A Common Characteristic of Very Successful Independent Restaurants

Over the years we've noticed that many, if not most, of our successful members purchase a large portion of food, beverage, paper and other products and supplies from one broad-line distributor. We've found that this practice, referred to as prime vendor, is much more common with our members who own and run highly profitable, growing independent restaurants.

While prime vendor arrangements are no panacea, in many cases, consolidating purchases with one supplier tends to offer the opportunity to lower overall food, beverage and paper costs and frees up independent restaurant owners and managers to focus more on their employees and guests.

In addition to lower overall prices, independent restaurants who engage in prime vendor programs often site other meaningful benefits as well –

• Less time spent on purchasing activities. Owners have told us they were spending several hours a week comparing bids and were able to cut their purchasing time to virtually nothing by having a prime supplier.
• Fewer vendors and invoices to deal with.Instead of dealing with several vendors and getting lots of invoices, the number of suppliers is significantly reduced. This results in fewer companies, salespeople and paperwork to deal with. Also, instead of getting lots of small deliveries, prime vendor results in fewer, larger deliveries which means efficiency in receiving and restocking activities.

Only recently have people begun to recognize that working with suppliers is just as important as listing to customers.
– Barry Nalebuff

• Win-win relationship.It creates more of a genuine partnership relationship between independent restaurants and their suppliers. Prime vendors tend to be very responsive to their prime customers' problems and special needs. And many distributors offer their prime customers an array of services such as menu design, recipe development, server training, business practice reviews, recipe costing applications and more.
• Improved product consistency.Food products are obtained from the same supplier over and over again, not the low-bidder of the week. This usually translates into greater consistency and better quality.

Prime vendor arrangements can be structured in many ways but most operate on a cost-plus basis. Suppliers agree to a certain percentage or dollar amount of "mark-up" over their cost for a certain amount of time, often a year.

To verify pricing compliance, independent restaurants usually have the right to audit supplier invoices to verify the distributor’s actual cost. Operators agree to purchase certain minimum quantities or the majority of their purchases from the supplier during this time.

While some operators may not find prime vendor relationships particularly advantageous, many successful independent restaurants have and some even claim their close relationship with their prime supplier is one of the main reasons for their success.

Looking to grow your business with more independent restaurant operations best practices? Read our article Strategies for Working With Foodservice Distributors and download our Prime Vendor Cover Letter to start building your ideal distributor relationship.

Have a profitable week!

The RestaurantOwner.com Team