, and freight costs aren't signs of inefficiency. They're the business, and Kemp was direct that distributors have every right to a reasonable profit for providing it.

"Those pieces of the puzzle are going to always be there, kind of like layers on a cake."

It's a practical way to look at procurement.

The Goal Isn't Eliminating Every Cost

The goal should be to reduce the costs you can actually influence while recognizing which ones are structural.

That's also why Kemp encourages larger groups to treat procurement as its own discipline rather than another responsibility bolted onto someone's already-full job.

Every organization eventually reaches a size where vendor management deserves an owner. Someone who tracks manufacturer programs, reviews purchasing trends, and questions price changes before they quietly become the new normal.

He calls that person the gatekeeper.

Even then, procurement only solves one side of the equation. Buying ingredients well doesn't automatically mean using them well.

A Case of Romaine Reveals the Bigger Problem

Different distributors may offer different pack sizes, different counts, different configurations. On paper, two cases can look similarly priced. Operationally, they may be completely different purchases.

Why? Because of ingredient yield.

That single word moves the conversation from procurement to operations. A case isn't valuable because of what arrives at the back door. It's valuable because of what reaches the plate.

If one case trims to 68 percent usable product while another yields 79 percent, the cheaper invoice isn't necessarily the cheaper ingredient. Yield percentage is what decides, and the math runs both directions: usable weight over as-purchased weight gives you true cost, while required edible portion divided by yield tells you how much to order in the first place.

Restaurants routinely compare supplier prices before they compare usable food.

Procurement answers what you paid. Recipes answer what you actually got.

The strongest purchasing decision isn't the one with the lowest delivered price. It's the one that produces the lowest edible portion cost after prep, and that calculation happens in the kitchen.

Every Ingredient Carries Two Prices

That idea sits at the heart of Kemp's argument, even where he doesn't state it directly.

The first price appears on the invoice. That's the number procurement works to improve.

The second emerges after trimming, fabrication, cooking, and portioning. That's the number margins actually care about.

Imagine a chicken breast purchased at $4.50 per pound. If trimming leaves 85 percent of the product usable, the edible portion cost becomes roughly $5.29 per usable pound.

Nothing about the invoice changed. But everything about profitability did.

What makes this more than a technicality is the size of the second lever. Kemp's produce analysis found more than $200,000 across 80 to 90 locations. Modern Restaurant Management, citing ReFED's 2026 food waste research, notes that a restaurant spending $1 million annually on food could save roughly $30,000 a year by reducing waste 3 percent.

One side of the receiving door focuses on buying smarter. The other focuses on using ingredients more efficiently.

Both improve food cost. They simply attack it from opposite directions.

Procurement Ends at Receiving. Profitability Doesn't.

This is where Kemp's work connects to recipe management, and where most operations quietly break. Negotiated rebates lower invoice costs while recipes determine whether those savings ever reach the plate.

When supplier pricing changes but recipes stay static, accounting recognizes the savings while menu costing keeps reflecting outdated assumptions. Finance believes margins improved. Recipes insist they didn't.

Neither system is wrong. They're disconnected.

Closing the Gap Is Mechanical, Not Philosophical

When invoice line items connect directly to recipe ingredients, every negotiated saving automatically updates the recipes that depend on those products. Ingredient costs and plate costs stay current. Invoice processing stops being an accounting task and becomes the starting point for every profitability decision that follows.

That's also what makes theoretical food cost worth measuring.

When purchasing data, recipe costs, yields, and portion standards all stay current, the comparison becomes a real operational signal instead of an accounting exercise.

Which menu item lost margin this week, and which vendor increase caused it, are answerable questions only once both halves of the cost are current.

That connection is also the thing most operators overlook when they evaluate real-time food costing software, invoice automation and recipe costing are usually sold as separate problems, and at multi-unit scale they aren't.

The Better Question

Operators usually ask how to lower their food costs.

