Voice of the Restaurant Industry
Think about walking into the foodservice distributors warehouse and seeing thousands of aisles and racks with millions of products on them. Now ask anyone has ever worked for a restaurant chain if this is their product selection experience. Can they choose the right products at the right price to improve costs and increase market share?
Is your supplier selection process a competitive disadvantage? You best purchasing tool is completing committed volume supply agreements. This is one secret that your broadline distributor doesn't want to talk about.
When it comes to menu planning, cost reduction and strategic sourcing many restaurants and emerging chains are not capable of maneuvering past the maze of brokers, distribution representatives and manufacturer representatives to find fantasic products.
Take Carolyn’s American Café, a 17-unit regional chain in Brunswick, GA serving a menu of American and Mexican fare. To compete with the national chains, they were encouraged to sign a one-stop, master distribution agreement (MDA). They fell for the "spreadsheet" sale without seeking the resources required to issue a professional RFP (request-for-proposal); analyize results, only to discover the dark world of off-brands and pricing misrepresentations.
The purchasing supply chain contracting process is complex and the interdependencies between the distributor-broker-manufacturer may not always be obvious. If you can not specify products and control the landed costs through distribution, your business is at a disadvantage.
Chart your path to lower costs and exciting new products by doing your own strategic sourcing and pre-qualification of suppliers. Find suppliers that market to the end-user and that are not represented by distributor "in-house" brokers. Keep the cost-factor in mind; broadline distributors must generate 17% gross profit (on average) on product sales and $175 profit dollars per delivery.
It's difficult to explain how they can offer a 10 unit chains a blended 8.5% margin program. Suffice it to say, the "foodservice industrial complex" of distributor-broker-manufacturer, expects you to buy a high percentage of their house labels and national brands that offer them back-side income.
Don’t get caught up in thinking that your product selections are limited to the distributors inventory. If your weekly consolidated purchases for a specific product is 10 cases, your primary distributor will slot the product for you. How many new products did you develop or bring into distribution this year?
Our firms’ success proves that the most satisfying and sound purchasing decisions come from a direct relationship with local, regional and national manufacturers, growers and packers that want to work directly with you, the end-user.
There is a growing trend to make product selections much more than just buying what they are selling.
To Higher Profits! Fred
Fred Favole is Founder & President of Strategic Purchasing Services, America’s most experienced purchasing firm specializing in purchasing outsourcing, commodity contracting and product development. Contact information, P: 912.634.0030 email: firstname.lastname@example.org