While researching ways to save money in a catering business, you’ll probably come across a group purchasing organization (GPO) at some point. But if you’re unfamiliar with the concept, adopting other cost-cutting strategies—like adjusting menus, reducing food waste, and negotiating with vendors—might seem more accessible.
While these are all excellent practices to maximize your bottom line, overlooking GPO membership means you’re still missing out on savings. In essence, GPOs work with leading suppliers to negotiate wholesale pricing on behalf of their members. In other words, you get discounts on supplies as if you were buying bulk while ordering only the amounts you needed. But if it’s so simple, why aren’t more caterers using GPOs?
The truth is that they are! Tens of thousands of caterers enjoy the flexibility, convenience, and cost savings of GPO membership, even if they don’t disclose their secret to higher profit margins.
Unfortunately, GPOs are the subject of misinformation and false assumptions despite the clear benefits they offer business owners. Let’s break down some of these myths and shed light on the reality of GPO membership so you can make an informed decision about your purchasing sources.
Myth: GPO membership limits your purchasing choices.
It’s a common misconception that GPOs lock you into a specific supplier, preventing you from shopping around and buying from other vendors. However, that is not the case. If anything, a GPO broadens your options by providing more inventory at better rates. So you don’t need to cut ties with existing partners—where, when, and how much you order remains solely your decision! If considering a GPO with purchasing restrictions, look elsewhere to find one that does not limit your freedom as a business owner.
Myth: Switching to a new supplier will take too much time.
Joining a GPO isn’t difficult, but it does take time to transition—although not as much as you might think. In fact, you can become a member and have everything set up to place your first order within hours. But if time is a concern, consider also that GPO members save significantly more time in the long run, thanks to streamlined processes, in-house negotiation, exclusive member resources, and local concierge support.
Myth: GPOs are scams to make money off businesses.
You can’t be too careful with business partnerships, so it’s normal to suspect shady dealings—especially when a deal seems too good to be true, as a GPO might sound. But GPOs have been around for over a century with proven results, spanning industries like healthcare, agriculture, hospitality, electronics, and foodservice. The business model focuses on cultivating relationships over profit, which is why reputable GPOs are free for members with no strings attached.
Myth: A GPO isn’t necessary if you already get good deals.
Is there such a thing as saving too much? Negotiating a well-earned deal with an existing supplier is rewarding, but there’s no reason to ignore other opportunities to save. GPOs open you up to discounts far greater than anything a single company can procure. Thanks to the collective buying power of thousands of businesses, you can take advantage of bulk rates without purchasing more than you need.
GPOs offer catering professionals a smart, flexible way to save more money without dealing with undue restrictions or hidden fees. Business owners must make educated decisions about strategic partnerships, so now that these myths have been busted, consider whether a GPO is a fit for your company’s purchasing needs.
