Yes, you have to spend it to make it. But why spend more money than you have to? The deals are out there, for everything from wine to cleaning services. You just have to know where to find them, or at least how to ask for them. We sent reporters out looking for all the best ways for restaurant operators to save money. They found some great tips, so take a look and save a few bucks.
"There’s a sea of well-priced wine available from expected and unexpected regions,” says Michael Green, president of Liquid Assets consulting group in New York City. Certain regions are delivering especially good value. He cites rosés and Albarinos from Spain, Sauvignon Blancs from New Zealand, Cabernet-based wines from Chile, German Reislings, French Chenin Blanc from the Loire Valley and medium- to full-bodied reds from Puglia and Campania in Italy.
Research and a willingness to experiment can yield the best bargains. But if you don’t have the time or resources, tap your importer or distributor for ideas. “Think of them as true marketing partners—not just vendors who can provide case discounts,” Green says.
At Quartino, a Chicago wine bar and restaurant, executive chef/managing partner John Coletta follows that advice with his distributor, Blue Star. “We go to regions that aren’t well known for producing stellar wines, like Sicily and Campania,” he says. “The varietal is known but the winery may not be.” When they discover a fresh, food-friendly wine with character, they purchase it by the container load.
Other ways to save? “I’m a big fan of alternate closures,” says Green. “Screw tops and boxed wines—especially from Australia—can be good buys and look hip and cool.”
Sure, you can buy your own knives, charge employees with keeping them sharp and replace them periodically. But depending on your market, you can also check out back-door cutlery service. It’s essentially a rental program: You specify which types and how many knives you need, and the service provider drops off professionally sharpened knives each week (or however frequently you want), picking up those used the prior week for re-sharpening and re-conditioning.
Depending on the number of knives they’re using, a typical 60- to 80-seat full-service restaurant pays around $15 per week, says Robert Ambrosi, who operates Ambrosi Cutlery in Mahopac, New York, (www.ambrosicutlery.com). Such mobile services exist around the country, including The Knife Guys (www.theknifeguys.com) in Denver, which, through a national franchise division called Rolling Sharpening Stone, also offers on-site knife and smallwares sales from 18-foot mobile “showrooms.” Prices are com- petitive, says owner Darryl Hoffman, but the real deal is always having professionally sharpened knives—and one less thing to hassle with.
Looking for tech deals?
Whatever technology item might be on your to-buy list, chances are you can dredge up a killer deal at one of these sites: Spoofee.com highlights the best bargains of the day on its main page. Venture around a bit and you’ll find helpful deal forums, a one-stop spot for weekly ads from major retailers and a collection of current coupons.
CNet Shopper at shopper.cnet.com combines in-depth technology reviews with a price comparison search engine. Pick your product and then find the best offer. NexTag.com is already a popular shopping search site, but you might not know about the Price Drop feature. For example, the “Price Drops” link within the Computers category clues you into the biggest recent savings on notebooks, printers, desktops and more.
Look east—Far East—for your paper and plastic plates, containers and utensils. “China is emerging as a major player in disposables,” reports Russ Cipolla, principal in Team Four Foodservice, a group purchasing organization. “And the products coming in from there are 15 to 20 percent cheaper.” While quality varies considerably, large American disposable distributors, such as Bunzl, now station employees overseas to supervise production and packaging. The result: improved, more durable products.
Cipolla also advises operators to source from lesser-known manufacturers that have good market penetration. “Most operators fall in love with a brand, but it’s smarter to fall in love with performance,” he claims. For more competitive pricing, go through a disposables distributor rather than a broadliner. Eastern Bag and Paper, for example, imports its own house brand from Asia.
Deal basics - Distribution
There are a few rules of thumb when looking to cut costs with your distributor. Here’s a primer:
- Buy in bulk from one place. The more you purchase, the bigger the discounts a distributor will provide.
- Bundle orders into one delivery, when possible, to conserve fuel.
