On the other side of the equation, small, independent restaurants band together in the hope of using their combined demand to extract price concessions from these suppliers.
Restaurants Increasingly Opt for an Alternative to the Traditional Buying Group Arrangement
Many a smaller or independent eatery today belongs to a restaurant buying group that helps keep food costs down. Joining such a group will typically entitle a restaurant to a modest discount on its usual purchases, with the administrators of the system also taking a share of the rebates that have been negotiated.
That effectively leaves many restaurant owners receiving less from their food service buying group than might be hoped. Another type of restaurant purchasing program has become increasingly popular among those who recognize that the situation could be improved. As those who follow here will see, joining such a program will often mean saving quite a bit more.
Thanks to Lower Overhead and Fewer Middlemen, Restaurants Receive Larger Effective Discounts
The traditional type of buying group in the food service industry is one that collects participants at several levels of scale into a single organization. From manufacturers to distributors and wholesalers, there are a number of types of sales-side entities that have to be accounted for and dealt with.
On the other side of the equation, small, independent restaurants band together in the hope of using their combined demand to extract price concessions from these suppliers. With an independent party overseeing the resulting organization and putting in all the difficult work of negotiating, that entity will always need to receive compensation for its efforts.
An alternative arrangement that is becoming increasingly popular has a well-positioned service provider taking over the role normally played by this group manager. With many independent restaurants already using the same accounting package, for instance, the leading provider in that field has developed its own buying discount program.
What this move enables is a streamlined take on the traditional buying group format that delivers more impressive results to participating restaurants. Instead of seeing a significant portion of the negotiated discount being assigned to an administrator, participants receive a much larger share in the form of a rebate applied to their standard service fees.
Receiving a Larger Cut in Exchange for a Distinction Without a Difference
Unlike with a conventional buying group, this arrangement will not see a restaurant receiving discounts that are applied directly to its food orders. Instead, the rebates that have been negotiated will be used to defray expenses of other kinds.
In practice, that will rarely matter, aside from possibly needing to make some accounting related adjustments. What restaurants end up receiving in exchange is a significantly larger effective discount on food purchases compared to what they would otherwise be entitled to.