With the new year upon us, many business owners are spending time creating goals and making big plans for 2023. If increased profit margins are in the forecast, you might consider ways to raise pricing and sell more (particularly in times of inflation). But don’t overlook the other side of the coin: cutting down expenses.
Catering businesses carry many fixed costs: rent, equipment, payroll, taxes–the list goes on. But one thing is noticeably left off that list: food!
Many caterers and restaurant owners assume that food prices are fixed. After all, we don’t go to the grocery store and negotiate with the cashier for the best rates. There’s a sticker price for a reason!
While we don’t have that kind of leverage as consumers, you can negotiate with food suppliers. Your suppliers are business owners, too; they understand the importance of retaining clients, just as you do. So, next time you place an order, don’t be afraid to discuss ways to save on your food without impacting their bottom line.
Here are a few ways to trim your food budget without sacrificing quality.
Ask for samples and suggestions
Distributors are experts on their inventory, so don’t be afraid to ask if they recommend any cost-effective alternatives. In some cases, you may find a generic-branded product that is just as good at a lower price. Request a sample to test it out before making the switch. A great food supplier will guide you in the right direction, so lean on their knowledge to make more budget-conscious decisions.
Reach out to local suppliers
When you’ve established close relationships with suppliers, they’ll often notify you of extra savings opportunities or flash sales. And on a local level, you’ll likely find more flexibility with pricing–particularly if you’re a regular customer. So spend time researching and connecting with butchers and farmers to build a partnership. Bonus: Today’s consumers value locally-sourced food for its sustainability!
Double-check your invoices
If you’re wondering where all of your money is going, review your invoices from the bottom up. Most of the time, caterers negotiate prices for big-ticket items like proteins and produce. However, those savings might pale in comparison to inflated pricing on disposables that live at the bottom of the receipt. So always look through your itemized invoices for discrepancies before heading to the negotiation table.
Let a GPO handle it for you
You’re a culinary pro, but that doesn’t make you a negotiation expert. Your time is better spent in the kitchen and leading your team, so consider joining a group purchasing organization (GPO) to take over negotiation. By combining the buying power of thousands of companies, GPO members get better pricing than they’ll find on their own. And since it’s free to join, GPOs provide a 100% return on investment.
Many trusted and reputable food suppliers are willing to work with catering businesses to achieve mutual benefit. Unfortunately, others rely on price gouging techniques to make up for a high churn rate. Finding the right suppliers is vital to negotiating success, or you could leave it up to a GPO to source from reliable big-name brands without passing on hefty big-name costs. The choice is yours!