When it comes to price, it’s easy to want the easiest and cheapest option. However, building profits doesn’t necessarily come from just reducing spending.

“Our goal as Source1 is to expose operators to our knowledge base and experience,” said Molly Fierro, VP of programs. “We try to manage overall cost; it’s an expanded way to think about the bottom line.”

The relationship between price and cost can be compared to purchasing more expensive, yet more efficient pre-cut fruit versus cheaper, less-efficient fresh fruit. Despite the lower up-front costs, the fresh fruit will cost more in the long run because it requires the labor of washing, cutting and preparing it.

The negatives involved with low up-front price go beyond simply paying more: labor costs and potential lost time drive the cost of the fruit up. Although this particular option might work for some operators, given their needs and wants, the interaction between price and total cost beyond the initial price tag is an important consideration.

When the scale is something as large as a Foodservice operation, the relationship between price and cost becomes not only important, but vital to the health and efficiency of a business.
Below are 3 things you can do to be price-aware and cost-effective.

1. Have access to options.
Options allow operators to access many different prices and qualities of product. Because no two businesses are the same, the ability to choose different products depending on demand, season and consumer preference is vital. Only you know what you need and what your customers want; having access to multiple options for hospitality products through Source1 means that you don’t just have to choose between low price whole fruit vs higher price pre-cut fruit options—you can choose from anywhere on a spectrum that fits your specific needs.

2. Work to maximize product applications.
This is perhaps the best-kept secret of the relationship between price and cost – the application of products. While some products, such as kitchen utensils and appliances, have one application, many products have unexpected multitasking powers. Through manipulating such products and streamlining purchasing, an operation has the power to drive down costs and better leverage your overall spend. Many foods—meats, for example—can be used in a variety of applications. For example, a cut of chicken can have multiple applications beyond just an entrée; it can be used just as effectively in a salad or stuffed. Although the actual numerical price won’t change no matter what a product is used for, the maximization of its use will eventually drive down costs and price in the long run.

3. Utilize leverage buying.
The ability to not only choose and maximize the products you do have, but to buy those products at the lowest possible price allows for even more room in the budget to expand your business. Leverage buying through Source1 can be a key component of being a price-aware and cost-effective business because it allows you to maximize your overall budget all while obtaining the products that you need for your business and customers.

What should we be thinking about in the hospitality industry? How do we assure long-term financial viability? Well the answer has not really changed since the dawn of Marketing.
“Long-term financial viability comes when someone–in our case, guests–gladly pay for our offerings.” Wise words from Trevor Stuart-Hill of Revenue Matters. But how do we assure that is the case. Stuart-Hill details 5 effective marketing tips in order to maximize opportunity. Making sure these areas are genuinely customer-centric is the goal.
Let’s take the hospitality marketing list one by one.
1) Policies
2) Pricing Schemes
3) Online Presence
4) Guest Engagement Practices
5) Promotional Activities

1) Policies-
I remember distinctly pulling into a resort hotel at about 6:30 pm after a long day of touring. The idea was to refresh for the evening before heading back out the next day. The pool looked beautiful and so inviting. I couldn’t wait to jump in! But, the pool closed at 7:00 PM. By the time we checked in and changed our clothes, it was too late to take a swim. I was left with disappointment rather than delight.

We get that sometimes budgets are tight and trade-offs need to be made. But, it is in your best interest to make sure your policies support your guest’s needs. In a resort area, it would seem that that patrons might want the pool to be open later than 7:00 PM.

2) Pricing Schemes-
Understanding what guests are willing to pay for is important! This comes down to really understanding your segment, your location and your product offerings. When you can offer something no one else can, and that difference is valued (a hot bar scene, a restaurant attached to a limited service hotel, proximity to a beach or even free parking) your pricing structure can and should reflect your advantage. The key is to communicate that advantage in a way that potential customers see the benefit. But value is key. Walking distance to the beach probably is not super important in Maine in January. But proximity to a ski hill might be!

3) Online Presence-
We have all been there. A beautiful website with amazing pictures and quotes from satisfied customers. You can’t wait to try the restaurant, hotel, casino, whatever! Or the opposite experience – a confusing website where you cannot find what you need or the functionality is just not there! The menu loads slowly or you cannot find the number to ask a question or make a reservation. Or there are not enough pictures and you just cannot figure out whether the property is luxury or mid-scale and whether they are catering to foodies, singles, tourists, families or some other group.

The moral – make sure your website puts your best foot forward! It is the first place a potential customer will go to learn about what makes you different. Make sure they close out their browser with a reservation or at least wanting to learn more.

