In the hospitality and food service industries, there is a saying that amateurs buy often, but professionals purchase only once.
Some small to mid-size operators spend a great deal of time and effort buying instead of purchasing. When making a shift to purchasing best practices, you can access experience and information that will contribute to your success — purchasing is educated acquisition while buying is informal shopping. And a group purchasing organization can help operators transition to a more advanced procurement method.
Here are six purchasing best practices, along with reasons why you should adopt new buying habits.
1) Purchasing is about studying the products: Moving from buying to purchasing starts with education about product performance, value, security and sourcing. By studying these points, you can find answers to questions that improve guest satisfaction while increasing profits: How can you offer new products or find new dishes that demonstrate revenue growth? How can you increase your average guest check while lowering food costs? How can you create signature dishes that attract and retain guests?
2) Purchasing maintains product value and performance: The key difference between buying and purchasing comes down to this — buying is attaining products while purchasing is the management of products. There’s a contractual element to purchasing, which can guarantee elements like price, yield and grade, determining factors that ultimately make the product more successful. While buying usually creates product inconsistency, purchasing improves product quality and results in higher guest satisfaction scores.
Consistency is a crucial component of a successful operation, stemming not only from using quality ingredients, but also from having a reliable staff, according to an article on the Culinary Arts 360 website. “No one wants to chance eating at an establishment that has a dish perfect one night, and a mess the next,” the article states. Purchasing ensures a favorite dish will always include the same quality ingredients.
3) Purchasing as a group leads to extra discounts: Group purchasing organizations like Source1 can help operators with their purchasing model. By combining purchasing power from different operators, Source1 can present to an operator the latest r rebates, allowances and incentives on a variety of products across all areas of their operation.
4) Purchasing leads to information sharing: Group purchasing organizations help operators share knowledge and exchange reviews. Source1 Purchasing performs a business review every quarter with clients to evaluate savings that were realized and what potential they have for additional savings.
5) Purchasing is a tool for improvement: Operators that move toward a purchasing methodology can focus on continuously refining the process. Instead of buying the cheapest brand on the market, they can choose an item — say a standard chicken breast — and then work with that item to make it great. Once operators move to a standards-based purchasing model and create a new baseline, they can work on improving it.
6) Purchasing offers better return on investment: During the recession, many operators re-engineered their menus to focus more on ancillary items like salads, soups, appetizers and desserts. Profit margins are better on these products and they offer greater flexibility to introduce new ideas. These operators increased their margins by offering exciting new desserts with a cup of coffee or other beverage. This was a direct result of purchasing and its related analysis, demonstrating the great return on investment of group purchasing organizations.
There are many sound benefits to implementing purchasing best practices. The bottom line is that if you’re simply buying products instead of purchasing, you’re not getting the most for your dollar, and possibly save the wrong products at the wrong price. As an authority in GPO best practices, Source1 Purchasing can get guide you away from buying and toward purchasing. Plus you’ll have access to the resources, tools and leverage of a powerful purchasing program.