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 food purchasing group.
Let’s take a look at the 4 of the many benefits a restaurant buying group offers.
Combines Purchasing Power
The main goal of a restaurant GPO is to help independent restauranteurs gain leverage through the combined purchasing power of all the members in the food purchasing group. 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 38,000 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.
Saves Time & Frees Up Internal Procurement Resources
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.
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.
Ensures Quality, Safety & Traceability
It seems that each month is bringing 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, and 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 is key to providing safe food. A reputable foodservice GPO ensures that their suppliers have procedures and technology in place that enables them to trace their products from farm to table.
Provides Marketing Opportunities
Because of their relationship with thousands of suppliers and members, a foodservice purchasing group is kept well-abreast of food and beverage trends in the industry. Restaurants are able to offer high-demand menu items, such as the recent movement towards medicinal spices and high-nutrient food, before their competitors.
Various software companies also make up a portion of the suppliers found within a quality GPO. Dining Alliance has partnered with cutting-edge technology companies including Tipzyy, InsideTrack, andOrderly.
What Dining Alliance Offers
Dining Alliance is the largest GPO in the industry with more than 60,000 members that create a purchasing power of over $12 billion.
As a foodservice purchasing group, and an industry leader with over 20 years of experience, all suppliers have developed methods for traceability. Members are also included on distributors’ insurance contracts.
Their rebate system provides quarterly payments from negotiated rebates or cash back contracts. Dining Alliance has over 165,000 rebated line items from over 350 different manufacturers.
While some GPOs charge membership fees, Dining Alliance is free—no membership dues, hidden fees, or costs of any kind.