4) Guest Engagement Practices-
What happens when your guest walks in the door. I remember being in France. In every region from Paris to Nice to Normandy, I was greeted with Bon Jour or Salut the second I crossed the threshold. It was welcoming, it made me believe they wanted me in their store and it made me comfortable to just poke around. And believe it or not, many times that led to a sale. So if you look hard at your establishment, are you making your guests comfortable, from the second they walk in? Do they have help with their luggage? Are they being guided towards check in? Do they have a drink at their table as soon as possible? In general, are you maximizing their guest experience? Something little like saying hello can enhance guest satisfaction which can lead to additional sales, word of mouth and repeat business.

5) Promotional Activities
Are you sending them the messages they want to hear in an environment where they are ready to receive them? There are so many options when it comes to hotel marketing strategies! Newsletters, Google ads, Groupon, email promotions. The guideline here is to make sure your vehicle, offer and brand image are aligned. For example, it may not make sense to put a 5 star hotel offer for a free night in the PennyShopper.

Source1Purchasing is a company that focuses on driving revenue through the purchasing process. If you want to increase revenue and guest satisfaction through best practices and smarter purchasing contact one of our experts.

What you will need:
• 2/3 Cup of all purpose flour
• 1/4 Cup of Butter
• 1 pkg Cake, Yellow Mix, dry mix
• 1 cup Nestle Toll House Semi-Sweet Chocolate Morsels
• 1/2 Cup of light brown sugar
• 1/3 cup Almonds
• 3 tsp Nescafe Columbian
• 1/2 Cup of water

Instructions:
1. PREHEAT oven to 350° F. Grease 13 x 9-inch baking pan.
2. MIX flour and sugar in medium bowl; cut in butter until mixture resembles coarse crumbs. Stir in nuts.
3. PREPARE cake mix according to package directions, substituting coffee for water. Pour batter into prepared baking pan. Sprinkle with half the chocolate, nut mixture and remaining chocolate.
4. BAKE for 35 to 40 minutes or until wooden pick inserted in center comes out clean; cool. Cut into squares.

A Group Purchasing Organization, or GPO, is an organization that creates and facilitates efficient, price-reducing relationships between operators and suppliers.

Much like a dating service, a GPO seeks operators and suppliers and matches them according to operator needs and suppliers’ ability to meet those needs—creating a network of exchanges and relationships within an industry.

In the world of impersonal GPO relationships, Source1 strives to be not just a ‘dating service,’ but a friend that personally understands operators’ needs.

Although the goal of reducing costs is simple, the power of this complex network is often misunderstood.

 

5 Buzzwords to Help Better Understand GPOs

 

1. Value Stream

Because of the middle-man nature of the GPO, many groups are involved in different parts of what Source1 CEO Scott Hoffmire refers to as the value stream.

“Source1 does the block and tackle work—helping everyone upstream and downstream, uniquely starting with the guest,” he said. “We help everyone below and coordinate everyone above.”

Those ‘below’ are the operators, who receive the benefits of the coordination work of the suppliers upstream in the process. Although this value stream involves both the operator and supplier – to be most effective, the “energy” needs to be derived from only one party: the guest.

 

2. Pivot

The role the GPO plays in this value stream involves pivoting between operators and suppliers to ensure that needs are met.

“We are the pivot: the group that makes it happen by determining client needs and turning back to the manufacturers to get the best price and quantity,” Hoffmire said.

In the case of Source1, this pivoting role proves very advantageous to all involved: because of the 3,000 operator-network accumulated by the Source1, it boasts $7 billion dollars in buying power. However, with great power comes great responsibility and care: Source1 is dedicated not only to decreased costs but customer and operator satisfaction.

 

3. Leverage

This buying power is evident in Source1’s mission to harness “the leverage of billions, the power of one.” Because low pricing is garnered by high-volume leveraged buying and positive relationships with manufacturers, operators receive the best pricing on the market for a wide range of goods. Bottom line: As the GPO network grows, so do the savings.

The leverage provided by Source1 does not end with lower prices: Source1 strives to be “operators serving operators”—that is, many Source1 employees are actually garnered from the types of operations they work to serve. By understanding the needs of the operator, Source1 inherently understands the needs of the dining guest.

 

4. Parking lot to rooftop

With lower costs, operators can choose the optimal goods for their firms: Source1 offers food, glassware, maintenance supplies, housekeeping chemicals, and almost all necessary goods to run an establishment—“from parking lot to rooftop.” So many categories—and over 6,000 branded items with 500+ national contracts—allows for a virtually unlimited selection that can equip all aspects of an establishment.

