The Purchasing Debate.  How much does it cost you?

As long as there have been salesmen, customers have asked this question. No one wants to feel as if they have been taken advantage of. But as a business man, as a restaurateur, you can't afford to trust your purveyors, right?

MAYBE

First, let's set the record straight - your purveyors are NOT responsible for your Cost of Goods Sold (COGS). The "Food Cost" you generate in your restaurant is based upon how well you CONTROL and MARKET your inventory. Whether your purveyors sell you tomatoes for $15 a flat or $30 ( a typical annual fluctuation), you still need to make a profit selling them to your guests

PHILOSOPHY OF PURCHASING

There are still a lot of operators who "cherry pick" low pricing from a multitude of purveyors.  You know who you are. These price-listers spend hours every week going over pricing sheets from two, three, or more purveyors, and always purchase the lowest price. Is this smart?  Is this the best use of their time? We'll offer an example in lieu of a one-word answer.

When we bought one of our earlier restaurants, we were  still in awe  of our Chefs. These guys (back then they were always guys) were very fixed in their ways, and Management rarely intruded upon their back-of-house domain. We allowed them to purchase what they wanted. It was easier to beat up the salespersons than to ask the Chef to control inventory better, reduce waste, and to buy products appropriate for the restaurant. There were a number of problems with this dynamic:

1) None of the purveyors enjoyed a major portion of the business. Further, all were begrudged a profit margin. They were often treated like thieves. Which one, on a Friday afternoon, would be willing to drop everything to find two cases of Tenderloins for us? None of them cared, because we only bought the cheapest price, and they seldom made any commission of substance from our account.

 2) Because we only bought the lowest price, all purveyors were looking for ways to earn a bigger share of the business by offering the cheapest (in quality) products. Despite demanding "only the best", we often got what we wanted - the cheapest product. These products have much lower yields, and much lower quality, and the guests suffer the consequences of this process.

3) Despite their culinary training, many Chefs did not (and still do not) operate their departments like businesses. They are "artists." Wrong! Restaurant success, more often than not, is based upon the efficiency, talent, and productivity of the kitchen. Creating a beautiful plate is less than 30% of the Back-of-House equation. In over 150 restaurants we've visited in the past 5 years, only 3 had kitchens operating properly. Being a professional Chef or Kitchen Manager requires control systems for inventory, staffing, sanitation, and training. A real professional Chef or Kitchen Manager will TAKE control of the kitchen operation and establish budgets, protocols, and regimens in order to create business success.

So the long answer to the short Cherry-Picking question is:

"It's not a formula for business success."

In the last month, National has helped a client reduce their food costs by almost 10% just through undertaking a process to negotiate the proper way.  In one year the operator will save  8-10 times our fee.   In the years ahead, this consulting fee will continue to pay back.  Call and let us help you achieve the same type of savings.

Success in business equates to more personal time for you, and the real opportunity to work ON your business instead of putting in 100 hours a week IN your business.

National Restaurant Consultants has helped hundreds of operations around the world to improve their performance.  Contact us at (303) 757-3663 so we can help you see better results and profit from the current operating environment.