As any restaurant owner is all too aware, the food service industry is known for having tight margins and high overhead costs, and it doesn’t help that the cost of food shipments is on the rise. You are not alone if, as the owner of a small, independent restaurant, you are looking for ways to save money and cut food costs to keep your business aﬂoat, particularly with how hard the last year has hit the restaurant industry.
Unfortunately, independent restaurants and smaller chains do not have much power to negotiate with suppliers due to their size. Unlike large, national restaurant chains that have the buying power to get the best prices and products, small restaurants end up at the end of the line, oftentimes getting inferior products for a higher price.
Fortunately, there is power in numbers, and a group purchasing organization (GPO) can allow small restaurants to pool their resources and negotiate better rates on supplies.
What is a GPO?
If you are not familiar with GPOs, you may be wondering what exactly they are and how they can beneﬁt small restaurant owners. A group purchasing organization is a collective of restaurants that join together to get better deals from suppliers. While small restaurants do not have the power individually to negotiate with suppliers, working together gives these restaurants the money and leverage that they need to get the best deals from food producers.
Not only does this put small restaurants on more equal footing with national chains when it comes to acquiring products from their preferred suppliers, but it also gives these restaurants access to vendors who may not have been willing to accept small orders from a single restaurant, greatly increasing their buying power.
The fact is that there is power in numbers, and working with a GPO can give restaurants the power to negotiate prices on everything from produce to uniforms. If your restaurant is currently not part of a GPO, keep reading to learn about just a few of the beneﬁts joining one could provide you with.
How a GPO Saves Time
One of the biggest beneﬁts of joining a GPO is that doing so can save you a great deal of time. The fact is that tracking and comparing prices, vendors, and services can be overwhelming for small restaurants as it is extremely time-consuming. Researching and talking to suppliers to learn about options and pricing, and comparing multiple vendors, can quickly cause a headache for the owner, chef, or manager in charge of purchasing at a restaurant.
In fact, this can end up pulling focus from a manager’s most important job: making sure that customers are happy. However, when you partner with a group purchasing organization, all of this work is handled for you. You can rest assured knowing that your GPO is working to get you and the other member restaurants the best deals on the products you need, without having to spend hours of your time researching suppliers and reviewing cost-comparison spreadsheets.
GPOs Give Small Restaurants Big Buying Power
As we previously mentioned, small restaurants are at a disadvantage when it comes to sourcing products, as large national chains often have access to the best products and the lowest prices. In fact, many small restaurants may even struggle to get the brands they like, or the quality of products they deserve, as being at the back of the line leaves them with fewer options.
Contrary to the belief of some restaurants that they are too small to join a GPO, small restaurants stand to gain the most by joining a group purchasing organization. A GPOs job is to ﬁght for the little guy and give them better bargaining power. By pooling the resources of many restaurants, GPOs are able to create a strong bargaining unit that puts small restaurants on more equal footing with large chains.
GPOs Save Restaurants Money
Of course, perhaps the greatest beneﬁt small restaurants stand to gain when they join a GPO is signiﬁcant cost savings. The fact is that large chains have the leverage and buying power to negotiate lower rates on bulk orders, sometimes paying 30% less than an independent restaurant would pay for the same products.
Fortunately, joining a GPO gives independent restaurants similar buying power to large chains. By leveraging group purchasing power, your GPO will be able to work with suppliers to negotiate lower prices on bulk orders for many of the supplies you and the other restaurants in your group need. Reducing the cost of food and other items you frequently use in your restaurant can then help to boost your bottom line and increase the proﬁtability of your restaurant.
However, just because you are paying less does not mean that you will have to sacriﬁce quality. Your GPO will constantly research options and negotiate with suppliers to ensure you are getting the best products at a fair price.
Get Access to Better Food Through a GPO
Some restaurant owners may worry that turning over their purchasing to a third party, and relying on bulk orders, could mean that they will see a drop in the quality of food they receive; however, this is not the reality of working with a GPO. When you work with a GPO, you will have a team on your side dedicated to ﬁnding the highest quality products. Your GPO will have the time to research suppliers to that ensure you are getting the best food possible at an affordable rate. In fact, the power of bulk orders may even allow you to purchase higher-end food items that you may not have previously been able to afford, or exotic foods from suppliers who would not take small orders from independent restaurants. The fact is that you will likely ﬁnd that the quality of food you receive goes up after joining a GPO.
With restaurants operating on such small proﬁt margins, anything that independent restaurant owners can do to save time and money can be extremely helpful. Thusly, if you are tired of overpaying for supplies and competing with large chains for name-brand products, it may be time to join a group purchasing organization. A GPO can do the hard work for you by working with suppliers to get you the best food at affordable prices.
At ChefMod, we are in the business of helping independent restaurants gain the buying power and benefits of a large national chain. To learn more about our GPO & member services, contact us.