Secret Ways To Get Better Prices And Deals From Food & Beverage Suppliers
This is not an easy or predictable relationship. Covid times have also added the element of complexity between hospitality venues and suppliers. The ecosystem is rife with tension. “One day they are your friends. The next day they are surviving at your expense,” a common sentiment on both sides of the argument. However, you still have a business to run and there is no point to leave money on the table. Here’s how.
One last point to bear in mind, before we dive into this post. There is a misalignment of timelines too. Small operators tend to think short term and suppliers are more after the mid-term or even long term prospects. This is especially true with pricing and negotiations. Covid times have restricted the leg room for negotiating either way because of unpredictable logistics restrictions.
Does your accountant think your suppliers are just plain evil?
Of course not. This is simply a matter of unresolvable tensions because of cash flows. The latter comes from customers, percolates through the hospitality business and ends up in the suppliers pocket in some ways. We may well understand we are someone’s customer or supplier in the end. Increasing costs, bad debts and cash flow issues do not seem to make any distinction.
Be smarter – always.
If you take a step back and walk in your supplier’s shoes for a little bit you may actually see an opportunity to save some money here. Let’s see where their costs are coming from. Firstly, they have costs of goods too. Then they will shoulder their own administrative, marketing and logistics costs. We can’t expect them to want to work without profits unless they are starting out. So, you need to factor in their margin.
If there is anything you can do to help them on any of these fronts, you can probably negotiate a lower price. For example if you can help reduce their distribution costs or administrative costs, making their life easier in the process, you have a leg to stand on.
Can ordering be improved?
Have you heard of Foodbomb? You can easily compare suppliers and electronically place your order. However, that undermines any relationship you may have taken years to build and develop. You trade that for some kind of market-based transparency. You also trade in long term security in your orders. How risk-averse are you really in the end?
Use scale to your advantage. If you order larger quantities, suppliers may favour you. Delivery surcharges may be avoided. However, this comes at a price too. You have to be super organised to dodge spoilage. Help them out and reduce or eliminate their processing costs. For instance, you can buy off them in the same package they get their own orders delivered. Make it predictable by agreeing to minimum orders in advance.
Their mood, your win!
Keeping them happy can be a bit challenging. Little things go a long way. Even remembering issues they are having and doing something about it. For instance, you may help them with delivery times. If you are able to accommodate them so they don’t have to drive to your shop around school time, that can put a smile on their face. How about allowing for a few extra substitutions? Sometimes, it is simply the act of remembering to do a kind gesture.
Good communication means good savings
As within any work or personal relationship, good “comms” go a long way. It is like a bucket of goodwill. If you keep refilling it, when you need a favour, you get away with murder. Forget being right in argument or dispute if you can avoid it – as long as it is clear the poor fellow is simply not trying to take advantage. Again, doing things electronically documents everything. Having everything documented ensures that change of staff on the supplier side does not impact your agreements. Avoid distributing and passing on gifts from suppliers to your staff. This raises an expectation with the latter and encourages “miscommunications” and bribery with the former. No one wins.
Can you just get a discount?
That sounds unreasonable. But, it happens all the time. Surprisingly, it is on a first come first serve basis. Let’s face it, they will not be able to dish out discounts to everyone. And if they have promised you one, it will likely be at the expense of another one of their customers. Ignorance is bliss. In fact, if you agree to promote their brand for a discount, and your competition does not know that, that can come in handy for both you and your supplier – if explained delicately and the practice cautious and sensitive.
Lightning fast cost savings?
Do you use digital menus? If an ingredient becomes pricey, you can simply withdraw the item from your menu. That way people simply don’t order it. Some of these systems are quite sophisticated and can notify you when prices go up. It can all happen on the same day, within mere hours. This is modern times and software ensures actions can be taken promptly and salvage an upcoming financial hole, ahead of time.
Try to order everything from one supplier and see what they can do for you. It sounds simple but most people won’t do it. There are too many reasons against it. However, what if the supplier could give you free stuff in return? Or maybe sponsor an event together to plug his wares even more? Recall promotion is one of his/her expenses too. If you can shoulder some of it (And win too), that would quickly make your business more appealing to the supplier. The trick is not to think of what you can do alone – but rather, what can you do with his support & start looking for opportunities to work on that basis instead.
Ask What Your Supplier Can Do For You..
Suppliers think they praise one thing above all else. In reality, when push comes to shove, it will always come down to pricing. However, why prepare for extreme circumstances. 90% of your interactions will happen in ordinary times. In those times, loyalty often carries the day. In return for loyalty, inquire about what non-financial benefits they may offer you. Leave it to them to come up with something. Or, be proactive and ask for specific items and guide them towards thinking about what they can do for your business.
Many times if you need a favour, it is better to ask for a small one. Reward the behaviour, then ask for the real one you wanted to ask. That may feel a tad bit manipulative. However, the flipside is worse i.e. the supplier thinking you are simply unreasonable. That would hurt the relationship. In the end, business is all about relationships!