How to Manage Suppliers in Hospitality and Stop Paying Too Much

Supplier management is one of the least glamorous parts of running a hospitality venue and one of the most financially significant. Most operators have a loose relationship with their suppliers built on habit, loyalty, and the path of least resistance. That relationship is costing them money.

Know What You Are Actually Paying

Pull your last three months of invoices from each supplier and work out your average price per unit on your top twenty to thirty most purchased items. You will almost certainly find prices that have crept up without anyone noticing, items where you are paying more than the market rate, and in some cases items where you are being charged inconsistently across different orders.

Get Competing Quotes Regularly

Most operators get competing quotes when they are setting up and then stop. Getting competing quotes once a year on your highest spend categories takes a few hours and consistently identifies savings that go straight to your bottom line. You do not always have to switch. Often just showing a current supplier that you are getting quotes is enough to prompt a price review.

Consolidate Where It Makes Sense

Having ten suppliers feels like flexibility. In practice it means ten sets of minimum order requirements, ten delivery windows to manage, and ten invoices to reconcile. Consolidating spend with fewer suppliers increases your value to each of them, which improves your negotiating position and in many cases your credit terms. This kind of supply chain review is part of what we cover in our food cost consulting service.

Understand Your Supplier’s Business

Suppliers have slow periods, surplus stock situations, and end-of-month targets just like you do. An operator who is willing to be flexible on timing, take on short-dated stock at a discount, or pay early in exchange for better pricing is a more valuable customer than one who just orders on autopilot.

Put Your Key Arrangements in Writing

Verbal agreements with suppliers have a way of being remembered differently by different people. If you have agreed on a price, a minimum order, a delivery schedule, or a rebate arrangement, get it in writing. Not because you distrust your supplier but because people change jobs and businesses change ownership.

Review Pricing When Your Menu Changes

Every time you change your menu you change what you buy and in what volumes. A menu change is a natural trigger to revisit your supplier arrangements, renegotiate on new items, and exit arrangements that no longer make sense.

If you want a full review of your supplier arrangements and food cost structure, talk to Pestle and Mortar. We work with hospitality venues across Australia to reduce input costs without compromising quality. You can also read our post on where food cost leaks and how to stop it.