6 tips for maintaining vendor relationships
Challenging and competitive markets make it all the more crucial for restaurant owners to maintain a sustainable and solid relationship with vendors. Omar Maharsi, director of operations at Glee Hospitality Solutions, a company specialized in the Middle E
1. Create a mutually beneficial relationship with vendors
Where possible, restaurant owners should try to obtain items from a select number of suppliers and sign long-term contracts that include a credit limit and fixed prices to ensure a sustained and transparent deal. Cross-promotions could also be an option for restaurant business owners to consider offering. If, for example, a vendor offers services which may be beneficial to a restaurant owner’s customer base, proprietors could promote those services in return for discounts or referral fees.
2. Long-term partnerships, better deals and bargain opportunities
Long-term partnerships should result in a consistent product, while also helping to avoid interruptions caused by changing suppliers. The greater the number of yearly service contracts with suppliers, the easier it becomes to plan operating budgets. Restaurant owners can also look at working on a rebate agreement, where the supplier will give a percentage back to the restaurant, depending on consumption. Restaurateurs can mutually negotiate beneficial deals, such as cross-promotions. They can also look at consumption and request free-of-charge items for orders over a certain size. Restaurateurs should look at topical dates. If there is a special occasion coming up and there is the possibility of placing a larger than usual order for certain products, it makes sense, where possible, to place the order well in advance, allowing time and space to discuss the possibility of securing a better deal. Keeping costs as low as possible by creating dishes from scratch and using local produce wherever possible is good practice, since it will always be cheaper than imported produce. Buying power is a valuable asset for new restaurants. Become part of a bigger group that has stronger buying power, since this will help to reduce supplier prices.
3. Manage timely payments
Smart business owners will have a welldefined annual operating budget, which is separated by phases with reasonable revenue goals and created allowing for worst-case scenarios. In this way, the team will be prepared to handle such situations. One means of managing timely payments is to arrange extended credit limit contracts, which ensure plenty of time for payments and managing cashflow.
4. Understand the shift in business strategies
It’s difficult to maintain a successful business in today’s market conditions. Suppliers are keen to avoid credit payments for newly opened restaurants and are quick to halt deliveries if there are any delays in payments.
5. Invest in vendor management
Investing in vendor management is important to ensure that communication and documentation between the restaurant and supplier run smoothly. Handling it in-house is not advisable, since this could lead to miscommunication and mistakes in the contracts.
Become part of a bigger group that has stronger buying power, since this will help to reduce supplier prices
6. Resolve disagreements professionally and know when to search for new vendors
The most common issue that causes problems between suppliers and restaurant business owners is late payments. If this happens, restaurateurs must ensure the business is not affected. One way of doing this is by offering cash on delivery payments until credited pending payments are settled in the case of financial disagreements. Issues such as delays in deliveries and inconsistency in products should act as a red flag. Other signs to look out for include sporadic changes in pricing; of course, inflation means that the price of goods will increase, but only moderately. If you are not receiving regular communication from a supplier, it's time to look for a new one.