• Vendor-Selection Criteria• Overall Value

• Understand how methods used to select a vendor affect an F&B operation’s cost of sales.

• Develop selection criteria based on the operation’s needs.

• Ability to investigate potential suppliers and assess their overall fit into the operation.

• Discuss the implications of various pricing systems, ordering procedures, and credit terms.

• Describe perceived value and its relation to product quality.

• Describe the difference between AP price and EP cost.

• When “hiring” a vendor:– Review multiple applicants– Interview several candidates

• National chains provide purchasing support– Still must buy some items locally

• Some vendors have exclusive rights: your choice is to take it or leave it

• References• Compatibility/Chemistry• Size of the Firm• Location• Delivery Schedule• Storage Availability

• Free Samples• Social Responsibility• Lead Time• Returns Policy• Minimum Order Requirements• Purveyor’s Experience

• Technological Capability• Ordering Procedures• Reciprocal Buying• Willingness to Barter• Cooperation in Bid Procedures• Long-Term Contracts

• Credit Terms• Cost-Plus Purchasing• One-Stop Shipping• Standing Orders• Vendor’s Consulting Support

• References– Join organizations to meet other buyers• National Restaurant Association NRA (local

chapter)• American Culinary Federation (ACF) (local

chapter)– Ask about vendors in the area

• References (cont.)– Ask for references from vendors and call them!• Is the vendor fair, honest?• Are drivers easy to work with?• Are deliveries made on time? • How are credits handled?• Will the vendor make emergency deliveries?

• Compatibility/Chemistry– Note positive or negative vibes– Are you comfortable with the person?– Hopefully this is a long-term relationship

• Size of the Firm– Large firms• Adequate inventories• Ability to meet your needs• May be impersonal

– Small or specialty vendors• May not have large inventories• More personal service• May cost in the long run in stockouts and

shortages

• Location– The closer the better• Staff members may need to pick up items• Will-call or cash and carry buying will be easier• Ideal world – between your home and the

restaurant

• Delivery Schedule– May not always have a choice as to time• Ensure that a knowledgeable person is

available to receive delivery– Don’t use a purveyor who uses third-party

shippers

• Storage Availability– Sometimes available after a big order– Stockless purchase play – pay for the order but

receive it in small amounts

• Free Samples– Good for trying new products– May make some managers nervous – Super Bowl tickets aren’t “free samples”

• Social Responsibility– Do manufacturer’s employees receive a living

wage?– Does the vendor buy from minority- or women-

owned firms?

• Lead Time– Time between order and arrival of shipment• The shorter the better–Lets you make better ordering decisions–Saves you money in the long-run–Helps keep inventories at manageable level

• Returns Policy– Is it a hassle to get a credit to your account?– Must you pay a fee for the goods to be picked up?– Is there a restocking fee?– Best when the driver gives you a credit slip right

on the spot

• Minimum Order Requirements– Meeting the minimum order requirement• May qualify you for free delivery• May give you will-call privileges• May be more than you can do – so find another

vendor

• Purveyor’s Experience– Do you want to be a new purveyor’s guinea pig?– Financial stability is an issue here– Look for a good track record when seeking a

vendor

• Technological Capability– Accessible online?• Product availability• New products• Recipes• Current promotions

– Still need face-to-face contact• Trends• Gossip

• Ordering Procedures– Online is preferable– Avoid complicated ordering systems

• Reciprocal Buying– “I buy from you if you buy from me”• Not a good idea• Break even arrangement at best• Often supplier will take you for granted and you

will lose services

• Willingness to Barter– Tradeouts• Is vendor a member of a barter group? • A $500 dinner may only cost you $200• Food vendors don’t usually trade• Advertising account executives like these kinds

of trades

• Cooperation in Bid Procedures– Request for Quote• Good to shop around occasionally• Current vendor may be responsive• Current vendor may be secretive and not

respond• Online systems provide information

immediately

• Long-term Contracts– Some vendors may not commit to long-term

prices or product availability– Most vendors want large buying commitments

before committing to long-term contracts

• Credit Terms– Ask about• Financing• Discounts–Cash on delivery–Prompt payments–Payment in advance

• Deposits for equipment and packaging • Credit Period

Vendor-Selection Criteria

• Cost-Plus Purchasing– Definition: purveyor’s cost plus negotiated

percentage markup– Buyers have a love/hate relationship with this

process– Vendors don’t like cost-plus – they take on more

risk

• One-Stop Shopping– Also known as: sole-source, prime-vendor,

preferred-provider or single-source procurement– Easy for the purchaser– May cost more but result in labor savings

• Standing Orders– Driver leaves enough product to bring you up to

par stock– Typical items: dairy products, bread, soft drinks– Remember to watch the drivers

• Vendor’s Consulting Support– Source of product information– Networking source– When buying equipment, vendor may

help with health and/or building permits

• Value – cost of the product plus additional supplier services

• Edible portion (EP) cost—servable or usable cost

• As-purchased (AP) price—price of product on delivery

• Better to pay higher AP if it results in lower EP

• It’s really up to you• Most buyers want– Consistent product quality– Supplier services– AP price

• Look for consistency, dependability, loyalty and trust