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Chapter 3 Food Vendors Who Should I Buy t his Stuff From?

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Chapter 3 Food Vendors Who Should I Buy t his Stuff From?. Chapter Outline . Vendor-Selection Criteria Overall Value. Learning Objectives. Understand how methods used to select a vendor affect an F&B operation’s cost of sales. Develop selection criteria based on the operation’s needs.

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Presentation Transcript
chapter outline
Chapter Outline
  • Vendor-Selection Criteria
  • Overall Value
learning objectives
Learning Objectives
  • Understand how methods used to select a vendor affect an F&B operation’s cost of sales.
  • Develop selection criteria based on the operation’s needs.
  • Ability to investigate potential suppliers and assess their overall fit into the operation.
learning objectives4
Learning Objectives
  • Discuss the implications of various pricing systems, ordering procedures, and credit terms.
  • Describe perceived value and its relation to product quality.
  • Describe the difference between AP price and EP cost.
introduction
Introduction
  • When “hiring” a vendor:
    • Review multiple applicants
    • Interview several candidates
  • National chains provide purchasing support
    • Still must buy some items locally
  • Some vendors have exclusive rights: your choice is to take it or leave it
vendor selection criteria
Vendor-Selection Criteria
  • References
  • Compatibility/Chemistry
  • Size of the Firm
  • Location
  • Delivery Schedule
  • Storage Availability
vendor selection criteria7
Vendor-Selection Criteria
  • Free Samples
  • Social Responsibility
  • Lead Time
  • Returns Policy
  • Minimum Order Requirements
  • Purveyor’s Experience
vendor selection criteria8
Vendor-Selection Criteria
  • Technological Capability
  • Ordering Procedures
  • Reciprocal Buying
  • Willingness to Barter
  • Cooperation in Bid Procedures
  • Long-Term Contracts
vendor selection criteria9
Vendor-Selection Criteria
  • Credit Terms
  • Cost-Plus Purchasing
  • One-Stop Shipping
  • Standing Orders
  • Vendor’s Consulting Support
vendor selection criteria10
Vendor-Selection Criteria
  • References
    • Join organizations to meet other buyers
      • National Restaurant Association NRA (local chapter)
      • American Culinary Federation (ACF) (local chapter)
    • Ask about vendors in the area
vendor selection criteria11
Vendor-Selection Criteria
  • References (cont.)
    • Ask for references from vendors and call them!
      • Is the vendor fair, honest?
      • Are drivers easy to work with?
      • Are deliveries made on time?
      • How are credits handled?
      • Will the vendor make emergency deliveries?
vendor selection criteria12
Vendor-Selection Criteria
  • Compatibility/Chemistry
    • Note positive or negative vibes
    • Are you comfortable with the person?
    • Hopefully this is a long-term relationship
vendor selection criteria13
Vendor-Selection Criteria
  • Size of the Firm
    • Large firms
      • Adequate inventories
      • Ability to meet your needs
      • May be impersonal
    • Small or specialty vendors
      • May not have large inventories
      • More personal service
      • May cost in the long run in stockouts and shortages
vendor selection criteria14
Vendor-Selection Criteria
  • Location
    • The closer the better
      • Staff members may need to pick up items
      • Will-call or cash and carry buying will be easier
      • Ideal world – between your home and the restaurant
vendor selection criteria15
Vendor-Selection Criteria
  • Delivery Schedule
    • May not always have a choice as to time
      • Ensure that a knowledgeable person is available to receive delivery
    • Don’t use a purveyor who uses third-party shippers
vendor selection criteria16
Vendor-Selection Criteria
  • Storage Availability
    • Sometimes available after a big order
    • Stockless purchase play – pay for the order but receive it in small amounts
vendor selection criteria17
Vendor-Selection Criteria
  • Free Samples
    • Good for trying new products
    • May make some managers nervous
    • Super Bowl tickets aren’t “free samples”
vendor selection criteria18
Vendor-Selection Criteria
  • Social Responsibility
    • Do manufacturer’s employees receive a living wage?
