Saturday, May 26, 2012

Questionable Foodservice Buyer-Seller Practices

Foodservice business relationships change over time as the executive chef or buyer gets to know the foodservice distributor and suppliers' sales representatives. This leads to a better understanding of expectations and performance capabilities.

One difficulty, from an ethical standpoint, is taking favors or gifts, starting with an exchange of pricing information about a competitor's product to more egregious and illegal practices. Nearly any favor carried to an extreme will create dependence between the buyer and seller, raising ethical concerns.

On the other hand, there are certain practices the buyer must avoid or they will wind up abusing their responsibility to their employer and profession.

Caveat Emptor (let the “buyer” beware!)
  • Expensive trips paid by the distributor or seller
  • Lavish entertainment at the expense of the vendor
  • Cash or frequent gifts valued at more than $50 from suppliers
  • Misuse of the exchange of information
  • Conflicts of interest
  • Unfair buying decisions or bids
  • Misuse of the foodservice organization's buying power
  • Disclosure of company confidential information
Every Buyer Is Tested

From the junior buyer to corporate CPO (Chief Procurement Officer), being offered gifts is the most common and most troublesome aspect of my profession. During my time managing food purchasing and distribution for Fortune 200 companies we always had a strict no-gift policy because it prevents most salesmen's attempts to influence the buyers.

I can still vividly recall my first week as an assistant buyer for American Airlines in NYC. I had just been promoted into purchasing, and moved from the Long Island offices to the company’s headquarters. But the longer commute and job promotion wasn't to be my only new experience. I was about to face a decision that would forever impact my foodservice-purchasing career.

Ted, the print salesman, had been “working” the account for years. It turns out that he had invited every new buyer to lunch at the infamous Gaslight Club on the upper-east side. During my own inaugural luncheon, the dining room was very dim (or maybe it was the atmosphere of the club's speakeasy heritage), and the all-female wait staff served just about everything rare.

Somewhere between my first drink and the last of my veal osso-bucco Milanese, I went to the restroom. Upon my return, I found placed neatly under a fresh Bucardi and Coke four crisp C-Notes. In a way, my buying career flashed before my eyes: “Will this place me under obligation? Do I have to return this favor, and if so, how am I supposed to do it?” I sat silently with these thoughts for a moment, and then slowly pushed the hundred dollar bills to the middle of the table. Ted appeared almost as bewildered as I felt, hesitated but finally took the money off the table. Lunch was finished cordially.

My solitary cab ride back to the office in the Continental Can Building on Third Avenue seemed longer and slower than usual. But as I stepped onto the elevator, I checked my wallet - just the $14 that was supposed to stretch until payday.

After sitting at my desk for about 40 minutes trying to analyze what happened at lunch, I made the decision to discuss it with my boss. "Jack, Ted took me to lunch today. He offered me cash. What should I do?" Slightly to my surprise, Jack's response was calm and casual. "Nothing to do," he shrugged. “He offers everyone money.”

So I was introduced to this “business as usual” practice, but how I decided to handle it influenced the rest of my 35-year career. Past rookies had kept silent; some perhaps even kept the money. I had mentioned this dark practice and by bringing it into the light, was given recognition and respect for doing so.

I never did make it back to the Gaslight Club, which is too bad … the food was pretty good.

To Higher Profits!


Fred Favole is Founder & President of Strategic Purchasing Services (SPS), a firm specializing in purchasing supply-chain management outsourcing, product development and distribution program warehouse audits. His contact info: p: 912.634.0030 email: Connect on LinkedIN & Follow Fred's blog at

Thursday, May 10, 2012

Is "MEAT GLUE" The New Pink Slime?

First,  I had to take the LFBT (pink slime) out of my Angus burger, now "they" are after my MEAT GLUE. All this erroneous food press is leaving a really bad taste in my wallet. 

Food procurement experts and every foodie reading this blog will know about that powdery substance "transglutaminase" that binds the smaller cuts of protein together. You know, a structured and formed patty served at every public school and institution in the U.S.A.  The foodservice community is not fooled into thinking these products are solid muscle prime cuts!  And, depending on your level of foodservice (QSR, School Feeding, Cafeteria) these products meet both nutritional and menu food cost requirements.

You just watch, the food police will say these fabricated products are  cheap scraps of beef (or chicken) produced by an industry trying to fool the public, or they will label "meat glue" as just another food trick like professional chefs substituting chicken for veal in the cutlets.

To these non-gassed bunch of bananas in the press, I say, "Balderdash"!

To Higher Profits!

Fred Favole, is Founder & President of Strategic Purchasing Services (SPS), a firm specializing in procurement outsourcing, product development, commodity management and distribution warehouse audits. He can be reached at 912.634.0030 or via email:

Thursday, May 3, 2012

Foodservice Purchasing Raises "SUM" Concerns

Preparing to start a food & supply cost reduction initiative can be a real challenge for multi-tasking executives working 60+ hours each week. You know who you are; CFO’s / COO’s / Owner-Chefs of emerging chains that manage finance, culinary, operations, purchasing, and risk management for their food service organizations.

My advise to these multi-tasking managers seeking to take on yet another project is to proceed as follows:
  1. Take a day off and spend it with your family
  2. Properly value your time and resources
  3. Complete suggestions #1-2 before reading the rest of this article.
The SPS cost-reduction model has proven that increasing the amount of spend under management (SUM) to a minimum of 70% is critical to improving a food service organizations contribution to profits. Yet most emerging chains and even a few Fortune 500 brands achieve less than one-third of this target.

Perhaps they have not initiated a self-directed procurement program or joined a rebate driven G.P.O. Both have the same devastating and irreversible affect on center-of-the-plate spend, as allowing your teen-age baby sitter to raise your twin 5 year-old daughters.

One of the financial strengths of leading brands is the control they gain by having a large percentage of food and supply spend under management. This allows the executive team to make more informed product and menu decisions and reign in maverick spending when compared to chains without SUM controls.

Why Companies Outsource
Through interviews with former “multi-taking” executives, we discovered companies want 3 chief benefits from outsourcing procurement activities.

1. Fast road to improved pricing
2. Lower overhead cost
3. Access to spend expertise

Why Companies Won’t Outsource
We found 5 main reasons food service companies reject hiring non-traditional purchasing staff:

1. A perceived loss of spend control
2. Believe that “we do it best”, it’s a core competency
3. Spending money for resources is not available
4. Prior investment in procurement staff or
5. Inability to measure savings and improvements

It’s Your Money, Outsourcing Can Get It For You Now!
The food purchasing supply-chain area is a place to make money! To do the job right takes expert experience, talent, time and money. On average a traditional purchasing department for a 100 unit chain, costs 4 times the investment than hiring a outsourcing service, yet returns only two-thirds the ROI.

A properly staffed and professionally managed purchasing supply-chain is an essential part of the modern food service organization and should be part of your business plan.

To Higher Profits!

Fred Favole is Founder & President of Strategic Purchasing Services (SPS) a firm specializing in purchasing outsourcing, commodity price management and distribution program warehouse audit.  His contact information:, Office: 912.634.0030, Follow Fred's Blog: and connect on LinkeIN.