- Go for private labels. For certain products, like ketchup and other condiments, brand image might be a priority. But distributors usually offer a better price on house brands or private label products.
- Be willing to compromise. “A distributor will give you the best deal on the package size they are trying to move,” says Harry Harrison, director of purchasing and distribution for the Black Angus Steakhouse chain. If you agree to different specs, you can save money.
- Lock in prices on commodities. If your distributor offers long-term pricing contracts for beef, seafood, poultry, coffee and other commodities, sign up. It looks like food inflation is here for awhile.
- Keep an eye on invoices. Regularly check your bills to make sure charges aren’t escalating behind your back.
- Join a buying co-op or group purchasing organization. Particularly good for independents, the combined buying power of co-ops and GPOs gets members better deals than they would on their own.
To make the most of your uniform-buying dollars, focus on the pieces that are most visible to customers. “Put your money into the shirt and apron,” suggests Janice Henry, VP of design for Superior Uniform Group in Seminole, Florida. “And buy from the com- pany’s stock line instead of going for custom-made apparel.” Renting is a viable option if staff turnover is on the high side, says Brian Garry, director of segment marketing for Cintas, a national company with a local presence in most markets. “We charge a flat fee for each employee, so you basically pay for what you use,” he says. Uniform rentals average $5 to $7 a week per employee, including laundering. The drawback? Choices are narrower when you rent.
The age of the one-stop marketing shop is over, right? Now it’s de rigueur to split your business up, with one contract for PR, another for outdoor advertising and still another for marketing. Not so, says Doug Reifschneider, director of marketing for Jacksonville, Florida-based Firehouse Subs, which has more than 250 units across the southeast. The 13-year-old company does its marketing the old-fashioned way, paying a retainer to Erwin-Penland (www.erwinpenland.com), a South Carolina advertising, marketing and branding firm that is a division of Hill Holliday, the big advertising agency. The arrangement means that Erwin-Penland handles everything from point-of-purchase materials to print fulfillment to good old-fashioned PR for Firehouse.
Not only does the arrangement save Reifschneider time—“When we’re working on developing a new product, it means the world to be able to call one or two contacts at Erwin-Penland and get them to run with it,” he says—but it’s surprisingly cost-effective, too. “We had a third party consultant review the contract, and we found out that Erwin-Penland is giving us a great deal for our money,” Reifschneider says.
The best way to save money on insurance premiums is to pay attention at renewal time. It’s a well-kept secret that much insurance pricing is subjective. So let your insurance agent know that you’ll be asking the agent around the corner for a bid, too, and you’ll likely save 20 percent to 30 percent on your premium. Don’t know how to compare one policy to the next? Look for an independent insurance consultant, many of whom are retired insurance brokers. (Check with your state’s office of insurance or search online under “insurance consultant.”) The best consultants are those who don’t sell insurance themselves. Yeah, you’ll have to shell out the dough for their fee, but in return you’ll be getting unbiased advice—which means lower premiums and, just as importantly, a policy that’s right for your business.
Partnering with a food manufacturer is the cheapest way to research and develop menu items. Big companies are staffed with trained research chefs who develop proprietary products for foodservice customers free of charge. Often they partner with other vendors to come up with a comprehensive solution. Say you’re looking for a new burger variation; a meat supplier can enlist manufacturers of sauces, buns and even equipment and arrange a vendor panel—which often includes an independent consultant who specializes in R&D. Robin Schempp, president of Right Stuff Enterprises in Waterbury, Vermont, who takes part in these preferred vendor panels, is asked to do everything from ideation to recipe development to marketing. But, she cautions, “you’re beholden to using the manufacturers’ products.”
Rick Kowalski, operations VP for It’s a Grind, a Long Beach, California-based coffee chain, recommends keeping tabs on the price of green coffee beans in the open market. That way, if your supplier increases prices, but you know the price of beans hasn’t increased, you’ve got ammo at the negotiating table.
