Putting a squeeze on distributors

Question: 

One of my [broadline] vendors offered to give me an ongoing discount if I agree to use him exclusively. I don’t know how he would be sure I didn’t use any other vendors, but it sounds like a good deal, if prices don’t go up. Are other people doing this?

distributor trucks shipping chain global
Answer: 

Most foodservice operators are very comfortable dealing with multiple suppliers. Even if you get the vast majority of your products from a broadline distributor and can theoretically get everything you need from a single supplier, you likely use more than one broadline distributor or buy specialty items from a specific vendor. Having multiple suppliers is simply a better way to do business in most cases. It brings with it a number of advantages:

  • Suppliers compete for a larger percentage of your sales, thus strive to offer more competitive pricing. We’ve all experienced great pricing at the beginning of a vendor relationship, followed by “the creep”—prices creeping up which, if left unchecked, can undermine a business. Knowing you’ll be comparing prices to another vendor’s can help keep multiple suppliers in check.
  • Suppliers can specialize in what they do best. While everything you need may be available from a broadline supplier, that doesn’t mean it should be. Some items—say, canned goods—are somewhat interchangeable. If one supplier has the brand you like, in the pack size you like, at a better price than another, your shopping may be done. For other products, like fish, for example, price is only one factor—one company may be cheaper than another, but what is their quality like? Some products require specific expertise that a specialty supplier can provide.
  • Beyond pricing, suppliers work to provide new, novel or high-quality options that ensure your continued business. We know that multiple suppliers will compete on price, but what else can they do to be competitive? By offering a more variety, higher quality or unique products, you can leverage your suppliers’ energy to offer your guests something unique and better than your competitors.
  • Customer service is better when you have options among multiple suppliers in a competitive environment; they all want to win your business. Beyond price and product, competing suppliers have reps who will fight for your business. Who will make the extra effort if you were shorted something on the truck? What if it was your mistake and you missed the order deadline? Who will hand-deliver a replacement or get something you need on the truck at the last minute?
  • You can support the suppliers you value. By using multiple suppliers, you can leverage your purchasing power to support the kinds of businesses you feel good about. These may be small businesses, locally owned franchises or woman- or minority-owned businesses. Or they may be businesses that are known for high-road practices like using U.S.-made materials, paying workers a livable wage, practicing sustainable practices, supporting a nonprofit whose values you share, or even sponsoring a favorite sports team. Whatever your reasons, business relationships are built on more than comparing prices.

It may be tempting to focus your business on a single supplier rather than multiple—they may offer favorable terms in exchange for an exclusive contract or help to simplify ordering with a single phone call, and you may enjoy the perks and VIP treatment of being a big spender with your supplier. But my advice is that the benefits of working with multiple suppliers win.

More on the benefits of multiple vendors here

Want to ask advice guy a question?

Refresh Type the characters you see in this picture. Type the characters you see in the picture; if you can't read them, submit the form and a new image will be generated. Not case sensitive.  Switch to audio verification.

Today's top stories

1
Seattle Mayor Ed Murray has called on the city to adopt a 2-cent-an-ounce tax on sugared soft drinks as a way of simultaneously discouraging consumption and raising money for education. The surcharge...
2
Last-minute shift changes would require restaurants to pay affected employees for at least four hours, whether the time was worked or not, under bills likely to be heard next week in the Oregon...
3
Starbucks is pulling the plug on another of its secondary restaurant concepts, this time the Evolution Fresh cold-pressed juice chain. The coffee giant intends to shut the two remaining Evolution...
4
One thing I’ve loved about writing this column over the past seven (!) years is that by using real reader-submitted questions, I am always learning new things, due to the complexity of running a...
5
Chipotle has finished rolling out its new “Smarter Pick Up Times” platform to all of its locations that offer digital ordering. Through “Smarter Pick Up Times,” the chain says it’s able to monitor...
6
Which Wich is making moves into the supermarket segment, as the chain announced a new partnership that will put units of fast-casual sandwich brand inside 15 Crossroads IGA stores nationwide. Five of...
7
Ambiance and service attributes—not food quality—have the most dramatic positive impact on consumers’ willingness to pay more at restaurants, according to a new study. The importance of ambiance and...
8
After selling pizza and burgers as the operations specialist for a multi-concept franchisee, John "J" Hedrick has moved to the Pei Wei fast-casual Asian chain as CEO. The concept, the little sister...
9
Restaurant Brands International, the parent company of Burger King and Tim Hortons , has agreed to add the Popeyes Louisiana fried chicken chain to its fold for $79 a share, or about $1.8 billion in...
10
The prototype for a new in-store Brazillian fast-casual chain will be part of a supermarket Whole Foods intends to re-open in May in midtown Atlanta, the grocer confirmed last week. Called Roast, the...