Food Power-Buying Strategies for Tough Times

High-performance food procurement conducted in the face of rising commodity prices, and limited supplies requires the awesome daring of Indiana Jones with the bid strategies and systems that would be the envy of margin day traders.   

However, you can use different approaches to offset the coming price increases and strategies that your distributor, broker or favorite supplier won’t talk about.  Start by paying attention to commodity markets and developing new sources of supply and you can outsmart the competition for better prices!

Know where you stand in the pecking order.  You can quickly determine that you are not in cue for great prices for your high volume items if the broker offers a rebate or if you can only secure month-to-month pricing.  

Avoid awarding bids to the lowest bidder  - if the price term is the shortest.  The critical end-of-year contracting period establishes your price base for next year. Think in terms of cost-avoidance more than immediate savings and you’ll be ahead of the pack. 

If you bundle purchases (ex: single source poultry) you must gain a price concession to save even with the market – make sure if you add more products to the program that you receive an immediate price concession or extended pricing terms. 

If the supplier thinks he owns your business, deconstruct those bundles/consolidated deals and reduce costs for the individual items. You may have to add a few suppliers to your program, but on the other hand, that may benefit your program next year.

Don’t freak out if your current supplier jumps your price.   Do check the price history for the product and really prepare for you next meeting with the supplier.   Remember, it’s typical for suppliers in tough markets to lean on current customers for increases, but don’t give in too quickly.  Slow the negotiating process and start of bid frenzy —the broker/salesmen community will quickly get word to your current supplier, who I guarantee will ask for a meeting. 

Discover how you can switch from distributor label products to national brands and save money.  SPS clients quickly find out how much money they leave on the table when we conduct a distribution assessment or complete a bid.   The idea is to work around the sheltered income programs that manufacturer’s offer sellers.  This can be accomplished by taking bids and comparing “like-to-like” items on a spreadsheet or take direct action and negotiate directly with the manufacturer for your own private label program. The savings can be significant; for grocery items is 5%, up to $.30 lb. for proteins! 

To jump-start your power-buying program, I recommend extend pricing terms with current suppliers through Q1-2013 as a quick way to edge out the competition for better prices.  Then, during the next few months conduct strategic searches for new suppliers with significant retail presence willing to sell to food service.  

To Higher Profits!

Fred

Fred Favole is Founder & President of Strategic Purchasing Services (SPS), America’s most experienced foodservice purchasing outsourcing firm, offers limited and long-term cost-reduction services, external distributor audits and product development services.  Contact information: P: 912.634.0030, e-mail: favole@gate.net or connect on LinkedIn. 

Views: 52

Comment

You need to be a member of FohBoh to add comments!

Join FohBoh

Advertisments

 

DEPARTMENTS

Social Wine Club for Craft Wineries

Smartbrief

Red Lobster crafts new, high-end image

Red Lobster will nix low-price specials and focus on flourishes like plating in order to reshape itself as a cut above dine-i -More

The Year of the Instagram Strategy
Managing the Instagram channel has become a strategic imperative for any brand or small business, and the urgency grows daily along with its user base. During this webinar on August 12 you'll hear how brands such as Disneyland Resort, JCPenney, and The Coffee Bean & Tea Leaf are utilizing this platform to connect with their customers in an authentic, relevant way. Register today!

The tweet's the thing

Everyone’s atwitter about the NRA's Kids LiveWell Twitter party, held in celebration of the program’s third anniv -More

Arby's meaty campaign highlights protein lineup

Arby's new campaign, "We have the meats!," focuses on the chain's new limited-time menu offering, the Mega Meat Stack, which  -More

JOBS & CAREERS

Posting a job or finding a job starts here at FohBoh. Call us about special $50 posting packages to syndicate across all major jobs boards.

National News

Gen Z, the First True Digital Generation, Represents the Future Foodservice Consumer

Gen Z, the first true digital generation, represents the future foodservice consumer. They're a generation on the move that strongly prioritizes speed of service, technology, and having what they want, when they want it. Millennials, more so than older generations, prefer to visit restaurants that offer new and unique foods and flavors. Gen X and Boomers converge on several preferences—such as the importance of a convenient location.

Red Robin Gourmet Burgers Celebrates Its 500th New Restaurant Opening

Red Robin's 500th new restaurant opening will open on Aug. 4 at 11 a.m., in Milpitas, Calif. at the Great Mall of the Bay Area.

Darden Completes Sale Of Red Lobster To Golden Gate Capital

Darden Restaurants, Inc. (NYSE: DRI) and Golden Gate Capital today announced that Golden Gate has completed the acquisition of the Red Lobster business and certain other related assets and assumed liabilities for approximately $2.1 billion in cash.

Dunkin' Donuts Announces Plans For Seven New Restaurants In Duluth, Minnesota With New Franchisees Brian And Sharon Weidendorf

Dunkin' Donuts announced today the signing of a multi-unit store development agreement with new franchisees, Brian and Sharon Weidendorf, to develop seven restaurants in Duluth, Minnesota and the surrounding areas. The first restaurant is planned to open in spring 2015.

Wendy's Names Brandon Solano Senior Vice President of Marketing

The Wendy's Company (NASDAQ: WEN) announced today that Brandon Solano, 43, a veteran brand builder and product innovator, has been named Senior Vice President of Marketing.

CROWD FUNDING

If you are looking for capital to start or grow your restaurant, create the next 501c3, develop and launch the next app for the restaurant industry,or want to help your peers in some meaningful way, we want to know about it.

TED TALKS VIDEO

TED: Ze Frank: Are you human? - Ze Frank (2014)

Have you ever wondered: Am I a human being? Ze Frank suggests a series of simple questions that will determine this. Please relax and follow the prompts. Let's begin …

TED: Heather Barnett: What humans can learn from semi-intelligent slime - Heather Barnett (2014)

Inspired by biological design and self-organizing systems, artist Heather Barnett co-creates with physarum polycephalum, a eukaryotic microorganism that lives in cool, moist areas. What can people learn from the semi-intelligent slime mold? Watch this talk to find out.

TED: Shih Chieh Huang: Sculptures that’d be at home in the deep sea - Shih Chieh Huang (2014)

When he was young, artist Shih Chieh Huang loved taking toys apart and perusing the aisles of night markets in Taiwan for unexpected objects. Today, this TED Fellow creates madcap sculptures that seem to have a life of their own—with eyes that blink, tentacles that unfurl and parts that light up like bioluminescent sea creatures.

TED: Nikolai Begg: A tool to fix one of the most dangerous moments in surgery - Nikolai Begg (2013)

Surgeons are required every day to puncture human skin before procedures — with the risk of damaging what's on the other side. In a fascinating talk, find out how mechanical engineer Nikolai Begg is using physics to update an important medical device, called the trocar, and improve one of the most dangerous moments in many common surgeries.

© 2014   Created by FohBoh.

Badges  |  Report an Issue  |  Terms of Service