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How to get the best value from food and drink suppliers

By Shabaz Mohammed

- Last updated on GMT

Related tags: Price

By checking and benchmarking prices in the correct way you can save money on the bills from your suppliers, says Pelican's Shabaz Mohammed
By checking and benchmarking prices in the correct way you can save money on the bills from your suppliers, says Pelican's Shabaz Mohammed
With ingredients continuing to creep up in price there has never been a better time for restaurant, pub and hotel operators to seek out the best value from their suppliers to ensure profit margins don't get squeezed too much. Here, Pelican Buying Company managing director Shabaz Mohammed gives some tips on benchmarking to ensure you get the best prices available to your business. 

Because produce prices change frequently, it is always wise for pubs, restaurants and hotels to carry out regular price checks to ensure they are getting the best value from their current providers. To ensure you get the most from this process, here is a practical check-list. 

Get benchmarking right

The Chartered Institute of Purchasing and Supply (CIPS) promotes benchmarking - the practice of comparing prices, quality and other aspects of a product or service with others - as an activity that, if correctly applied, can provide valuable improvements in managing purchasing. Comparing the cost, delivery time or quality of one product or supplier against another can provide a highly effective measure of food costs to help maximise best value for your business.   

How best to benchmark

To ensure your benchmarking exercise is valid, it is essential that any comparisons are made on a like-for-like basis and that the type and volume of products analysed are a true reflection of what you actually use. In addition, the benchmarker (the person carrying out the price comparison) should be including non-competitive products and not just those where their own pricing could be considered favourable. 

Pack sizes

Smaller pack sizes, usually of a different brand, are sometimes used to compare prices. Any benchmarking should be taking into account the pack size differences and adjusting the new size accordingly.

Volumes

Ensure the benchmarker hasn’t assumed that you are buying one of every product, instead of taking into account the volumes of each product purchased over a period of time. 

Brands

If you generally use a particular brand of product, be vigilant to them being switched to non-branded or cheaper alternatives in order to achieve a more competitive price, as the alternative brand may be inferior and may not have the same yield. ​ 

Using a loss leader

Be mindful of having loss leader products (products sold at a lower price, which are at, or below the market cost) forming part of your benchmarking. These products are normally listed at competitive prices for a limited period only and can often revert to a much higher price after a short initial period. 

Hidden management fees

Once you have been through the process above, be sure to ask suppliers about any additional fees. You should feel confident that the savings you have achieved will not then to be lost through hidden management fees or services such as delivery charges. 

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