Purchasing is probably the class least remembered during culinary school, but has tremendous impact on the business of serving food. We all remember butchery and braising, knife skills, and even sanitation. For many chefs-in-training, the classes on purchasing are a topic to get through as quickly as possible before getting back to the kitchen.
That’s understandable but unfortunate, because in many ways, purchasing is the single most important job responsibility in the restaurant industry.
Even the best chef, with the most the incredible talent, will fail at the business of running a successful restaurant if purchasing isn’t done systematically, and diligently, and as a team.
We’re going to use the standardized definition of purchasing which is:
Purchasing is the entire process of selecting, buying, and evaluating the products and services needed by a restaurant or foodservice operation. The purchasing process begins when needs are determined and ends after the products are used or contracted services are provided.
The most important take-away from the definition is that purchasing is much more than placing an order for food products from a vendor.
Purchasing is a cyclical system that starts with determining needs, and ends when products are consumed or used.
In a very real sense the purchasing cycle never truly ends, at least as long as a restaurant is in business, because the cycle starts again as soon as a week or month’s product needs are determined and existing product stock is depleted.
Some purchasing activities are undertaken seasonally or monthly, including determining what types of products are needed for a menu and determining the necessary quality requirements. Many other activities occur more frequently, such as determining purchase quantities or service requirements, placing orders, and paying vendors.
The Objectives of Effective Purchasing
Purchasing objectives are the driver behind every decision that a purchasing team makes in order to return on investment (ROI). Regardless of who does the actual ordering, every team member with purchasing responsibility should be involved in determining the operation’s specific needs for products and services as well as in identifying the best sources for products.
In addition, all team members should be involved in assessing the different ways that the use of technology can improve different stages of the purchasing process.
Purchasing objectives drive the daily activities of the purchasing team, including:
The Impacts of Effective Purchasing
Perhaps more than any other aspect of the foodservice operation, purchasing has a direct impact on a restaurant’s success. The most important responsibilities of the purchasing team include maintaining adequate product quantities, maintaining quality standards, and minimizing costs.
Maintaining Adequate Quantities
It’s vitally important to ensure that an adequate supply of all necessary products is available to prepare every menu item. There are several different ways that managers and purchasing team members do this including analyzing Point of Sale (POS) information and sales histories to correctly forecast the number of portions needed.
Forecasting can be made even more accurate by looking at additional information including seasonality, holidays, and greater or lower amounts of foot traffic in the neighborhood or city over specific time periods or months.
We all know what happens then adequate inventories aren’t maintained, and it isn’t pretty. Product shortages can turn an amazingly busy weekend service into a nightmare. Just as importantly, failure to maintain quality standards can result in purchasing products that don’t meet customer expectations, and in some ways that’s even worse.
Maintaining Quality Standards
Every single item produced by a foodservice operation must meet the quality standards that have been developed for it. Ensuring consistent quality begins when purchasers develop reasonable quality standards and continues by communicating these standards to vendors and vigilantly checking product quality during the receiving process.
That’s important enough to repeat.
Quality standards may be set by the chef, manager, or owner of a restaurant but need to be clearly communicated to every member of the purchasing team, especially those doing the receiving from vendors and suppliers.
For obvious reasons food costs and cash flow are extremely important to the success of a foodservice operation.
Many new purchasers will view finding the absolute lowest prices on products during purchase as the primary way to minimize cost but it is only one strategy, and often not the best one.
Tying up large amounts of cash for stored products that won’t produce revenue until a later date can be just as crippling as purchasing too few products to get through a busy weekend.
An effective purchasing team will use several strategies to minimize unnecessary investment in storage:
Purchasing Practices & Vendor Relationships
Purchasers are always competing with other operations for the best prices on food products. That’s quite simply the way the restaurant industry is designed.
Although simple in concept, achieving an advantage based on food costs is actually very challenging for a number of different reasons – the most important of which is based on a traditional lack of transparency in vendor pricing. It can be very difficult to know how much an operation should be paying for food products at any given time and getting product pricing from new vendors can be a time-consuming process.
