In the competitive world of restaurants, managing costs effectively isn't just a strategy—it's essential for survival. One of the most significant areas where you can control costs and boost your bottom line is through effective supplier negotiations. Collaborating with a seasoned expert, we'll explore how mastering this skill can make a substantial difference in your restaurant's success.
A little bit about our expert:
Strategic Supply Chain Partners is a Supply Chain Solution Provider servicing all industries within foodservice. SSCP experience ranges from single unit ownership restaurants to multi-million-dollar chains with billion-dollar companies including emerging chains, QSR, Fast Casual, Casinos, Hotels, Schools, Assisted Living and others. SSCP supplies strategic "on-site and off-site fully-managed supply chain function" as an alternative to an internal supply organization or a co-op. SSCP works exclusively for clients, not a GPO or specific distributor.
Understanding Your Leverage
Before you sit down at the negotiating table, it’s crucial to understand what cards you hold. Leverage in supplier negotiations can come from various aspects of your business:
Volume: If your restaurant orders large quantities, suppliers are more likely to negotiate better terms.
Loyalty: Long-term relationships can give you an edge. Suppliers value stability and predictability in their clientele.
Seasonal Demands: Use your menu’s seasonal changes as a negotiation tool by planning purchases in advance and discussing these needs with suppliers.
Understanding these elements can position your restaurant to negotiate from a place of strength.
Preparation is Key
Understanding data is a key in preparing for negotiating with suppliers and distributors.
Access to data including menu item performance, ingredient usage and cross-utilization, ingredient availability and seasonality are all important.
Understanding data related to manufacturing practices, how certain products are marketed, and how those items compare across distribution platforms.
Having access to product pricing, availability, logistics, freight lines, and other criteria across markets, regions and nationally is critical.
Strategic Supply Chain Partners provides those insights to clients in order to facilitate informed purchasing decisions. To get the best possible deal, foodservice companies need in-depth understanding of the manufacturing, purchasing and distribution world and how it impacts them.
Effective Communication Strategies
How you communicate can often be just as important as the terms you’re negotiating. Here are some strategies:
Be Clear and Concise: Make your needs and limits known clearly. Ambiguity can lead to misunderstandings.
Stay Professional: Even tough negotiations should be conducted with respect. You’re building a relationship, not just striking a deal.
Lead with Numbers: Using software to quantify both $ and quantity of items purchased is critical to success.
Negotiating Tactics for Better Deals
Getting into negotiations is always stressful and a bit awkward. The goal is to create a win-win situation where everyone is happy, not for one party to win. This is a common misconception in negotiations!
Work with someone with deep knowledge of the industry and ideally long-standing relationships with manufacturers, suppliers, broadline distributors, and importers
Start an RFP process to create supplier competition addressing delivery fee structure, price deviations, SKU consolidation, incentives, and other important considerations determining the final prices
SSCP clients on average have experienced reduction in overall cost of goods pricing between 7% and 15%.
Building Long-Term Relationships
Negotiations are just the beginning. The goal is to build a relationship that will grow and evolve along with your restaurant:
Regular Check-Ins: Schedule regular meetings to discuss performance, challenges, and evolving needs.
Mutual Growth: Look for opportunities that might benefit both your supplier and your restaurant, such as promotional events or joint marketing campaigns.
Software and Tools to Aid Negotiations
Embracing technology can provide a significant advantage in supplier negotiations. Here are some tools that can help:
Inventory Management Systems: Tools like Restaurant365 or MarketMan offer features that track inventory levels and usage patterns, providing data that can strengthen your negotiating position.
Early Warning/Alert Software: Starfish assists with ensuring that you know earlier and more often as your costs are increasing so you can have the data you need to negotiate the best prices.
Mastering negotiations with your suppliers is not just about getting the lowest price—it’s about forging partnerships that will help your restaurant thrive. Approach every negotiation as an opportunity to strengthen these relationships and enhance your business’s prospects.
We’d love to hear from you! Share your experiences, challenges, or tips in the comments below. For more specialized advice, feel free to contact our expert partner.
Comments