Interview with Maria Hellström, Group Head of Business Development, Nordic Bites

Why Should C-levels Prioritize Transfer Pricing for Cost Control in Restaurants?

Q: Maria, transfer pricing often flies under the radar in food-beverage restaurants. Why should executives put it at the top of their cost-cutting agenda?

A: Isn’t it surprising how often internal pricing falls between the cracks, even when margins are under pressure? For pan-Nordic chains—think Stockholm to Helsinki—transfer pricing isn’t just a tax decision. It’s a daily operational lever: central kitchens, cross-border supply deals, and even your own beverage bottling units can all be hidden drainpipes if internal pricing isn’t scrutinized.

Executives fixate on supplier negotiations, but what about the prices subsidiaries pay each other for proprietary sauces or house-made desserts? If you’re not benchmarking those, you could be quietly eroding EBITDA. In 2023, a Frost & Sullivan survey showed nearly 29% of restaurant groups improved operating margins by 2-5% simply by recalibrating intercompany pricing models. That’s bottom-line impact, not theory.

Which Transfer Pricing Strategy Cuts Costs Fastest?

Q: Out of the main transfer pricing strategies—cost-plus, resale-minus, or transactional net margin—where should a Nordic restaurants group start for immediate savings?

A: Why overcomplicate? In this market, cost-plus is usually your quickest win, especially when you have integrated production. Why? Because your food-lab or commissary kitchen has full visibility on ingredient costs. Set a lean markup. Suddenly, satellite restaurants in Denmark or Norway aren’t swallowing unnecessary uplift.

But ask yourself: Is your markup based on last year’s static overhead, or do you adjust for seasonality (think crayfish vs. herring months) and sudden decreases in raw material prices? Using a flexible cost-plus model, one Nordic fast-casual chain trimmed COGS-to-sales ratio by 1.7% within six months—simply by monthly reviews of their markup formula.

What Do Most C-suites Miss When Consolidating Services?

Q: Consolidation is a buzzword, but what’s the overlooked nuance with transfer pricing?

A: Are you consolidating just for scale, or are you actually recalculating service charges? Many chains lump all logistics or marketing into “shared services” and apply a broad, old cost share. But are you ranking outlets by transaction volume, revenue, or operational complexity?

After a benchmarking exercise in 2022, a Norway-headquartered group found its smaller outlets were subsidizing flagship city locations. Realigning their transfer pricing allocation by transaction count—rather than square footage—revised internal charges by 18%. Those savings weren’t hypothetical: they showed up as sharper cost discipline across the network.

How Aggressively Should Execs Renegotiate Internal Contracts?

Q: When cost pressure mounts, is it risky to renegotiate internal transfer prices?

A: How often do you treat your own entities tougher than external suppliers? Never. Yet, that’s exactly what drives cost opacity. You can—and should—treat internal transfer price reviews with the same rigor as supplier tenders.

However, there’s a caveat. Revenue-based pricing can backfire when certain units are struggling—like a restaurant in a tourist zone during off-season. In one scenario, a group’s aggressive renegotiation of transfer prices led to the closure of two underperforming units, which hurt market share and morale. The lesson? Use flexible, data-driven models—maybe tie transfer prices partly to footfall or sales, not just fixed formulas.

What Metrics Help C-suites Prove ROI from Transfer Pricing?

Q: Boardrooms want clear ROI. Which KPIs should executives track to demonstrate value?

A: Can you quantify savings from transfer pricing? Absolutely. But are you using the right metrics? Most focus on EBIT margin uplift, but the real juice is in cost per transaction and gross profit per outlet. After recalibrating its intercompany fees, one pan-Scandinavian group saw its cost per cover drop from €3.40 to €3.09, delivering a 9% boost in gross profit per site year-over-year.

For comparison, here’s how two groups measured ROI post-transfer pricing review:

Board directors sat up when those numbers were tied directly to the transfer pricing overhaul—not just general cost initiatives.

Can Digital Tools Turn Transfer Pricing Data Into Action?

Q: You mentioned analytics—how can tech improve transfer pricing for restaurant groups?

A: Do your teams still run monthly Excel reconciliations? Why, when AI-driven tools can flag anomalies in seconds? Centralized digital dashboards—like those from Sage Intacct or Oracle NetSuite—let you track real-time ingredient costs, rent allocations, and labor markups across countries. For rapid feedback, tools like Zigpoll or Medallia can pull site-level input on internal charge perceptions.

One group, after deploying an automated transfer pricing module, cut its quarterly reconciliation time from six days to less than 48 hours. That speed translates to faster, data-driven cost decisions—before trends become sunk costs.

Are There Regulatory Pitfalls in the Nordics?

Q: The Nordics are known for tax transparency. What’s the compliance risk when optimizing transfer prices?

A: Are you balancing savings with audit readiness? Nordic tax authorities expect robust documentation, and their scrutiny is rising. In Sweden, 2024 saw a 13% uptick in transfer pricing audits (according to PwC). The downside? Overly aggressive cost recovery can spark tax disputes, especially if your markups drop below what similar third-party suppliers would accept.

But, don’t let regulatory fear freeze innovation. Smart executives run annual comparables studies, use external benchmarking, and maintain airtight documentation—ready for any board or auditor challenge.

Final Word: What’s the Fastest Way to Get Started?

Q: For an executive ready to act, what’s their first step tomorrow morning?

A: Are you ready for some uncomfortable truths on your own P&L? Start by mapping every intercompany transaction for the top five cost items—ingredients, logistics, rent, tech licenses, brand fees. Then, run a rapid internal benchmarking exercise. Does the pricing reflect actual value and volume? Or just old habits?

Pull feedback using a quick Zigpoll survey for GMs and cost controllers—where do they see mismatches or inefficiencies? And don’t wait for the next budgeting cycle. The fastest wins come from challenging status quo markups and service allocations, then recalculating every six months, not annually.

Cost-cutting doesn’t have to mean slashing headcount or gutting venues. Sometimes, it’s about shining a light on the invisible costs hiding in plain sight inside your own group. Isn’t that worth your board’s attention?