6 Tips How To Make A Contract With Food And Drink Suppliers

6 Tips How To Make A Contract With Food And Drink Suppliers

This guide sets out how to make a contract with food supplier, how to use the right tactics to get what you want at the cheapest possible price.

Where to buy goods, and on what conditions is one of the most important financial decisions you need to make in your restaurant business. This means that your restaurant suppliers need to meets your requirements such as payment terms, delivery times, quality of the goods and many other factors which will decided would you do business with particular supplier again. And of course at the good price which will make both sides happy.

You should understand your supplier’s position also, none should not be forced into corner.

Make a list of the factors that are most important to you.
When you are setting objectives you should certainly think about the following things:
1. payment terms
2. price
3. quality
4. delivery schedule
5. transport of packaging

Be prepared for compromise before you start to negotiate. Decide what compromise you can or can not accepted and afford it. Remember that your restaurant business is not measured according to income, but the difference between revenues and expenditures that give you the possibility that your business can grow.

Price and payment terms

Good start is to define your priorities such as high specification goods, low prices or a specific delivery schedule.
Check it out! Get price lists from all suppliers (they will give them unwillingly ) with their proposed conditions for contract and compare. The key is to establish your preferred outcome. Before make a contract with food supplier, get your price list of item and calculate how much each product costs from each supplier individually. Consider what offer will make your supplier and how you will respond. Compare and you will get the opportunity to save the money at least for your next vacation.

If you’ve ever bartered at a market you should be familiar with some price negotiating techniques.
Never accept the first offer - ask what else they can include at the given price. You should make a low counter-offer. Your supplier will come back with a revised offer. Promotional materials (cups, aprons, shirts, sunshades) are stories to entice you. Summarize year and calculate what you actually get from a supplier.
Sometimes if the price is suspiciously low, you should check is the food or drink at high quality and what kind of delivery schedule will be?
If the price includes items that you don’t need, try to lower it by asking to remove those items from the deal.
If you squeeze the price too low by threatening to walk away from the negotiations you may end up getting a poor deal. The supplier may have to cut costs elsewhere in an area such as delivery service, which could prove costly to you in the long run.

Even if you are supplier s main customer if you force to squeeze the price too low you could make your supplier to go out of business. That would not be good for your business and reputation.
You should aim to strike a deal that both parties are happy with,especially if you want to do more business with the supplier in the future.
If you are important customer of the supplier you could also ask for bulk discounts to get best possible deal.

If you’re a small supplier’s customer, your negotiating power is smaller. Supplier may try to to get rid of old stock through your business. Be careful, don t buy items which you don t need even at cheap price. Find out as much as you can about the state of its order book.

Don t forget importance of good will. In a future good relationship may help you get even cheaper prices. Try to give the impression you’re approaching the negotiations positively without revealing your position. In any case the more confident you sound about what you want, the more likely you are to get it.

Be sure who you talking with. Identify the key staff in the supplier’s business, there’s no point trying to squeeze concessions out of a junior member of staff who doesn’t have the authority to grant them.

Delivery schedule of ordered goods

Of course when you are signing the contract each supplier will tell you that the delivery of ordered goods can t be a problem and that you do not need to heed to this category as they can do much more then it says in contract. Untruth. As soon as you have more extensive work in your restaurant you will have problems with delivery. Your restaurant software will control your stock and inventory and tell you when you need to supplement supplies but would your suppleir deliver it in appropriate time? You certainly don t want to have delayed delivery of ordered essential products which will be big problem in your daily work as well as make problems with the guests.

This situation is well known especially during the summer months when is the big crowd and very hot. Drinks that should be delivered  at 11am instead of the 8 a.m., and it’s very hot outside  you are not able to cool it down because there is no such refrigerators that can cool drink in such a short time. Or if you salad is not fresh, you could throw it away ! Problem. Big problem.

Of course you will get the answer that it was the crowd, that will not happen again, that they can not do anything about it and that they were all available vehicles in operation.