Several purchasing practices can be very helpful in working with vendors:
1. Always select vendors who provide the best combination of price and services. Vendors sell much more than just products – they should be assessed based on a number of additional factors including the frequency of deliveries, flexible payment terms, low order minimums, and perhaps most importantly, consistency and dependability.
2. Make sure that every dollar spent on products is wisely spent. All purchases should be based on the concept of intended use – don’t waste money buying a product that’s of higher quality than necessary.
3. Clearly communicated diligent receiving practices to all team members to make sure that incoming products meet the operation’s quality requirements. Check every product, every time.
Basic Steps in the Purchasing Process
Step 1: Identify product needs
Step 2: Determine quality requirements
Step 3: Determine quantity to purchase
Step 4: Identify vendor sources
Step 5: Select vendors for each product order
Step 6: Order Products
Step 7: Receive and store product
Step 8: Pay for product
Step 9: Evaluate purchase process
Each of these steps is equally important, but the final step, evaluating the purchasing process, needs to happen regularly to make sure that every member of the team is working together correctly and that the process is neither too time-consuming nor inadequate to provide proper inventory.
Factors that affect Purchasing
There are many factors that impact each of the steps in the purchasing process. These can be viewed as internal factors, or those taking place within the organization, and external factors, which are those outside of the establishment.
Internal factors effecting purchasing include the skills and abilities of the purchasing team members, the accuracy of forecasting product needs, available storage for products, and timing requirements for deliveries. These are all important and should be taken into consideration.
External factors are harder to control but should be anticipated whenever possible. External factors include the changing dietary needs of customers, local competition, environmental concerns, governmental regulations, and even global trade conditions.
Ten years ago, you’d be hard-pressed to find any “gluten-free” menu options even in large cities. Fifty years ago, the idea of a “vegetarian option” at a mainstream restaurant usually meant a side salad. The culinary landscape can change very quickly and unprepared restaurants can get left behind.
The Evolution of Purchasing Systems
In some ways restaurant purchasing hasn’t changed significantly in hundreds of years. In others, the role of purchasing within a food service organization and the way that relationships with vendors are defined have evolved in a variety of ways.
Establishing healthy relationships with vendors is at the cornerstone of effective purchasing. Lines of communications should be open and a partnership needs to be established. By clearly communicating requirements and expectations on both sides, the relationship can flourish and be mutually beneficial in a wide variety of ways.
Some chefs engage in what can be called price-conscious purchasing, where the main goal is to purchase products at the lowest possible price, each and every time.
This strategy may initially be good for cash flow and the business bottom line, but over time the adversarial nature of the relationships, and the potential loss of quality products, can remove any benefits very quickly.
There shouldn’t be winners and losers in a restaurant-vendor relationship, for the relationships to thrive their needs to be a mutual understanding and shared goals.
Price and quality purchasing is a philosophy that balances the cost of products and services with the quality. Purchasers are driven by value and there is a recognition that the best product for a given use may not necessarily be the least expensive.
Restaurants should also recognize the importance of information provided by vendors and understand that there are multiple responsibilities on the vendor side including product quality, information, and service.
Purchaser-vendor “partnerships” are the ideal. Successful restaurants view purchasing as having a much broader role in the organization and see how it can be a competitive advantage. Vendors are considered a resource and supplier expertise is an important consideration in choosing which vendors to work with.
There are a wide variety of considerations to make when evaluating your restaurant’s purchasing strategy, including team member responsibilities, quality standards, ordering and receiving protocols, and effective relationships with vendors.
A successful purchasing strategy is one that is streamlined, price-conscious, and systematic. Dine Market has spent years analyzing restaurant purchasing and vendor relationships to create an simple and intuitive platform and wholesale marketplace to take the hassle out of ordering so that you can focus on your food.
Want a free purchasing audit for your restaurant? Reach out to firstname.lastname@example.org and we’ll get you set up and find ways for you to save time and save money.
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