The Hidden Costs of Pressuring Your Supplier to Lower Prices
As a restaurant owner, you’re always looking for ways to save money and improve your bottom line. One strategy that many restaurant owners use is to pressure their foodservice suppliers to lower their prices. While this may seem like a smart move in the short term, it can have hidden costs that impact your business in the long run.
One-way suppliers can make up the margin when a restaurant owner pressures the salesperson to lower prices is by changing the price of items they know the operator doesn’t monitor. For example, an operator threatens to fire the supplier if they don’t reduce the price of their ground beef. The salesperson reluctantly says okay, lowers the price, and with a few clicks doubles the margin to all lids. After all, who in the heck is watching the price of lids? Net result, the operator is paying more than they would at the previous beef price. Everyone leaves happy but the operator will continue to struggle.
Another way that suppliers can make up the margin is by cutting corners on quality. For example, a supplier may switch products by telling the restauranteur “that item is out of stock but I have this one that is similar.” This could lead to a decrease in quality, which can negatively impact the customer experience and your reputation.
Understand, your salesperson has a responsibility to make sure each delivery meets their company’s expectations for profit margin. That said most operators don’t have a written contract explicitly spelling out how the margin/markup is calculated on every item they are buying. Without it, there is nothing prohibiting the supplier from changing prices at will.
At Thriving Restaurants GPO, we believe that transparency and honesty are the keys to building strong relationships with our customers. That’s why we offer complete transparency into our contracting and margin structures so that you can make informed decisions about your purchasing.
When you pressure a salesperson to lower the price of a particular item, you’re not just impacting that item – you’re impacting the overall relationship with your supplier. Instead of pressuring your supplier to lower prices, we encourage you to have an open and honest conversation about your needs and budget. By working together, you might find creative solutions that benefit both your business and your supplier.
At Thriving Restaurants GPO, we believe that building strong relationships with our customers is the key to our success. By offering complete transparency and honesty, we can help you make informed decisions about your purchasing and build a relationship that benefits both of our businesses.
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