Food Cost Control: Purchasing

Raw food costs are one important factor contributing to food costs. It is important to get the best prices possible.

Joining a group purchasing organization (GPO) is a good first step in obtaining good prices. The principle behind a GPO is that the greater the volume, the greater the discount from suppliers. An individual facility does not have much clout in negotiating prices with a supplier. The volume is not there. But if the facility joins a GPO with hundreds of other facilities, then the volume warrants special pricing. Plus the GPO does the negotiating for its members.

With the large volume, the GPO can also negotiate prices with manufacturers in addition to suppliers. This creates even more savings.

It is not enough to simple join a GPO, however. It is important to understand and follow the contract to ensure best purchasing decisions. For example, one item might appear to have the best price on the order sheet. However, if the supplier and manufacturer discounts are taken into account, a different brand might actually offer the lowest price.

Once a GPO is selected, then a supplier that the GPO supports must be selected. It is important to compare quality and not just price. It is not enough to compare apples to apples, even. It is necessary to compare the same type, size, quality, and quantity of apple to ensure the best price.

Ideally, specifications for each food item should be determined first. Then compare the price for each supplier’s product that matches your specification. One supplier’s “top” line may only be equal to another supplier’s “medium” line.

When preparing an order, a guide is very helpful in ensuring that all items in the correct quantity are ordered. This is more accurate than “winging it” each week. Both over and under ordering will negatively affect food costs. It is also more time efficient in the long run.

If errors are made in purchasing, it is extremely difficult, if not impossible, to make it up later.

Another critical tactic is to order within budget each week. This is much easier than ordering above budget and trying to make it up later.