Emmy award winners, Billy Costa and Jenny Johnson, host a premier food, dining, and entertainment program in Boston known as Dining Playbook on New England Sports Network (NESN)—the flagship network of the Boston Bruins and Boston Red Sox.
Recently, they spoke with John Davie, the founder of Dining Alliance and the CEO of Buyers Edge Platform. Here is what they found out about GPOs and their importance to the success of independent restaurants.
GPOs Defined
Many people, even those in the restaurant industry, are unaware of exactly what a GPO, such as Dining Alliance, is. Otherwise known as a Group Purchasing Organization, Davie defined their purpose as a group that “leverages the buying power of a lot of local operators and smaller midsized chains and emerging chains. They then use this leverage as buying power to negotiate contracts with everything from local distributors to produce vendors, meat vendors, and large national companies like Tyson, Georgia Pacific, Pactiv, and Unilever. All with the goal of helping local operators generate significant savings, lower their food costs, run a better operation, and ultimately be more successful.”
Currently, Dining Alliance works with about 56,000+ independent restaurants nationwide. Their clients range from mom-and-pop restaurants to country clubs to independent local restaurants. It is the largest Group Purchasing Organization for independent restaurants in the country.
Dining Alliance opened its doors in Rochester, N.Y. in 1998. Since then, it has grown to a national company, based in Waltham, MA.
How GPOs Help Independent Restaurants
Independent restaurants often buy many of the same products as large chains, but without the same purchasing power. A group purchasing organization helps close that gap by bringing operators together to unlock savings, resources, and supplier programs that may be difficult to access independently.
Lower Food Costs and Rebates
A GPO negotiates manufacturer contracts based on the combined purchasing volume of its members. Independent restaurants can earn rebates on qualifying products they may already purchase, helping lower effective food costs without switching distributors or changing how they order.
Access to Higher-Quality Products
Cost concerns can sometimes push operators toward lower-priced substitutions. Through competitive contracts and manufacturer partnerships, a GPO can make quality products more affordable while helping restaurants identify options that fit their menu, budget, and operational needs.
Supply-Chain Guidance and Menu Support
A strong GPO offers more than purchasing discounts. Operators can gain access to commodity insights, product recommendations, menu ideas, and supply chain expertise that help them respond to price changes, product availability, and shifting guest preferences.
A Market Example: Why Local Vendor Access Matters
Johnson spoke with Tina Davie Donahue, President of Dining Alliance, about the biggest challenges as well as the advantages she sees in the Boston market. According to Donahue, Boston has one of the largest selections of valuable and good quality specialty vendors. “There are multiple good produce companies, multiple good meat companies, seafood, dairy, and broadliners, or one-stop-shop distributors.”
Donahue believes that the success found in the New England markets is due, in part, to the immense variety of vendors found in the region. Of course, for restauranteurs, this benefit also proves to be a challenge, leaving multiple decisions that must be made. Choices include just how many suppliers do they want to work with, or do they prefer to be sole-sourced? How many deliveries do they want and how often for each vendor?
While GPOs are designed as a cost-saving venture, helping an independent restaurant make these vital choices is an important aspect of the GPO/restaurant relationship. Navigating through the vast supply chain is a challenge for even the largest of corporations. For an independent restaurant, it can be overwhelming. In addition to better price points, larger chains also have access to higher quality products—a benefit that can significantly affect customer satisfaction and return rates.
Working with a GPO helps streamline the operation and gives an independent the same competitive edge as the big multi-chain establishments that have entire teams of accountants and other specialists focused on cost and quality. Donahue sees two categories in particular that offer the most savings—paper products and produce.
Saving on Paper and Produce Goods
According to Donahue, paper products are a high-margin category that have embedded costs which a GPO can expose. The other category that profits from huge savings is produce. Because of its seasonality, produce is impacted with greater fluctuations. For instance, Dining Alliance sees huge savings for their members on the east coast in the first quarter, when the area’s supply is diminished. Their leverage enables them to monitor markets on a 12-month basis and develop extensive contracts with growers and shippers.
GPOs such as Dining Alliance provide more than strength in numbers and a competitive edge, they also act as a watchdog, helping their members make needed changes in their menu when outside forces, such as sudden weather disasters, are going to impact the supply chain in availability and pricing, or stay abreast of the upcoming trends in food and beverage. They develop ongoing relationships with new manufacturers and partners outside of the food industry, such as technology partners.
How to Choose the Right GPO
When choosing a GPO, it’s important to look for one that has local representation and works with the local vendors as well as one that offers cost-saving rebates as well as cost-plus programs. Unlike other GPOs, Dining Alliance does not contract on just a few specific items, they contract on all items—over 175,000 line items—that are specific to each individual restaurant’s needs. Working in this framework, a restaurant doesn’t need to try and fit into an existing mold or limit their concept.
GPOs such as Dining Alliance exist in order to help independent restaurants succeed. It’s that simple.
Final Thoughts
Not every GPO offers the same contracts, savings opportunities, or level of support. Start by looking for one that understands independent restaurants and works with the distributors and manufacturers already connected to your operation.
Before joining, ask a few practical questions:
- Does membership require a fee or long-term commitment?
- Can I continue ordering through my current distributor?
- Which products qualify for rebates?
- How are purchases tracked and rebates paid?
- Does the GPO offer savings beyond food purchases?
- Will I have access to reporting, market insights, or hands-on support?
The right GPO should fit into the way your restaurant already operates. It should make savings easier to find without forcing you to replace successful supplier relationships, overhaul your menu, or add more administrative work.
Dining Alliance is built specifically for independent restaurants. Members can access savings across more than 175,000 rebated line items, along with discounts on services such as uniforms, pest control, technology, and other operational needs. There is no cost to join, and restaurants can continue purchasing through their existing distributors. Click here to become a Dining Alliance member for free!
Frequently Asked Questions
How does a GPO help independent restaurants save money?
A GPO combines the purchasing volume of many restaurants to negotiate supplier contracts and rebate opportunities. Members can earn money back on qualifying purchases and access additional discounts for their operations.
Does joining a GPO cost anything?
It depends on the organization. Dining Alliance membership is free for independent restaurant operators, with no membership fee required to access available savings programs.
How do I choose the right GPO for my restaurant?
Look for a GPO that serves your segment, works with your existing distributors, offers contracts relevant to your purchases, and clearly explains how rebates are tracked and paid.
What types of restaurants benefit from a GPO?
Independent restaurants of many sizes and concepts can benefit, including full-service restaurants, quick-service concepts, cafés, bars, pizzerias, and small restaurant groups.
What products and services can restaurants purchase through a GPO?
Programs may cover food, beverages, disposables, cleaning supplies, equipment, technology, uniforms, pest control, and other operating expenses. Available contracts vary by GPO and supplier.
How do restaurant rebates work through a GPO?
When a member purchases a qualifying contracted product through a participating distributor, the purchase is tracked and a rebate is calculated based on the applicable program. Payment timing and requirements vary by contract.
Can a GPO help improve supply chain reliability?
A GPO cannot prevent every shortage, but it can provide market insights, supplier connections, and product guidance that help restaurants prepare for disruptions and consider alternatives.
What’s the difference between a restaurant GPO and buying directly from suppliers?
Buying independently limits negotiations to the purchasing volume of one restaurant or group. A GPO combines the volume of many operators to secure contracts and savings opportunities that may otherwise be harder for an independent restaurant to access.
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