If you are running a restaurant business, you know that it can be very demanding. You understand that you need to offer a good quality product while cutting your operating costs at the same time. When it comes to food suppliers, prices can be all over the board. So can the quality. How do you know you are getting the deal you need to be successful?
In the supplier world, there are words that spell profit for the supplier, but not the restaurant owner. As a restaurant owner, unless you know what those keywords are, they can work to your disadvantage.
Food suppliers don’t want their customers to know the ins and the outs of the supplier world for a good reason. The less restaurant owners and operators know about food pricing, the better for the profit margins of the suppliers. Knowing these four dirty words that hide supplier industry secrets can help keep you from being taken advantage of.
- Price Creep
Price creep is the way that suppliers incrementally raise the prices of their products so that you don’t notice. Before you know it, your bill has gone up substantially. By the time you realize it, you have been paying higher prices-all along.
Food service company offer you a price that you simply can’t beat. Thinking it is a deal, you jump on board and the item soon becomes your regular order. Months go by and suddenly you notice that the “great deal” has gone up by a small amount every month.
Before you know it, that excellent price isn’t so excellent anymore, and your food supplier has gotten you to pay a much higher price for months without you even noticing.
- Price Spikes
Have you ever noticed that certain foods tend to jump up in price suddenly without explanation and then back down again in the same fashion? When your supplier brings you your regular order, you might notice that one item has jumped substantially.
Even worse, your competitors aren’t paying any more for the same product, which means there is no rhyme or reason for the spike. Food suppliers will sometimes hike up the price of their food from month to month to gain more revenue, hoping that you either won’t notice or will just think that something in the industry changed. If the price goes back the following month, no harm, no foul.
The reality is that the food supplier is probably doing it to turn a profit, not because the industry prices have jumped. This can happen many times with different foods if you aren’t paying close enough attention.
Over market is when one restaurant pays substantially more than other restaurants for the same food. These items are considered over marked. Of course, your supplier isn’t going to point it out to you or tell you that you are paying over marked prices. This is a way for them to increase their profits.The only way to know if you are paying more than the average is to do your own investigation to see discover the going rate. It might take a little more time than just ordering and crossing your fingers, but, if you have a ton of over marked items, then it is well worth it to check your pricing periodically.
- Pack Size + Efficiency
Most restaurant owners assume that they are saving when buying bulk. The truth is that sometimes buying in bulk offers savings and other times it is simply provides a way for the food supplier to deliver items more efficiently, meaning that you aren’t reaping any benefits from buying in large quantities.To make sure that you are getting more from buying in bulk instead of buying just what you need and not having anything go to waste, be mindful of the unit price instead of assuming bulk always equals savings.It is a cat and mouse game. The supplier is in the supplying business to make a profit. The restaurant owner is in their business with the same objective. The key success is to know what things cost, not to let things slide, and to check on prices periodically to make sure that you aren’t being overcharged. If you can make changes in your ordering to save your restaurant money, then do so.
Don’t play the sneaky games that suppliers create. It might not seem like a whole lot, but if you add it all up, suppliers can really get a lot more than you think with these four dirty little words. Now that you know them, you can stay out of the game by staying on top of it.
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