Kemp's experience suggests that's only half the question. The more useful one is whether you know what every ingredient actually costs by the time it reaches the plate.

That shift changes the diagnostic entirely:

• Are we paying the best available price?
• Are we buying the right specification for how we actually use it?
• Do our recipes reflect current invoice costs?
• Do our yields reflect reality?

Kemp describes his own role with characteristic simplicity.

"My role is so simple. I need to leverage my past 25 years in distribution to be able to help multi-unit operators reduce their COGS."

He's right. He's also describing half the equation, and he never claims otherwise.

Cost of goods is what you pay multiplied by how efficiently you use it. Kemp spends every day improving the first number. The second belongs to the culinary team, and it's the one still fully in play.

The gap between theoretical and actual food cost is where you find out which half you've been managing.

If you want to size that second lever before touching it, meez's ROI calculator works from your own food spend.

The best procurement strategy doesn't end when the truck leaves the loading dock. meez connects live purchasing data with recipe costing, yields, and portion standards so culinary and finance work from the same numbers. See how meez supports finance leaders.

FAQ

What is food cost management?

Food cost management is the process of controlling both purchase cost and plate cost. It combines procurement strategies such as vendor negotiation, rebates, and purchasing optimization with recipe costing, yield management, portion control, and variance analysis. Managing only one side leaves predictable money on the table.

What is a group purchasing organization?

A group purchasing organization, or GPO, pools the buying power of many restaurant operators to negotiate manufacturer agreements that provide rebates and price deviations. Rich Kemp's organization maintains agreements covering roughly 500 manufacturers and more than 175,000 products. Members keep purchasing through their existing distributors and existing vendor relationships.

Do restaurants pay to join a GPO?

In a hard GPO, there is no membership fee. Operators receive 100 percent of the negotiated rebates and price deviations, while the GPO earns an administrative fee from manufacturers rather than from restaurant members. That structure is why operators frequently assume there must be a catch.

What is the difference between AP cost and EP cost?

AP cost, or as-purchased cost, is the price listed on the supplier invoice. EP cost, or edible portion cost, reflects the usable ingredient remaining after trimming, peeling, fabrication, and cooking loss. EP Cost equals AP Cost divided by yield percentage. Because recipes are built from edible product rather than purchased weight, EP cost gives a far more accurate picture of menu profitability.

Are restaurant food costs expected to decline?

No. Average wholesale food prices remain roughly 35 percent above pre-pandemic levels, and wholesale food costs resumed climbing in 2026 after a brief easing, driven partly by transportation and warehousing charges. Dry goods and paper stay comparatively stable, while produce, dairy, and proteins remain volatile.

How do I compare different pack sizes?

Don't compare case prices alone. Divide the delivered case price by the edible weight that configuration actually yields after prep, then compare against the portion your recipe requires. Two cases with identical invoice prices can produce very different usable quantities, which is why pack-size decisions depend on recipe data.

How do vendor rebates affect recipe costs?

Negotiated rebates reduce invoice prices, but restaurants only realize the full benefit if updated ingredient costs flow into recipe costing. Otherwise, accounting reflects the savings while menu costs keep using outdated pricing. meez covers this connection in its guide to dish costing.

What should multi-unit operators measure first?

Start with the products representing the largest share of purchasing spend, then track three numbers for each: the delivered vendor price, the actual yield you get, and the portion standard your recipes specify. Together, those give the clearest picture of true food cost, and Kemp's advice to operators with volume was to give one person ownership of vendor programs and direct contracts.

What software connects procurement savings to recipe costs?

Most multi-unit groups run two systems that don't talk to each other. Back-office platforms like Restaurant365 and MarginEdge automate invoices, inventory, and accounting. Recipe systems hold the yields, sub-recipes, and portion standards that determine plate cost. The savings only reach the P&L when updated invoice prices flow through to every recipe that uses those ingredients. We break down how the categories differ, and which one a group should buy first, in our guide to real-time food costing software for multi-unit restaurant groups.