“Coffee is the second most traded commodity and prices fluctuate daily,” he says. By going to a financial company’s Website or the CNN Money site, you can track prices and compare them to what your supplier or roaster is charging. New technologies are bringing labor-saving coffee products to foodservice that may also save you money. Liquid coffee concentrate costs the same as ground coffee, yet it takes the guesswork out of brewing and storage—a plus for many operations.
Web design & hosting
You don’t have to spend a fortune to get a Website. You don’t have to spend anything at all. With Microsoft Office Live Basics (officelive.microsoft.com) you get a domain name, Web hosting, design tools, 25 email addresses and 500 MB of Website storage space, all for free. An inexpensive offering can be found with SiteKreator.com’s $19.95 per month business Website package. Yahoo! (webhosting.yahoo.com) has an $11.95 per month starter plan with nice extras like 24-hour, toll-free phone support and a free domain name.
Committing to a primary supplier can save you money. “As soon as it’s a split job, with one company doing tablecloths and napkins and another chef’s coats, mop heads and towels, for instance, prices go up on both sides,” says Matt Schlosberg, VP of business development at White Plains Linens, Peekskill, New York.
Another penny-pinching tactic: Switch from 100-percent cotton to new synthetic blends, which Schlosberg says have come a long way from the rough and unabsorbent versions common a few years ago. “Today, you can’t tell the difference between synthetics and 100 percent cotton. They hold up a lot better and they’re much less expensive—from 25 percent for standard cotton up to 150 percent less than top-quality Egyptian cotton,” he says. Or, if you’re committed to cotton, you might try using a blend for tablecloths and cotton for napkins.
Finally, check the fine print on your contract so you understand how you’ll be billed (i.e., for actual use versus standard weekly minimum), what constitutes damage and how damaged items are charged for, and how adjustments can be made if your inventory needs change.
For the best deal, ditch the pricey big accounting firms and sign up with a smaller local or regional firm that has other restaurant clients. (Your state’s association of CPAs is a good place to look for leads.) Once you’ve found a firm you like, don’t be afraid to talk about how much, exactly, the work is going to cost. “When I had an accounting practice, if a person asked about the fee I would be more careful and the fees would be lower,” says Ed Hynes, a CPA who now runs the Restaurant Seminar Institute in Edmonds, Washington.
Stereos & TVs
Televisions and stereo systems can be tricky beasts to bargain hunt for. If you’re shopping online and find a good deal, check with competing retailers. Most of them offer price matching and many will undercut the other guy’s price if you take the time to ask. Visit DealCatcher.com for a one-stop roundup of both online and printable in-store coupons. If you hit up the large chain retailers, check out their open stock and floor models for unadvertised deals. Don’t overlook independent electronics retailers. They often have more room for negotiating prices, especially if you need several stereos or TVs to stock more than one restaurant location.
Here, it’s all about volume and frequency, both of which can be impacted by separating out recyclables, says Kenny Lark, national accounts director at Waste Management, Inc., the country’s largest disposal service. “Separating allows for less frequent pickups on regular trash. And recyclables, which comprise about half of the total tonnage at typical restaurants, cost significantly less to pick up because vendors get rebates on those materials.If you’re an existing operation and can install a second container to start recycling, work with your service provider to either “right size” your regular trash dumpster or to adjust pick-up frequency to compensate for lower volume. If you can’t separate, you can still save. In particular, make sure employees break down packaging materials. “We routinely see 25 to 60 percent of the volume in restaurant dumpsters taken up by air—mostly boxes not broken down,” Lark says.
If you have enough space and volume, consider buying or leasing a trash compactor. It’ll reduce your volume, and theoretically the transportation portion of your waste-pickup service, by up to two-thirds. Instituting any of these tips can cut your garbage bill by 10 to 20 percent.
In your hunt for plates, glasses and flatware, comparison shopping pays off. “If you don’t have time to do your own legwork, restaurant supply houses that specialize in front of the house can do the research and direct you to the best products for your concept,” says Barry Goldberg, VP of Corby Hall, a dinnerware company in Randolph, New Jersey. A couple of examples: Edward Don and Company (www.don.com) and Tri-Mark (www.trimarkusa.com).
