Discussions with suppliers about pricing helps food service executives understand changing markets, protect menu profits and consider alternative buying tactics and options. However, until a written pricing agreement has been completed, do not assume that you have secured a protected price.
Leading food service chain buyers, as well as our consulting team follow these simple rules for distinguishing between pricing discussions, program negotiations and committed vendor agreements.
#1 Just because you made a purchase decision don’t confuse this with an agreement. Confirm all verbal pricing discussions.
#2 Pricing issues or misunderstandings about product and price commitments are best resolved in writing, as this formality serves to clear the air for the future.
#3 Formal vendor negotiations should be part of your contracting plan. This places all parties on record, allows you to involve the “next higher level” of supplier management, and for emerging chains, your brand will receive higher visibility back at the manufacturers or distributors corporate office. (hint: not all suppliers follow the commercial pricing rules of Sarbanes-Oxley or Robinson Patman) #4 Stand Your Ground during formal price negotiations, if the supplier expects you to accept a price prior to the meeting or with the boss in the room, do not! Feel free to question the pricing and be prepared to negotiate at a later time.
Here is a buying tactic that works great to achieve better prices and will save money when markets are increasing; look directly at the most senior manager from the supplier's side and ask for a 30 day price extension.
When food service owners/managers or your boss thinks they are negotiating when they are not, the consequences can be detrimental to your bottom-line.
To Higher Profits,
Fred
Fred Favole is Founder & President and Ronald Bay, Managing Partner, direct the Strategic Purchasing Services (SPS) consulting firm specializing in department outsourcing, and the "Get Deals Now - 100% performance based contracting services for emerging hospitality and restaurant chains. Connect via phone: 912.634.0030 or email: SP_Services@Bellsouth.Net
Leading food service chain buyers, as well as our consulting team follow these simple rules for distinguishing between pricing discussions, program negotiations and committed vendor agreements.
#1 Just because you made a purchase decision don’t confuse this with an agreement. Confirm all verbal pricing discussions.
#2 Pricing issues or misunderstandings about product and price commitments are best resolved in writing, as this formality serves to clear the air for the future.
#3 Formal vendor negotiations should be part of your contracting plan. This places all parties on record, allows you to involve the “next higher level” of supplier management, and for emerging chains, your brand will receive higher visibility back at the manufacturers or distributors corporate office. (hint: not all suppliers follow the commercial pricing rules of Sarbanes-Oxley or Robinson Patman) #4 Stand Your Ground during formal price negotiations, if the supplier expects you to accept a price prior to the meeting or with the boss in the room, do not! Feel free to question the pricing and be prepared to negotiate at a later time.
Here is a buying tactic that works great to achieve better prices and will save money when markets are increasing; look directly at the most senior manager from the supplier's side and ask for a 30 day price extension.
When food service owners/managers or your boss thinks they are negotiating when they are not, the consequences can be detrimental to your bottom-line.
To Higher Profits,
Fred
Fred Favole is Founder & President and Ronald Bay, Managing Partner, direct the Strategic Purchasing Services (SPS) consulting firm specializing in department outsourcing, and the "Get Deals Now - 100% performance based contracting services for emerging hospitality and restaurant chains. Connect via phone: 912.634.0030 or email: SP_Services@Bellsouth.Net
