Powered by Savings: How One Company, Source1 Purchasing, is Revolutionizing Food and Beverage Purchasing Programs
By Courtney M. Fisher
Nothing holds the promise of satisfaction more than dining out. Whether customers are enjoying a casual bite with friends at the neighborhood hub or celebrating a milestone event at the finest eatery in town, there is but one standard equation for the diverse types of dining classifications out there: food supplies + chef + customers = dining experience. Bring them together in the right way and the combination can create pure alchemy.
But customers often overlook what goes on behind-the-scenes to get their meals from the supply chain to the restaurant walk-in to their tabletops. As food operators know all too well, what goes on in the kitchen transcends the romantic notion of a chef in a white coat, hand-selecting delicacies to tenderly prepare to the delight of his guests. The reality is that behind every great chef is a food buyer trying to save a little money while continuing to give customers the experiences they expect.
A single dining experience reflects countless decisions – both large and small. While ingredient selection never moves off the front burner, the overall customer experience hinges just as heavily on the mundane supplies needed to manage food service operations: cleaning chemicals, small wares, paper products and other operating supplies. With food, beverage and paper costs typically exceeding 35 percent of sales, the challenge is to hone in on what customers want while keeping an eye on the bottom line.
So what is that bottom line? It’s simple, really: the only way to create sizable savings in today’s economy is to make informed buying decisions.
Putting Saving On the Front Burner
In a food culture that’s gone from haute to homespun in a matter of a few years, more than ever, customers are on the lookout for value without forsaking quality. Food programs are no exception. The current focus on what customers want to eat puts even more pressure on buyers to make smart decisions.
Food programs are the frontline for hospitality. As such, savvy decision making is often the differentiation between the industry’s success stories and its strugglers.
The challenges faced by hotel companies like John Q. Hammons (JQH) are amplified by rising food costs that create even more intense pricing pressure. Close attention to detail and impeccable service define the John Q. Hammons hotel experience and the company’s buying program is no exception to the rule. While there is a new trend toward participating in pre-negotiated buying programs rather than navigating the complex processes of purchasing programs alone, JQH executives have long been taking the critical steps to save today while helping to ensure the company continues to prosper well into the future.
Their solution? The company taps into the buying power leveraged by Source 1 Purchasing with an enviable – and measurable – success rate.
Based in Cordova, Tennessee, Source 1 Purchasing offers clients sizable savings in a down market, up market and any market in between. While other buying programs exist, Source 1 is unique to the industry in that it is neither a group purchasing organization (GPO) nor a consulting firm. Instead, the company provides a comprehensive suite of services that empowers operators to not only lower prices, but also reduce operating costs, ensure consistent product quality and achieve higher customer satisfaction for their clients.
To illustrate the savings potential, JQH’s launch of Source 1’s Prime Direct program resulted in immediate savings for the company, producing a savings of $43,014 in the first month participating in the program, with total FY2009 savings exceeding $800,000. In addition, the company’s manufacturer rebate returns doubled to 1.13% by utilizing the Prime Direct Program compared to an existing vendor’s rebate return. It’s not a stretch to say that the potential savings significantly outweighed any costs associated with implementing Source1’s purchasing consolidation program. Instead, the savings continue to self-fund the program.
It’s a Buyer’s Marketplace
Today’s climate makes such well-rounded buyings programs particularly attractive and ripe for the savings pickings. The truth is, buying programs have always existed, so what’s all the fuss about?
“Overall, programs like Source 1’s negotiated buying programs provide the market new options. Customers keep their own signature deals, add new GPO deals and last source independent deals that fill any gaps in the program. This new flexibility brings optimal cost saving and blanket coverage over all purchases throughout all operational areas,” said Scott Hoffmire, President of Source 1 Purchasing.
Source 1’s negotiated savings plans go beyond just food and beverage savings to offer the widest range of category potential, as well as partner features and benefits that are unlike any other. Furthermore, as the only company of its kind to offer such broad stroke savings – offering customized programs based on operational size – the company is strategically positioned as the one and only front runner to service this fast-growing segment of the industry.
The good news is that buyers don’t have to lose control of their purchasing programs – they simply gain the assistance of an established company with powerful resources to obtain the most cost savings overall. Jumping on this fast growing “food” wagon simply means operators get to keep more money in their pockets more quickly.
To meet the rapidly escalating need in the marketplace, Source 1 offers two programs customized for different target segments. First, the Buyers’ Marketplace is designed for single unit hotels, private schools, restaurants, smaller casinos. This is where operations link to a buying group and obtain discount prices by utilizing over 450 national brand contracts – all offering quality, name brand products, these aren’t your run of the mill discounts– delivered by a variety of nationally recognized distributors. Operators gain access to basic food and beverage items, as well as dining room supplies. They also have access to rebate opportunities that Source 1 collects and allocates quarterly with special distribution incentives like prompt pay, delivery size and pricing level incentives.
Prime Direct Purchasing is the second buying program. This program is designed for multi-unit hospitality groups, large casinos, hospitals, theme parks, resorts, etc. This program offers the same advantages as Buyers’ Marketplace, but also includes a universal range of categories from F&B to capital equipment to small wares to maintenance and lawn supplies and administration products, resulting in a greater savings potential obtained from contracting pricing at the lowest price across the board.
Both programs are powered by industry heavyweights to obtain the most manufacturer contracts. For instance, Source 1 offers 450 brand name contracts representing over 6,000 products with links to partner distributors such as Sysco and US Foods. With that kind of buying power, clients get the flexibility to fit their own unique needs with maximum savings and assurance that pricing won’t incrementally “creep” up.
Rather than simply becoming another provider, Source 1 assumes the role of partner, enabling clients to become true innovators within the hospitality industry while they assume paperwork, filing and collection needed to maintain the programs. Client just get to sit back and collect the savings.
In an industry where every dollar matters, the increasing role of purchasing consolidation brings the right products to the right clients at the right time – revolutionizing the way food and supply purchasing is being done. Yet another example of pure alchemy.
For more information about Source 1 Purchasing food programs, visit www.source1purchasing.com or call 877.717.5566.
