Food and supply costs are one of the biggest expenses restaurant owners will encounter and negotiating with your suppliers can have a significant impact on your bottom line.  Lower costs allow you more menu flexibility and can impact your bottom line for years to come.  So, what leverage do you have when negotiating with your suppliers?

Single Supplier

If you purchase a large percentage of your inventory from one supplier you stand a much better chance at receiving lower bulk rate pricing.  Buying in bulk is always to your advantage as long as you properly track your inventory.  Continued heavy volume business gives your restaurant the leverage it needs to negotiate prices across the board.

Quote The Competition

Letting your suppliers know you’re shopping around and quoting lower price points from the competition is one of the best ways to persuade your vendors into offering a better deal.  Detailed online research and networking with fellow restauranteurs can give you the knowledge you need to negotiate a better deal.

Long-Term Contracts

Long-term contracts protect you from large price increases and can lock you into discounted rates.  Be sure to do your research before agreeing to something long-term as not doing so could lock you into a bad deal.  The prospect of locking in future business is generally enough to get suppliers to drop their prices.

Avoid Cost Plus Percentage Model

“Generally, vendors have two main pricing strategies that can be used, Cost plus Percentage & Cost plus fixed price. Cost per percentage is a strategy where the price increases in proportion to cost, while cost plus fixed price you pay the food cost and a flat fee.”  Locking yourself into fixed food prices can save you a significant sum of money over the long-term.

Fewer Deliveries

The fewer times your vendors need to fulfill your orders, the less money you’ll spend.  Fewer orders are cost effective for your suppliers and with proper negotiations that savings can be passed on to you.  Condensing your orders while paying close attention to product use and expiration dates can make your deliveries more efficient and less costly.

Having an intimate knowledge of your own finances and researching suppliers and food prices will give you the knowledge you need to better negotiate with your vendors.

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