    • Does the vendor buy from minority- or women-owned firms?
vendor selection criteria19
Vendor-Selection Criteria
  • Lead Time
    • Time between order and arrival of shipment
      • The shorter the better
        • Lets you make better ordering decisions
        • Saves you money in the long-run
        • Helps keep inventories at manageable level
vendor selection criteria20
Vendor-Selection Criteria
  • Returns Policy
    • Is it a hassle to get a credit to your account?
    • Must you pay a fee for the goods to be picked up?
    • Is there a restocking fee?
    • Best when the driver gives you a credit slip right on the spot
vendor selection criteria21
Vendor-Selection Criteria
  • Minimum Order Requirements
    • Meeting the minimum order requirement
      • May qualify you for free delivery
      • May give you will-call privileges
      • May be more than you can do – so find another vendor
vendor selection criteria22
Vendor-Selection Criteria
  • Purveyor’s Experience
    • Do you want to be a new purveyor’s guinea pig?
    • Financial stability is an issue here
    • Look for a good track record when seeking a vendor
vendor selection criteria23
Vendor-Selection Criteria
  • Technological Capability
    • Accessible online?
      • Product availability
      • New products
      • Recipes
      • Current promotions
    • Still need face-to-face contact
      • Trends
      • Gossip
vendor selection criteria24
Vendor-Selection Criteria
  • Ordering Procedures
    • Online is preferable
    • Avoid complicated ordering systems
vendor selection criteria25
Vendor-Selection Criteria
  • Reciprocal Buying
    • “I buy from you if you buy from me”
      • Not a good idea
      • Break even arrangement at best
      • Often supplier will take you for granted and you will lose services
vendor selection criteria26
Vendor-Selection Criteria
  • Willingness to Barter
    • Tradeouts
      • Is vendor a member of a barter group?
      • A $500 dinner may only cost you $200
      • Food vendors don’t usually trade
      • Advertising account executives like these kinds of trades
vendor selection criteria27
Vendor-Selection Criteria
  • Cooperation in Bid Procedures
    • Request for Quote
      • Good to shop around occasionally
      • Current vendor may be responsive
      • Current vendor may be secretive and not respond
      • Online systems provide information immediately
vendor selection criteria28
Vendor-Selection Criteria
  • Long-term Contracts
    • Some vendors may not commit to long-term prices or product availability
    • Most vendors want large buying commitments before committing to long-term contracts
vendor selection criteria29
Vendor-Selection Criteria
  • Credit Terms
    • Ask about
      • Financing
      • Discounts
        • Cash on delivery
        • Prompt payments
        • Payment in advance
      • Deposits for equipment and packaging
      • Credit Period
vendor selection criteria30
Vendor-Selection Criteria
  • Cost-Plus Purchasing
    • Definition: purveyor’s cost plus negotiated percentage markup
    • Buyers have a love/hate relationship with this process
    • Vendors don’t like cost-plus – they take on more risk
vendor selection criteria31
Vendor-Selection Criteria
  • One-Stop Shopping
    • Also known as: sole-source, prime-vendor, preferred-provider or single-source procurement
    • Easy for the purchaser
    • May cost more but result in labor savings
vendor selection criteria32
Vendor-Selection Criteria
  • Standing Orders
    • Driver leaves enough product to bring you up to par stock
    • Typical items: dairy products, bread, soft drinks
    • Remember to watch the drivers
vendor selection criteria33
Vendor-Selection Criteria
  • Vendor’s Consulting Support
    • Source of product information
    • Networking source
    • When buying equipment, vendor may help with health and/or building permits
overall value
Overall Value
  • Value – cost of the product plus additional supplier services
  • Edible portion (EP) cost—servable or usable cost
  • As-purchased (AP) price—price of product on delivery
  • Better to pay higher AP if it results in lower EP
most important vendor selection criteria
Most Important Vendor-Selection Criteria
  • It’s really up to you
  • Most buyers want
    • Consistent product quality
    • Supplier services
    • AP price
  • Look for consistency, dependability, loyalty and trust
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