Traceability and accountability are more than just buzzwords. Customer confidence is key to running a successful restaurant, and finding trusted suppliers and distributors is a common challenge for operators. Food scares such as last fall’s Listeria-based recall in California and Canada show how far supply chains can stretch and what can happen if something goes wrong.
We talked to three inspirational women who are the buying power, analysts and managers behind respected brands such as Sysco, Fairmont Hotels and Gordon Food Service, about factors that can influence food purchasing. We’re delighted that our friends want to share their industry insight about the food purchasing cycle; from the advantages of working with a one-stop-shop broadline distributor and buying local, to advice about how to find the best products for the best price.
Introduction to food purchasing procedures
When it comes to getting to grips with the food purchasing cycle, many restaurant operators use a one-stop-shop (broadline) distributor to vet vendors on their behalf. Space constraints, logistics, vendor minimums, shelf life, customer usage, and lead times can all play a big role in which products are available, but by far the biggest challenge for distributors is finding vendors that can adhere to their stringent safety criteria.
“Truck temperatures are checked upon arrival, the product is inspected for damage, the internal temperature of the product is checked and recorded; as are the production dates, best before dates, weights etc. Everything is logged, and nothing can be received unless a member of our QC Department is on site,” says Chris Pearce, Category Analyst for meat and seafood products at Sysco in Vancouver. “Our freezers and coolers are monitored, temperatures are recorded, and then the product is scanned, selected and held in the correct environment until it gets loaded onto our delivery trucks, which are also temperature checked. It literally takes a village.”
Strict regulations mean that distributors can’t take back the perishable product if it’s been received by the customer. “It doesn’t matter if it went straight into their freezer or cooler,” explains Chris. “If it isn’t refused at the customer’s door at the time of delivery and gets returned on the truck that delivered it, we cannot put it back into stock. The cold chain has been broken so we won’t take the risk.”
Benefits of using a broadline distributor
Having one distributor helps operators streamline their business by only dealing with one sales rep for all the operation’s needs and having one truck to distribute all of those needs at one time. “The foodservice sales representative will know and understand the operator’s business intimately and will be able to act as a consultant in all day-to-day aspects,” says Kristina Reeve, Customer Solutions Manager at Gordon Food Service. “A broadline distributor works with all food service manufacturers and can be the intermediary between the operator and those manufacturers. The broadline distributor also has a larger purchasing power, which will translate to lower costs for the operator.”
Factors that affect food purchasing costs
When it comes to discussing costs, there’s more than just the price of the goods themselves to consider! Sometimes it comes down to location, location, location and factors such as import and freight fees, or currency exchange rates. “If an operator has asked their distributor to source a product that is manufactured across the country, or even in another country, this product will cost more than the same product produced locally,” says Kristina. “It’s fair for buyers to ask their suppliers what makes up an item’s cost so that both the buyer and the operator can understand the extra costs that go into that item’s price.”
Supply and demand are two other big factors and so for Chris at Sysco this means staying on top of things by doing research, checking prices, and keeping in tune with the markets, seasonality and quotas. “Unexpected market drops are the most challenging thing, especially with fresh products,” she says. “There’s nothing worse than taking a margin hit to move that item out or marking it down just so it can go into the freezer. I follow the standard purchasing caveat: If something seems way too good to be true, it usually is. Buyer beware!”
Kristina also agrees that restaurant operators should be smart about their purchasing and not see cost as the only factor: “It’s key to ensure you’re saving on certain costs but if you pride yourself in quality, don’t sacrifice it. Your customers will notice.”
“It’s a mistake to focus only on cost or payment terms,” agrees Jodi Barrass, who is Regional Director of Procurement, Pacific Northwest, at Fairmont Hotels and has been working in the industry for over 30 years. A common mistake is for people to not do internal and external due diligence and then make assumptions on cost drivers that could be negotiated if they were better understood.
Jodi suggests regularly reviewing current supply chains to make sure that costs or scope don’t creep unchecked and urges operators to stay on top of the current market to create opportunities to innovate. “One of the most common mistakes is not following through with the first cycles of business with a new vendor/distributor to ensure that they are successful and that you’re both getting what you thought out of the arrangement,” says Jodi. “For example: Did the delivery come in on time, as ordered? Were there any issues with payment? Did the finance team have any issues with the invoices? Did the supplier get paid as per the agreed terms?”
Jodi uses a ‘who, what, where, when and why’ framework when going to market, reviewing vendor presentations, or reviewing current supply chains that help her to identify vendor matches for the hotel. This enables her to have a clear vision of who at the hotel will interact with and manage the goods/service; what business need or problem is to be solved; where shorter and faster supply chains can minimize environmental impact; when vendors and distributors will be providing a service and delivery; and why a specific product or vendor has been chosen.
“As part of the goal of clarity and balance in our operations between our guests, colleagues, owners and brand, we need to always be able to answer clearly why we are going to market, why we are purchasing specific goods or a service, and why one vendor over another,” says Jodi. “Ultimately we aim to end up with the right product/service at the right time and at the right price for all concerned.”
Food purchasing trends for 2018
In last month’s blog post we looked at upcoming industry predictions for 2018, which included a focus on hyperlocal ingredients — a theme that is also set to be a food purchasing trend this year. “More than ever we want to know where our food comes from and how it is treated. Is it local, sustainable and ethical?” asks Chris. “Other trends are old family favourites and ‘feel good food’ being made healthy, upscale or featuring an ethnic touch.”
As well as a throwback to nostalgic nosh, restaurant chains are also looking ahead to the future and using new technology to improve supply chain traceability. You’ve probably heard the big buzz about Bitcoin and the new ‘blockchain’ technology that the cryptocurrency uses to create a digital record or time stamp for each ‘block’ of the chain.
Big brands such as Walmart, Dole and Nestle are partnering with IBM to utilize this technology to improve food supply chains and offer more accountability to be able to trace suspected contamination outbreaks in the global food chain. It could be only a matter of time before smaller distributors and brands adopt this technology to make food purchasing even more accountable.