Who will you partner with?
SELECTING VENDORS & YOUR FOOD and BEVERAGE MIX
Your new restaurant will likely purchase Food & Beverage items from a wide variety of suppliers; while your concept, clientele and menu will determine the product mix of items you purchase. Obviously, a Five-Star restaurant will offer a much higher quality and sophisticated product mix than a diner or fast-casual restaurant.
Your Gross Profit and future success in this business is absolutely dependent on the price your market (target customer) will bear, your Cost of Goods Percentages and the volume of traffic your restaurant is able to generate and sustain over time.
Finding the right quality products for your concept at the best price to purchase and priced for “perceived-value” to the consumer, should be a major focus in designing your menu.
You must KNOW YOUR CUSTOMER.
If your theme requires the highest quality ingredients, you must ensure that your clientele cares and seeks this level of quality. This is a very fine line. ‘
NOTE: I recently worked with a newly opened client restaurant in a very competitive restaurant city that purchased only grass-fed local farm raised beef and organic local produce, yet this fact was NOT advertised to bring in that discriminating clientele. The Result quickly after opening was high food costs and little to No profit as this restaurant struggled to increase customer traffic.
FOOD PURVEYORS: Food vendors vary dramatically by size (national vs. regional or local), quality and depth of product choice, frequency of delivery and service.
Simple economics and economies of scale dictate that the largest broad-line suppliers have the greatest industry purchasing power and thus are able to offer the lowest prices to the restaurant customer. These companies also deliver weekly with the greatest frequency to most areas of the country and have excellent dedicated service from highly-trained and knowledgable reps, many being former chefs and culinarians.
Mid-sized regional players and local specialty suppliers round out your variety of choices, albeit at comparable service, but higher price. The only exception to this rule are “high-end” specialty suppliers that focus on low volume, high quality and sophistication items such as foie gras, truffles, caviars, expensive aged cheeses, spices, etc. that the broad-line suppliers find little demand for.
Again, your concept, clientele and pricing structure will determine the vendors you purchase from.
Questions to ask potential food service vendors are:
- Major national brands carried
- range of quality/grades of product available
- custom meat cutting programs to your specs
- frequency of delivery
- account representative references from your territory
- back-order/outage policy, etc..
EXCLUSIVITY CONTRACTS: If you choose to do business with the largest national purveyors, be aware that their main objective is to increase their market share and for your restaurant to purchase the majority of product from them. To acquire this business volume, they may promise you the absolute lowest prices, offer wide-ranging value-added services (free menu design & printing, dishwasher maintenance programs, marketing ideas, etc..), offer month-end cash-back rebates on all your purchases, etc..
Some of these vendors will ask you to sign “exclusivity contracts” promising a certain percentage volume of purchases to that vendor in order to qualify for the benefits.
WORD TO THE WISE: In my twenty years of experience, I have worked with all three of the largest broad-line vendors and each has promised one or all of the above benefits without the R.O.I., one would expect based on the promise.
If you give your chef or kitchen manager autonomy to make final purchase decisions, that decision may be made on the basis of personal friendship or appreciation of a particular rep’s service, at the expense of your food cost.
The only tried and true way to get the absolute best price and service from any vendor is to Shop Price weekly on comparable quality/grade of goods (See “Key-Item Pricing” Spreadsheet and Audio tutorial # 5 in Academy Module 2).
BEVERAGE SUPPLIERS: If you are planning to serve spirits and/or beer & wine, you will need to determine how many different varieties of liquors, beers (both keg and bottle) and different varietals of wine (reds & whites) that your clientele will demand/appreciate.
Do you need to stock Absolute, Stoli & Finlandia…
Do you need Bombay and Tanqueray… Myers and Mt. Gay Rum?
Do you need Budweiser, Bud Light & Coors Light?
How about Heineken and Stella Artois?
Hard cider and Single malt scotches?
The choices are endless, but so are the limitations on budget and storage at some restaurants.
Over time, beyond the basic requirements you’ll find that your customer’s requests will determine your ultimate beverage/liquor product mix.
Typically, these brands are available from different and multiple suppliers, so more than likely, you’ll need to purchase from several suppliers.
NOTE: When I started my first two restaurant/bar concepts, I interviewed several managers of similar concepts that were far outside my trade area in order to determine exactly which products I most needed to carry. This information proved highly accurate and invaluable.
WORD TO THE WISE: Vendors and their supplier brands will all but beat down your door to convince you to carry their products, especially their draft beers, as increasing market share is their primary goal. No matter how many draft lines you have available, there will never be enough space to satisfy all of these requests which puts your restaurant in an advantageous and leveraged position. You can literally pick and choose suppliers based on customer requests or your preferences.
VALUE FROM SUPPLIERS: Different vendors are willing to provide different value-added to their accounts depending on potential and proven purchase volume, number of taps represented, prestige of the account, past and future media/press coverage, etc..
One vendor may be willing to print your menus and table tents, while another may be willing to bring in live entertainment for your Grand Opening, etc..
Value-added is negotiable before you commit to any supplier and this is when you will have the most leverage.
NOTE: Many states deem it illegal to request or accept any cash, cash value or merchandise in excess of a certain limited dollar amount from any liquor supplier, as it is seen as a coercion or inducement to carry certain products at the expense of other products and “unfair trade”.
**Check with your state liquor commission first for legality before accepting anything of value from liquor suppliers (See Sponsorships/Promotional Accounts in Academy Module 4).
DRAFT LINE CLEANING/MAINTENANCE: If you have a draft beer tap system, your draft lines will need to be cleaned and maintained periodically to ensure freshness of product, taste and optimum efficiency of pouring. To accomplish this, your vendor(s) will pour gallons of good product down the drain to flush out your lines.
WORD TO THE WISE: Although this is a necessary process, vendors benefit from wasted product as your restaurant then needs to purchase more from them more frequently. Unless you have a very slow demand for draft beer with low volume sales, your draft lines will NOT need to be cleaned more than once every three to four weeks.
Occasionally, your bartenders will find that one or more of your draft lines are pouring excessive foam which also wastes valuable product. This is indicative of a temperature and/or CO2 Pressure issue. Have your vendor’s draft technician inspect and refine each line’s pour efficiency immediately before too much product is lost.