Best practice: negotiating with suppliers

You’ve got problems, they’ve got problems – that’s the first thing suppliers will tell you. Delays from overseas, commodity price increases and many standard products are not available. It’s all over the news and consumers see it in the supermarket, so there’s no harm in occasionally sharing some of the price hits you’re facing. Chicken breast is up 22 per cent, burger mince has increased by 28 per cent and cooking oil prices have doubled. This is transparency, not being a victim. 

It’s also helpful to consider supply price increases and labour shortages together, taking a radical look at the menu and everything that creates it. Here are some tips to help your business get ahead.

Understand the supply journey

The negotiations on your produce or supplies don’t begin and end with the prices. Consider other touchpoints along the way: how much is delivery? What are after-hours costs? What happens with returns or refunds? What kind of training or after-delivery care can they provide? You should be negotiating more than just price with your suppliers, you should consider all aspects of your working relationship.

Be respectful

Negotiating a price does not equal haggling. While there are considerable discounts and deals to be struck,  your supplier is also running a business, and when they say no to your offer, it usually means no. Like you, they have limits on how far they can push their cashflow. 

Upgrade the ordering process

Instant electronic pricing and ordering is now widely available and services such as Foodbomb have multiple suppliers for comparisons. Is there still value in loyalty to one supplier where they get your business for 12 months in return for better prices? Maybe – pricing can now be much more transparent and substitutions are agreed to in advance. They can also advise on the alternatives other operators use for products with rising prices such as oils, vegetables and proteins. It’s always great to call in a favour, but how often have you done that?

Help suppliers reduce friction and finance costs.

Their saving can be passed on to you. Could some deliveries come in the afternoon instead of the morning for a lower delivery cost? Eliminate broken packs and order larger quantities less often and further in advance. Agree in advance on substitutions if needed and pay accounts weekly. 

Use dynamic menu changes

With instant adjustments available through digital menus, there’s no need to feel ‘stuck’ with items that have had a cost increase. Have strawberries gone through the roof? Just turn off that cocktail or dessert on your menu control panel and it will no longer appear on your menu. Using a modern recipe management system gives you an immediate red flag if a price goes up, so this can happen on the same day – no need for an expensive delay before action.

Consider labour and food costs together

The move to outsourcing products has grown much more urgent. Consider the total cost on the plate from a supplier even for traditional items such as poached eggs, hollandaise, cooked meats, chicken and salads. Many more high-quality items are available for heat and serve and specialised equipment including speed ovens can have it ready in minutes with minimum skill. 

Trade-offs still work

They may not be ready to give a further discount on coffee and throw in a pallet of mineral water that you can sell, but suppliers might support your charity promotion with free products in exchange for a mention in your email marketing or on social media.

Being organised and prepared with your menu is the best way to save money and negotiate with suppliers. Work with them, not against them, and you will achieve great results.

Image credit: Typsy