That s not your problem, be sure to have your delivery time schedule mentioned in contract clearly. Before signing a contract check with the existing restaurants owners about local suppliers and their experiences with them. Ask the suppliers information about their cars for the delivery and the number of restaurants which they serviced. Insist that the goods are delivered to the previously agreed time. Try to set it as one of the conditions for the supplier to be followed and that in case of any breach of this clause of the contract, your contract with the supplier will not be valid anymore.

Make a research about restaurant suppliers

Make some basic research about potential supplier. This will make you clear how valuable is your restaurant business to them. Of course you will ask about references of local suppliers from restaurant and bar owners around you, but also supplier should be happy to put you in touch with some of its previous clients.
You should be sure that your potential suppliers have the cash flow to deliver what you want, when you need it.This is especially important if you’re entering into a long-term contract.
If you pick the supplier which has a lot of competitors you will be in much better position then you pick the supplier which has monopoly in your area. They could have already enough business. Also proper time of making contract with supplier is very important. Be sure make it in the end of month. Sales person may need to meet a monthly sales quota.

Negotiating with your restaurant suppliers

Ask the supplier before you start the negotiating to state the points he want to discuss. You should do the same. Both sides should be satisfied with what is being negotiated. Get the supplier to restate any discounts offered and payment terms. If you are important client, insist on using your own terms and conditions of purchase.
You also need to be aware of common negotiating tactics.
Detect pressure tactic. If the other party sticks to urgent deadlines or the person they need to confer with, remember that they can be used pressure tactics. You should use these tactics with caution.
Don’t allow to force you with pressure into agreeing something you’re not happy with. Make a short break. Ask for a break if you need one. Each time you have agree to some point, clarify that you have understood it correctly and write it down.

Transport of returnable packaging

It would be logical that the supplier with each delivery of ordered goods drove away returnable packaging. At the beginning of your business with supplier you will have no problems with it, but as we said earlier ,as your business grows problems occured. The first time they will say that the car is full and that they have no space to put your return packaging, the second time the same or that they must urgently go to another location and would definitely come back later to pick it up.

Your returnable packaging is growing and becoming big problem to you. Mountain of empty bottles and empty beer barrels and containers of syrup reminds more on trash than the neatly folded empty returnable packaging. Make a clear agree with the supplier for transport of returnable packaging, specify days in week when they will do this job. And if they do not adhere to the agreement call the chief of delivery or even the owner and show him your problem. These things can lead to bigger problems with the local sanitary inspection.

Making a contract with your restaurant supplier

Suppliers will entice you with low, sometimes unrealistic prices with the plan to raise the same very soon. Do not allow to make business with you  this way. Do not sign a contract in case that they can not guarantee the constant real price to you , or if they will demand you to buy goods only from them. Give yourself opportunity to buy from other suppliers.

Also define with the supplier in the contract that your prices will increase to the extent that the purchase price increased, for example, 3% and not 12 or 20%! You can easily check this. Call the general distributor of the product or salesman and ask if the prices have changed and in what proportion. You have right to do that. Use it.

Once when you make a deal about all points it’s best to get a written contract drawn up and signed by both parties. Consider getting legal advice when drawing up your standard terms and conditions. Both parties should agree on what the contract will cover.
You should have a contract that protect your interest and that shifts legal responsibility for any problems to supplier.
Aim to get a contract that protects your interests and that shifts legal responsibility for any problems to the supplier. Notify the supplier in writing how you intend to use its supplies and ask for written confirmation for the prodacts which he is  selling to you to be suitable.
It’s a good idea to explicitly ask about any hidden problems and to keep a written record of all assurances given.
Build into the contract what will happen if there are any problems with the goods or services. Consider including any dispute resolution or exit procedures that must be followed if either party is dissatisfied with the relationship or wants to end the contract.

These are the backbone of business with suppliers from personal experience and learned from Negotiate the right deal with suppliers, © Crown copyright 2009.

Good luck!