But don’t be shy about negotiating directly with manufacturers—they want your business and “list price” is just a number. Up to 50 percent off list is not unusual for an opening order and you should try to lock in discounts on re-supplying at the same time.
Credit card processing fees
There’s nothing simple about these fees; the merchant services industry is laden with jargon, mumbo jumbo and an impenetrable thicket of hidden charges and unsavory providers. The best way to cut through it? Get bids from at least three reputable providers, and make sure they’re complete. Most importantly, don’t just accept the fee structure you’re offered.
“Restaurants have the volume to negotiate on the per-transaction fee, which is the single biggest cost you’ll face here,” says Jeremy Sacco of BuyerZone (www.buyerzone.com), an online quote request service that vets the providers with which it works. Competition in the industry means you should be able to avoid long-term contracts; termination fees of more than a few hundred bucks are too high.
Deal Basics - Trade shows
Do your homework” is excellent advice whether you’re in the market for Web design or wine glasses. And one of the best classrooms is the industry trade show.
The National Restaurant Association show held each May in Chicago boasts 2,100 companies exhibiting. Here’s your chance to discuss options with manufacturers, examine the merchandise, get spec sheets and mull over your choices.
But if you’re an independent or smaller chain, it might be more productive to attend regional or state trade shows. “You’ll get more personal attention and more accessible local vendors at a smaller show,” notes Barry Goldberg, VP of Corby Hall, a tableware company.
To make the most of a show, plan ahead. Get a list of exhibitors by going to the show’s Website or looking through an advance copy of the guide and map. Depending on your needs, make a list of “must see” and “want to see” booths, suggests Susan A. Friedmann, The Tradeshow Coach (www.thetradeshowcoach.com). “Make appointments in advance with a good number of the ‘must sees’ to maximize your time spent,” she adds. Friedmann also encourages attendees to develop a lead form for recording vendor names, products or services, contact information, prices and any follow-up notes. And take advantage of “show specials” that can save extra dollars.
Take all your findings and numbers back to your distributor or vendor; you’ll be in a better position to leverage deals.
When it comes to office supplies, the biggest expenses are usually ink, toner and paper for your printers. Refill kits are available for many inkjet printers, but beware of the potential mess of doing it yourself. Check out online discounters like 123inkjets.com and InkSell.com. To save on miscellaneous office supplies, sign up for a loyalty rewards program like Staples offers. Theirs gets you 10 percent back on ink, paper and copying and printing services.
Auction sites and online companies offering discount prices on new and used equipment abound, and they can save you a bundle. If buying straight out isn’t an option, check out financing, offered by some major manufacturers, which can get you low monthly payments. One example is Enodis, the umbrella company for a number of foodservice equipment brands (www.enodisusa.com). Like leasing, you may pay more for the ability to spread the cost of big-ticket purchases out over time, but having relatively low, fixed monthly payments can be easier to swallow than writing a check for the full amount. Also, check out used equipment. Lots of dealers carry refurbished used items that work just fine, come with limited guarantees and can dramatically cut your purchase price. Auctions, classifieds and Websites are other good sources for finding used equipment on the cheap. One site to check out: www.acemart.com, where a used DoughPro countertop pizza dough press with a list price of $1,990 recently sold for $500. Another is www.acitydiscount.com, where a Grindmaster/Crathco frozen margarita machine listing for $6,314 was posted for $1,500.
Instead of paying for spent fryer oil to be hauled away, look for oil recyclers that will pick it up for free. Some will even pay you for it, so shop around. One that does is Sanimax (www.sanimax.com). Nick Manzke, procurement manager for the national company’s Deforest, Wisconsin, facility, says the payments depend on the re-sale market—mostly to animal feed manufacturers—and can range from $10 to “a couple hundred,” depending on volume.
