Hey, restaurant owners and operators.
Are you better off with one broad-line distributor, two, or even three?
We're going to find out here really quickly.
Hey everybody, Ryan Gromfin here – author, speaker, chef, restaurateur,
founder of TheRestaurantBoss.com,
as well as ClickBacon.com, and ScaleMyRestaurant.com.
Now we're here in my kitchen at home doing something a little different
because I just got finished going live to 24
television stations across the country back to back to back. It was an incredible morning,
it was unbelievable, it was a ton of fun,
but I wanted to film a couple of these videos here for you while
we were all set up with the lights and everything here in my kitchen.
So I get this question a lot and it came back up a couple of days ago, so I figured let's address it now.
Should we have multiple broad-line distributors?
Now if you're not familiar with the term broad-line distributor,
that's your main distributor.
Think of in the United States, think of your CISCO,
Gordon Foodservice, or GFS,
why am I drawing a blank now on the other one?
I can't think of it. Premier Food Group, I think PFG. Yeah,
there's a whole bunch of other ones. I think they're Shamrock
and they're smaller ones depending on the market that you're in, but
your main distributor, the place that you get
everything from your chemicals to your produce to your
proteins to your canned goods. You know, you can get it all.
So I get this question a lot.
There's two sides to the argument, there's the side… I think this is the old school argument,
but there's the old school argument which is you should have multiple broadline distributors,
you should price check them weekly, monthly.
You should constantly be sending messages back and forth and telling
this one that you can get this product cheaper here
and telling that one that you can get that product there.
And while that sounds great, it's absolutely
unequivocally in my opinion the wrong strategy.
Why is it the wrong strategy? Well, it's for two reasons. 1)
it puts a lot of work on your plate.
Now I’m the hard work guy, I'm not going to sit here and say that
we should always find the easy way out, but man,
is that a lot of work going through 100 or 200 items
and looking for the cheapest price on everything and then
negotiating and playing this person against that person
back and forth all the time.
But that's not even the reason I hate that strategy.
I hate that strategy because
I’m the guy that believes in partnerships,
I'm the guy that believes that your vendors are a partner in your business.
Your vendor, your broad-line distributor
might be getting 20, 25, even 30% of your revenue
for every dollar that comes in 20, 25, 30 cents are
going to this person.
That's probably more than any partners that you have in your restaurant.
So why not treat them like a partner?
You wouldn't do this to your partner. If you had a 10 partner in your restaurant,
you wouldn't pin one partner against the other partner
and get them to negotiate and threaten buyouts,
right? Your partners are your partners,
you're in this business together with them.
So why would you treat your distributors this way?
They have so much power in your business and I don't mean that in a bad way,
I don't mean like they have all of this power and you have nothing.
No! You are partners.
You need them as much as they need you,
but if you treat them this way,
they're going to go find someone else to do business with.
Now, they're still going to take your orders,
but they're not going to be excited when they see a phone call from you,
they're not going to look forward to your orders.
It's always going to be a challenge for them every time you call.
they're going to match your price on the 5 or 10 things.
but what do you think they're doing on the other 70 things that you order from them?
They're marking it up a penny here,
a nickel here, a dime there to the point where you don't even know it
because at the end of the day, we all need to make a living
in this world and while I don't necessarily agree with the processes
and the strategies that the broad-line distributors use to set their pricing,
the reality is they have investors in a bottom line to maintain,
you have investors in a bottom line to maintain,
their sales rep have a family to take care of,
you have a family to take care of.
And that sales rep is used to making a certain amount of money
and if he's constantly lowering prices
and constantly cutting margins to keep you happy,
he's going to want to… he or she is going to want to make up those margins
somewhere else.
So while you're paying attention to rib eyes,
they're marking up your plastic wrap.
Now I'm not saying this happens to everyone,
but that has been overall the experience in the 25 years
I’ve been working in restaurants
or working with restaurants. And now more than ever, the 10 years I've been consulting,
I hear from hundreds of restaurants, not just the one-two or three that I worked in,
so I know I can back this up.
What I suggest is that you have a conversation with your
one broad-line, your favorite one and you tell them,
I want to be your partner. I want you to be my partner.
I want to offer you 80% of my business or 90% of my business
or whatever it is that you're ordering from them anyways,
I don't want to do any price checking for the next year,
I don't want to pin you against someone else.
I want you to come back and give me the best prices you can
and I want to make sure that even when your prices go up,
you're only raising me the same amount that yours went up.
Now depending on your volume, you can get this under contract,
it's called a prime vendor agreement or
manufacturer distribution agreement – MDA,
manufacturers distribution agreement, that's what it's called.
Depending on your volume, you might be able to sign one of those.
If you're a little lower volume, you probably won't,
but work this out one-on-one with your rep
and basically let them know I’m here for you, you're here for me.
Treat your reps as well as you would a guest.
Don't call them at 5 pm on a Friday because
you forgot to order something and they need to rush it to you,
don't bother them on the weekends unless it's your day to order.
Don't be that person, don't be the person who calls at 4:25
for a 4:30 cut-off.
That's not how you should treat your partners.
if you treat your vendors with the respect that they deserve
andif you let them know not just by your words but by your actions that
you're on the same team as they are, they will respond.
Now should you randomly check some prices, sure.
But you know what you should be paying for product,
you know what a good price is and you know what a bad price is.
Heck most of the manufacturers at least when you have great relationships
with them like I did and like a lot of my clients do,
they'll show you in the computer the price that they're paying for the product.
And of course, they need to make a couple of percent on that,
so don't be rude about that.
Let them make their couple of percent for ordering the product and storing it and shipping it for you,
but most of them are an open book, they're going to show you what they're paying.
Certain products they're going to mark up more, certain products are going to mark up less, I expect that.
But when we create that open relationship, when we create that partnership,
I truly believe, I know it for a fact
you're going to get more out of that relationship
than when you try to play it one against another.
So to wrap this up in my opinion, one broad-line distributor,
work out an agreement with them, make sure it's someone that you love working with
and make sure that you're a person that they love working with and I think
I know that that's going to serve you well.
There's also one thing I do know, I know that many of you are going to disagree with me
and I welcome the comments. Please keep them professional,
please keep them polite.
There's no need to call names out here to call anyone out, but please, I love the conversation,
I want to hear from you.
Leave a comment below, tell me what your thoughts are, am I right or am I wrong?
Go ahead and leave those comments below. And remember,
systems create freedom, freedom creates value, and value creates scale.
I hope every single one of you crazy restaurant people out there have an absolutely
amazing day and I’ll see you on the next video. Bye-bye!
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