 

5. Catalyst

These benefits would not be possible without a GPO; the organization acts as a catalyst that positively enriches the buying and selling experience between operations and suppliers.

“Source1 helps obtain the best pricing, discover opportunities and meet goals. We bring in products specific to making their dining customers happy,” Hoffmire said.

In the case of Source1, the goal as the catalyst and facilitator of these opportunities also includes an understanding of all levels of the process—especially everyone’s main concern: the customer.

“Our competitors just give them a price book,” Hoffmire said. “We work closely with clients to meet their needs. We are operators serving operators; and in the end, the most important person in our process is the guest.”

 

Written by: Gabrielle Gresge

Designing and implementing a successful purchasing program doesn’t have to be an excruciating process. However, in order to accomplish such a purchasing program, you must put in it some thought about purchasing best practices and take time to plan. The following are a just few things you can do now to improve your purchasing program and begin saving money as you work to improve your purchasing practices:

1. Avoid taking relationships for granted.  While you may have been working with the same salesperson for years and are comfortable with their business, this doesn’t mean he or she has your best interest in mind. The truth is, everyone has his or her own best interests in mind.  Don’t be complacent just because it’s what you are comfortable with. Instead, you should consider comparing cost annually to ensure you aren’t overspending.
2. Spot-check your deliveries.  If you orders are sold by count, be sure to count it; if it is sold by weight, then weigh it. All of that extra time that you spent negotiating a great deal will be wasted if you don’t receive the right product at the price you agreed to.  These mistakes in delivery could be costing you a large amount of money.
3. No purchase is complete until it is fully paid for.  Vendor financing can be very costly.  It’s essential to understand that the price you pay and the quality of service you receive are affected by your willingness to pay within the terms you have agreed to.

Improving your purchasing practices may take some time, but if you invest your time wisely, over time you will see the dividends.  Money you save in purchasing will typically flow directly to your bottom line.  To avoid the hassle of following other more complicated steps in addition to the ones listed here, let Source1 Purchasing handle it for you. Source1 Purchasing is a leading strategic supply chain management group focused on cost management, savings and operational efficiencies for the hospitality industry, providing you with a complete purchasing solution for all of your food and beverage procurement needs so that you can keep your focus on your guests! To learn more about the Source1 Purchasing Program and how it can benefit your establishment, visit our website at www.Source1Purchasing.com.

Forget the outdated concept of room service and embrace the newest trend in the hospitality industry: the hotel pantry. The pantry is available to meets the needs of your guests when they are looking for a light snack, quick meal or even some aspirin after a long day of traveling. This recent hospitality trend has become a brand standard for many hotel brands, such as Marriott International’s “The Market” and Hilton’s “Pantry Pavilion” and “Suite Shop.” These pantries are a great source of revenue, however, when in the beginning stages of planning a pantry for your hotel, how do you select the right products and categories that will best meet the needs of your guests while ensuring you’re earning a profit and making the offering worthwhile? You must keep a few things in mind when developing your hotel pantry assortment. First, you must decide what categories should be included as pantry necessities, such as sweet snacks, salty snacks, healthy snacks, quick meals, ice cream, frozen dinners, and travel size amenities. Then, what are the best sellers in each of those categories? You will be able to determine these categories based on market research. Continue reading to learn how to stock a pantry to keep your guests happy!