As for keeping the lid on costs related to grease trap pumping, start by training staff to reduce the amount of grease going down the drain. You also might eliminate pumping costs with products that promise to keep pipes and grease traps clean. “It’s a liquid that gets poured down the drain once a week for about $240 for a year’s supply. By comparison, pump-out service, which is usually done quarterly and often more frequently, depending on volume, typically runs $100 to $300 per visit,” says Wyatt Magnum, chief engineer at EnviroLogics Laboratories, Ocala, Florida. The company makes a product that eats away at anything biodegradable in the plumbing system. “Solids are broken down to a liquid before they ever reach the grease trap. No pumping required,” he says.
You can save time and money on the front end of the hiring process by using an online job board that screens candidates for you. JobsintheUS.com, which runs local job sites in 18 states, allows employers to ask applicants up to three yes or no pre-screening questions before submitting their application online. Candidates’ ratings, which are based on their answers to the questions, are included in the subject line of each new application notification email you receive. The site also tracks statistics including the number of times your job posting was viewed and the total number of applications you received, meaning you can tweak future ads to be more effective. The end result is less time weeding through inappropriate resumes. Even better: JobsintheUS’s rates, which range from $260 to $5,000, depending on company size, for 90 days of unlimited ads, often beat those of national job boards and daily newspapers.
Real estate is a risky business. That’s why the best way to get lower lease rates is to demonstrate to the landlord that signing a deal with you is less risky than going with another potential tenant. Marty Kotis, president of the Council of International Restaurant Real Estate Brokers and of Kotis Properties in Greensboro, North Carolina, recommends a few ways to do so. First, take advantage of the buzz about your business. “Demonstrate that you’ll be a good draw, that you being there will help them lease out the center and make it more high profile,” Kotis says.
Second, ask to get the space in shell condition. This way, the landlord doesn’t have to lay out tenant improvement dollars; the cost of fitting out the space is on you, and in return you get a lower lease rate. Third, prove that you’re solid financially. This may mean putting up a personal guarantee, but remember: less risk for the landlord means lower costs for you.
Finally, don’t forget the value of market intelligence. Know what competing spaces are leasing for, and what other deals your landlord has done in the same center.
Deal Basics - Shopping online
When you have a tiny budget for equipment and supplies, old or used can be a smarter choice than new. Warner Ebbink, partner in Dominick’s, 101 Coffeeshop and the soon-to-open Little Dom’s in Los Angeles, scours salvage yards and flea markets around the country—often using Google as his scout—to unearth ceramic tiles, vintage photos, fixtures, tabletops, flooring, windows and other “found objects.” Favorite sources include Olde Good Things (www.oldegoodthings.com) and Santa Fe Wrecking (www.santafewrecking.com).
What about shipping costs? Ebbink has figured out a way to economize there, too. “Interior designers truck furniture from L.A. to New York on a regular basis. I contact these truckers through designer friends and piggyback on their trips to haul my load back,” he reports.
In any search for “used furniture and equipment” or “salvage,” eBay, uBid and other online auctions are going to come out on top. While these can be an excellent source for deals, there is some “buyer beware” strategy involved. The FTC offers these tips:
- Become familiar with the auction site; the rules of one don’t necessarily apply to another.
- Read descriptions and terms carefully. Sometimes important terms are in a contract that may be found at the seller’s online store.
- Try to determine the relative value of an item before you bid. Check price comparison sites and search eBay listings.
- Find out all you can about the seller. Don’t trust e-mails alone; follow up with a phone call and read comments by other buyers.
- Establish a top price and stick to it. Avoid bidding wars.
- Determine who pays for shipping and delivery. Check the return policy, too.
- File a complaint at www.ftc.gov if you experience fraud or deception.
Other deals are available online for just about any goods and services. Check out these sites:
Airfare: Kayak.com; Cheaptickets.com
Classified ads: Craigslist.com
Hotels: Quikbook.com; Sidestep.com
Cleaning and office supplies: Restockit.com