Discussions with suppliers about pricing helps foodservice executives
understand changing markets, protect menu profits and consider alternative buying tactics and options. However, until a written pricing agreement has been completed, do not assume that you have secured a protected price.
Leading foodservice chain buyers, as well as our consulting team follow these simple rules for distinguishing between pricing discussions, program negotiations and committed vendor agreements.
#1 Just because you made a purchase decision don’t confuse this with an agreement. Confirm all verbal pricing discussions.
#2 Pricing issues or misunderstandings about product and price commitments are best resolved in writing, as this formality serves to clear the air for the future.
#3 Formal vendor negotiations should be part of your contracting plan. This places all parties on record, allows you to involve the “next higher level” of supplier management, and for emerging chains, your brand will receive higher visibility back at the manufacturers or distributors corporate office. (hint: not everyone follows Sarbanes-Oxley, and is priced like an "A" account)
#4 Stand Your Ground during formal price negotiations, if the supplier expects you to accept a price prior to the meeting or with the boss in the room, do not! Feel free to question the pricing and be prepared to negotiate at a later time.
A tactic that works great to achieve better prices and will save money when markets are increasing is as follows: Look directly into the eyes of the most senior manager at the meeting from the supplier's side, and ask for a 30 day price extension.
When foodservice owners/managers or your boss thinks they are negotiating when they are not, the consequences can be detrimental to your bottom-line.
To Higher Profits,
Fred Favole is Founder & President of Strategic Purchasing Services (SPS) consulting firm specializing in foodservice department outsourcing and commodity contracting for emerging chains and human-services organizations. Connect via phone: 912.634.0030, email: SP_Services@Bellsouth.Net