Celebrity chefs and shows like
Hell’s Kitchen and
Top Chef highlight the creative, exciting side of the restaurant business. The contestant developing the exquisite menu item that will keep himself or herself safe from the wrath of Gordon Ramsay makes for great television.
Although they can be a big a part of a restaurant’s success, I don’t think the folks dealing with supplier contract negotiations will ever get their own shows. “America’s Next Top Purchasing Agent” will not be on the Fall schedule – not even as a midseason replacement. Yet done correctly, an adjustment to purchasing/food costs can have the same or bigger effect as opening a new unit.
At
Answers Systems, we work with foodservice multi-unit operators to help them understand their purchasing trends and data, which in turn help them manage their supplier contracts and relationships. Whether you use the
ValuTrak® solution from
Answers Systems or your own in-house methodology, there are some key benefits to leveraging your purchase/contract data in a supplier/SKU rationalization strategy:
Improved bargaining power
Multi-unit accounts need to do a routine examination of their spending profile. If your units are purchasing five different brands of coffee across the organization, your bargaining power is spread across those five brands. When you consolidate your purchases under one or two brands, your bargaining power increases. Be sure to enforce compliance across units.
Increased efficiencies
When you attempt to manage a large number of supplier contracts, you have more contracts and data to manage. These contracts and data have to be set up in one or more software systems; they require negotiations, vendor management, etc. There are some options here: decrease the number of manufacturers (thus decreasing the number of in-house resources required), or outsource some of the contract management processes to a system such as the
ValuTrak® solution, which frees up the procurement staff to spend time on supplier relationship management.