As a restaurant owner, you are pulled in many directions on a daily basis. You are responsible for staffing, training, inventories, menu creation, and a multitude of other duties that are vital to your restaurant running smoothly and being profitable. Comparing and negotiating product costs can also take up a significant amount of your time, but it doesn’t have to.
Becoming part of a group that ensures you get the best pricing on products for your restaurant can increase profitability and create a streamlined process for your purchasing. Knowing you are getting competitive prices with little time and effort on your part will allow you to invest your energy into other aspects of running your restaurant.
Group Purchasing Organizations (GPOs) have been around for quite some time. The healthcare industry was the first to take advantage of the power of the many over the inefficiencies of the few. Hospitals in New York formed the first GPO in 1910 and construction companies soon followed. Today, independent restaurant owners are coming to understand the many benefits of a foodservice GPO.
WHAT IS A GPO?
A food service GPO, or Group Purchasing Organization, is a collective of restaurants that join together to increase their purchasing power to negotiate better pricing on everything imaginable to run your restaurant. The GPO negotiates prices on everything from food items to uniforms to payment processors. Becoming a part of a GPO that includes your peers gives you incredible benefits you would not be able to negotiate independently.
Why A Food GPO Is A Powerful Business Tool
A food GPO allows you to pool together with other restaurant owners to negotiate prices with national manufacturers and distributors. This allows you to utilize buying power that as a stand-alone purchaser, would not have. There is power in numbers, and the purchasing volume created by joining together with your peers gives you leverage to negotiate lower pricing. It also allows you access to larger manufacturers who may not have been willing to service your restaurant alone.
The main goal of a restaurant buying group is to help independent restauranteurs gain leverage through the combined purchasing power of all the members in a food GPO. This collective buying power results in tremendous discounts that would otherwise be unavailable.
Think about the savings that institutions such as McDonald’s receive with over 40,472 locations around the world. Imagine the negotiations suppliers enter into in order to get their business. As Ray Kroc, McDonald’s founder, so eloquently stated, “None of us is as good as all of us.”
A GPO enables you, the independent restauranteur, to be as powerful as the big chains in relation to prices and contract terms.
While most operators think of the savings associated with food and beverage, a “Food GPO” creates savings in many more categories than its name implies.
Indirect Spend – All of the expenditures required to run a business “behind the lines” such as office and safety supplies.
Non-Food Items – Suppliers include those in the non-food sector that provide paper products, kitchen supplies and containers, as well as other disposable items.
Technology – While not all GPOs offer technology solutions, Dining Alliance is a GPO technology leader in the restaurant industry and serves as a resource for their members to discover innovative technology solutions.
Employee Perks – Dining Alliance knows that your employees are the seed of your success. Top brands have joined their efforts in supplying your employees with discounted shoes and apparel as well as cell phones.
Save Time and Open Up Internal Procurement REsources with a food service GPO
Procuring resources and supplies is an extensive undertaking. The first task is tracking down the suppliers that provide the product at the quality level you’re looking for. The second task is comparing prices, and the third involves negotiating. Price comparison shopping can take up a great deal of your time. Having to seek out, discuss options with, and compare pricing with multiple vendors can be time-consuming and a headache. As a part of a GPO, you know you are getting the best deal without dedicating hours of your time to reviewing cost-comparison spreadsheets.
While mega-chains have massive internal procurement resources, these tasks, for independent operators, are often delegated to chefs and owners.
A restaurant buying group has sourced suppliers that are both high-quality and cost-effective. Best-in-class GPOs work with broadline suppliers. Just as important, they include their member’s local vendors which is particularly important in our world’s growing awareness of the importance of sustainability and the farm-to-table movement.
A GPO manages the relationship between suppliers and their members while obtaining better pricing and contract terms. They’re also apprised of market changes caused by shortages, excess supply, and markets disrupted by weather phenomena. Members know what to expect in advance and can act on this knowledge, preparing for price changes and shortages by changing strategies and altering menus.
Quality, Safety, & Traceability with Restaurant GPOs
Each month seems to bring yet another breaking news story of foodborne illnesses whose source was a restaurant or deli. The FDA reported on several outbreaks in 2020 including Cyclospora from bagged salad in June, Salmonella from red onions in July, and peaches in August. Most recently, multistate outbreaks of E. coli from romaine lettuce led to a recall on Tanimura & Antle, Inc. brand packaged single-head romaine lettuce with a pack date of 10/15/20 and 10/16/20.
Traceability and supply chain visibility are key to providing safe food. A reputable foodservice GPO ensures that their suppliers have procedures and technology in place that enable them to trace their products from farm to table.
Because of their relationship with thousands of suppliers and members, a foodservice purchasing group is well-abreast of the industry’s food and beverage trends. Restaurants are able to offer high-demand menu items, such as the recent movement towards medicinal spices and high-nutrient food, before their competitors.
JOIN Dining Alliance
Dining Alliance is the industry’s largest GPO, with over 60,000 members that make up over $17.5 billion in purchasing power.
Dining Alliance is here to help you receive the best prices for your restaurant purchases and give you the negotiation power you have been looking for. We are the largest Group Purchasing Organization in the country and know the specific needs of restaurant owners. If you have been considering joining a GPO, contact us for more information or to join today.