Restaurant owners and Chefs commonly complain about suppliers who come in with pricing that may be below market value, but then slowly but surely start to raise prices as the relationship evolves.
In fairness, buyers sometimes overstate their volumes, and supplier reps too may be overly aggressive at first, in the hopes that they will grow sales so large that they will be able to sustain these very low prices, or introduce other items where they can start to become profitable. If expectations aren’t met, suppliers will surely have to raise prices to offset inefficiencies in the relationship that didn’t pan out the way they had hoped.
Neither of these things happen in ChefMod because through our distributor network, the suppliers have already been vetted, and they have already earned their position. Ingredient pricing that we may offer new members or that you would see when first coming into the program are the prices being charged to all members currently within the network.
How we ensure that pricing remains competitive once you’re part of the program is a larger answer and we manage this several ways.
This is job number one. Every one of distributor programs is a little bit different but the idea is to have an auditable program that is negotiated regionally based on program efficiency, namely volume, terms, and drop size. Most often they are a version of cost-plus that’s based on delivered or FOB cost.
National Program Comparison
As a National Organization, ChefMod brings piece of mind to all its members by Comparing programs Nationally while creating great distribution efficiencies regionally. Executing and comparing programs state by state ensures that all members realize the lowest possible pricing.
An important component of these agreements is to provide auditing capability, and additionally to secure incoming distributor costs with a layer of manufacturer contracts.
Manufacturer Contracts on many products and brands.
These contracts are usually structured to provide landed costs or FOB. With these contracts, we can apply to our distributor agreements to derive delivered cost.
With Heinz ketchup for example we have a landed cost or an fob cost of x, and distributor markup is y, and freight into that distributor is z. When we add X, Y, & Z within a few pennies we have what our delivered cost is. Variances are audited.
As a side note, distributor private label items are not under this type of scrutiny which is largely why we gravitate toward national brand contracts such as Heinz, Lamb Weston, Frymax, etc.
Price Comparisons. Constantly.
In the end there is no substitute for knowledge gained through Net Price Comparisons among many different companies across the country.
If you would like to learn more about our program or see a live demo please visit us here.