1. Stick with what you know. Offer popular products that your guests search for when stepping into a pantry. Some hotels want to stand out by offering only regional items or organic products. This can be beneficial, but national brands typically outsell specialty items 4 to 1. Research has shown that guests, especially families and business travelers, prefer comfort foods from well-known brands while they are traveling rather than trying something they have not had before. By offering items that guests are familiar with, sales and guest satisfaction will rise.
2. Use room rates as budget indicators. The room rate of a guest’s hotel is a great indicator of their travel budget and should be factored in when selecting the offerings in a pantry. For example, a guest who is willing to pay $200 per night to stay at a hotel is more likely to pay $7 for a pint of premium ice cream such as Ben & Jerry’s or Haagen Dazs. However, a guest who chose an economy hotel at a $49 per night rate is more likely to opt for an inexpensive ice cream product in the $3-4 range, such as Klondike or Good Humor novelties. Studies have also shown that generic or guests, no matter what their budget, do NOT usually prefer low budget items because they are normally associated with being low quality. If these products are stocked in the pantry, you will find that they will not sell as quickly, even if they are a low price.
3. The bigger the better. You’ll find that guests typically purchase the 20oz soda, the King Sized chocolate bar, and the large “grab bag” chips. These products sell better and faster, presenting an opportunity for larger profits. Market retail analysis of over 400 Marriott Markets shows that King Size beverages, candy bars, and potato chips outsell their normal size counterpart across all categories where a king size alternative is offered. To put it into perspective, the single serve 1 oz bag of Lays can be purchased from your food service company for about $.35 each (depending on your negotiated price) and can be sold in the pantry for $1.00. That’s about a 200% markup and $.65 profit per bag. However, a king size or grab bag size (2.25 oz) Lays sells wholesale for about $.65 and can retail in a hotel pantry for $2.00 or more. That’s about a 225% markup and $1.35 profit per bag. These simple size options can greatly increase your profits.
4. Switch things up. Guests want options – not just in the number of products being offered, but also in the categories available. A guest should be able to walk into the pantry and find a satisfying solution to for cravings. This means that if a guest needs to satisfy a sweet tooth, he should have several choices to choose from, including chocolate, cookies, and candy. If the guest comes in and is trying to stick to a diet, he should be able to select from a variety of healthy products like energy bars, trail mix, or Lean Cuisine meals.
5. Remember! Travel size assortments and single serve over-the-counter medicines are very popular sellers, but are commonly overlooked by hotels. These products allow you to meet the needs of your guests while earning a healthy profit, since most wholesale for under a dollar and can be sold for $2.00 or more. When properly supplied and merchandised, these assortments fall in the top five for all pantry offerings.

No matter what region or guest profile being served, the convenience of a well-supplied pantry market can greatly improve guest loyalty and increase sales for hotel operators. Selecting the right offerings is the first step towards hotel retail success. Source1 Purchasing is a leading strategic supply chain management group focused on cost management, savings and operational efficiencies for the hospitality industry and offers a wide assortment of products to stock your hotel pantry in order to increase your profitability and guest satisfaction. To learn more about the Source1 Program and how it can benefit your hotel operations and efficiency, visit our website at www.Source1Purchasing.com.

After adding up the the costs of advertising, marketing, and sales people used to attract new customers, it is easy to see that obtaining new customers costs much more than keeping your current guests loyal to your hotel. Surveys have proven that the top reason customers stop returning to a hotel is because they feel unappreciated. To reduce costs hotel operators should prioritize hotel brand loyalty and keeping current guests happy.

 

1. Leave a lasting impression. Show your guests how much you appreciate their business with a parting gift or even a sincere “thank you.” A few ideas to impress hotel guests: give them a small box of truffles or a jar of jam with your logo as a memorable personalized thank you. To take the hospitality one step further, handwrite a thank you note that is custom-made especially to your guest.
2. Keep in touch. Make sure your guests remember who you are and remember their stay, even if they only visit once. Throughout the year, send a letter or email that keeps them updated on the latest activities and news at your establishment and tell them how much you look forward to their next stay with you. Create a social media presence for your hotel by making updates, running contests, and posting pictures on various social media platforms, such as Facebook, Twitter, or LinkedIn.
3. Reward their loyalty with exclusive deals. Design special packages or deals just for your guests that are a part of your loyalty program. This displays your appreciation for their loyalty, encouraging them to choose to stay with you rather than your competitors in the future.
4. Ask for feedback. Don’t take your guests for granted just because they stay with your hotel regularly – more than likely, they have feedback to give you. When you receive feedback from your guests, be sure to fix any issues they have observed as quickly as possible. Negative feedback creates an opportunity for you to exceed expectations, show your dedication to your guests, and let them know that you do care about their opinion. Promote face-to-face interaction – start a casual conversation with a guest, and then ask if they enjoyed their stay and what they would like to see improved for their next visit. When there is an issue, keep your guest updated and inform them when it has been resolved. Be sure to check websites like TripAdvisor.com as well for reviews, good or bad.
5. Train your staff. Your staff should have the appropriate training and tools in order to provide the level of service that your guests expect and deserve. Your staff should be able to recognize loyal guests and handle any complaints that may come their way. By having confidence and authority, your staff will appear more professional, leading to more trust from your guests. If your staff is able to resolve a negative situation without your assistance, that’s even better.

The hospitality industry revolves around hotel guest loyalty, so when you see an opportunity to wow your guest, take advantage – it could make the difference between that guest returning or choosing to stay somewhere else. Source1 Purchasing is a leading strategic supply chain management group focused operational efficiencies for the hospitality industry in order to keep your business running smoothly and helping you keep guests coming back time and time again.