Using a GPO to Lower Hotel Food Costs

Looking to lower hotel food costs?

Group Purchasing Organizations (GPOs) started in the healthcare industry and quickly spread to education, electronics, manufacturing, agriculture, and hospitality. While their services have expanded since their birth in 1910, most operate under one important premise—the diffused purchasing power of a group of businesses, when combined and leveraged, produces a powerful collective buying power. As Aristotle said over 2,300 years ago, “The whole is greater than the sum of the parts.”

Hotels leverage this buying power to lower food costs, increase quality, and manage their inventory and supplies. Let’s take a look at just how a GPO can lower hotel food costs.

Imagine that you’re the operator or owner of a large-scale hotel with thousands of locations. Think Marriott International with over 7,000 properties in 131 countries. You can be assured that when you contact a supplier, you’re going to get the best possible price. The competitive advantage is palpable.

At Source1 Purchasing, we have 60,000 locations, more than 350 manufacturer contracts, 165,000 rebated line items, and $12 billion in purchasing power.

Not bad. Now imagine that we’ve become a part of your team, finding the right suppliers for your needs and ensuring you’re receiving the best possible price. Move over Marriott.

At Source1 Purchasing, we specialize in hospitality and food service.

This means that we do more than simply lower food costs. We’ll also take a look at your menu, plating costs, and inventory controls to look for potential savings. In today’s environment, it’s important to search for every business-building and cost-saving strategy.

Even though room revenue is considered the heart of hotel profitability, food and beverage sales can impact direct sales as well as occupancy rate. If guests are staying in a specific area, and they have a choice of one hotel that offers stand-out food and cocktails at reasonable rates, or another that puts little attention into their food and beverage program, which one will they choose?

Success is measured by the ability to maximize revenues while containing costs in all departments.

It’s not uncommon for hotels to leave the responsibility of purchasing, costing, inventory control, and menu design in the hands of the chef or food and beverage manager. These responsibilities, along with scheduling, food preparation, and ensuring guest satisfaction can leave little in the way for supply assessment.

For this reason, many in the hotel industry simply go along with their favorite suppliers year after year. Chefs may talk with their distributors if there’s a menu change, ask about specials, or simply establish a regular delivery schedule that rarely deviates.

Working with a GPO changes all of that.

At Source1 Purchasing, we work with both broadline distributors and specialty suppliers. This ensures a reliable, cost-effective supply chain. We’ll find the highest quality and best costs for each product and ensure contracts are up-to-date. Now, the hotel is working with one supplier that provides all-inclusive inventory and cost management solutions. Group Purchasing, that’s personal!

Chefs and operators get to do what they do best—create memorable meals and guest experiences that keep clients coming back for more and telling their friends.

As with all businesses, no two are usually ever quite alike. The same is true for GPOs. At Source1 Purchasing, we pride ourselves on becoming members of our client’s team. We’re committed to helping our customers increase their bottom line while providing their guests with high-quality products and exceptional service.

To this end, we take a deep dive into analytics. This data provides us with the information we need to ensure you are buying from the right suppliers, have the right contracts in place, experience the benefits of a solid supply chain, and have instituted the proper inventory controls.

Our supply-chain experts and their individual attention to a savings analysis of each product ensure you’re getting the best price for top quality.

In addition to food and beverage supplies, we procure everyday operating supplies and products. In fact, we work with some of the top manufacturers in the hotel industry, including American Hotel Register Company, World Amenities, and Chef Works, to name a few.

Like a cog in a wheel, while seemingly insignificant, it is vital to the momentum. One broken cog, and the wheel simply stops. A hotel has many moving parts and each part plays into the success of the business. At Source1 Purchasing, we’re here to help you keep your wheel turning toward maximum profitability.