The restaurant business is one of the most expensive businesses in the world. Before the first guest is served, food expenses, labor, rent, and utility costs are considered margins. And yet, one of the surest and least utilized profit drivers in the industry is not on the menu. It is embedded in the supply chain.
The food and beverage rebates have also been swept under the carpet as a financial tool that only operators who understand how to utilize it have. Since an independent restaurant aims to grow its bottom line without increasing prices or reducing staff, learning how rebates operate and how to maximize them can make a difference.
Rebates are, in their simplest form, financial incentives provided by food manufacturers and suppliers to encourage buying behavior. The manufacturer reimburses a part of the spend to the buyer when the restaurant regularly purchases certain items in larger quantities from the manufacturer, in a quarter or a year.
Also, in contrast to discounts, which lower the initial invoice price, rebates are usually paid retrospectively, at the end of the month or quarter, or at the end of the year. This allows them to be easily missed in the day-to-day running of businesses. Still, when the operators are keen on them, the rebates can translate into thousands of dollars in annual revenue.
Rebate arrangements are diverse. Others are simple volume-based schemes: purchase more, gain more. Others are tiered- the higher you spend within a product category, the higher the rebate percentage will be. Other manufacturers have promotional rebates based on new product releases or seasonal marketing. Every structure is rational in its own way, and being aware of which of them are applicable to your buying habits is the beginning of reaping actual benefits.
The ugly truth behind this is as follows: rebate programs are mostly geared towards high-volume purchasers. Multi-location groups and large chains have their own procurement teams that track rebate levels and accruals and ensure that every available dollar is taken. They can bargain to get better terms and the infrastructure to handle complicated agreements on rebates with a variety of restaurant vendors.
Independent operators, conversely, tend to buy in smaller quantities, deal with multiple restaurant food suppliers without a centralized plan, and just do not have the bandwidth to run rebate programs on top of all that it takes to run a restaurant. Most operators are not even aware of what rebate programs their existing restaurant suppliers have on offer - or whether they are achieving the levels required to even qualify.
This is where the level playing field is disturbed. And that is precisely what the smart procurement partnerships are meant to bridge.
To address this issue at scale, there is a group purchasing organization (GPO). Through the collective buying power of hundreds of independent restaurants, a GPO can directly negotiate with manufacturers and networks of restaurant food vendors to achieve negotiated pricing, special offers, and, most importantly, designed rebate programs which would not have been available to individual operators.
When you are a member of GPO, the volumes of purchases that you make individually are combined with all other members' purchases of the same products. That group spends open rebate levels that would not otherwise be accessible to a one-location restaurant. Your combined group could be the equivalent of 4 million, as opposed to purchasing 40,000 units of the product annually from a manufacturer, which would put everyone on an entirely new level of the rebate setup.
The outcome is simple: members get extra money refunded on purchases they were already making. No extra expenditure necessary. No additional restaurant vendors to be vetted. Simply improve returns on your current restaurant food supply budget.
Foodservice Restaurant Partners Group (FRPG) was established with this mission in mind. Because it is a group purchasing organization run by restaurant owners, FRPG knows the purchasing pressures that independent operators must deal with - because they have experienced it themselves.
Having an active network in 20 states, contact with 56+ qualified suppliers, and direct contact with some of the leading food manufacturers throughout the country, FRPG negotiates on behalf of its members to ensure that they are receiving the best mix of contracted price and rebate programs in their entire restaurant food supply chain.
Members will receive volume-based rebates on food and beverages, kitchen supplies, and non-food supplies. These rebates can be monitored and controlled via the FRPG platform, and this designation enables operators not to run after paperwork and manually track thresholds. The system is back-end to allow restaurant staff to remain in their areas of expertise, operating kitchens and looking after their customers.
In addition to the monetary gains, FRPG members have an exclusive network of reliable restaurant food suppliers and manufacturers. All suppliers within the FRPG ecosystem are quality, reliable, and compliant vetted - thus operators are not only saving money, but they are also confident in the purchases.
Rebates do not come as a nice surprise at the end of the quarter to the most profitable operators. They strategize around them. Their buying choices are organized based on the eligibility of rebates, monitor their expenditure based on the program limit, and include rebate revenues in their financial estimates.
This change - reactive to proactive - is the difference between leaving the money on the table and creating a more resilient, profitable operation.
In case you have a restaurant food distributor, and you are not quite sure whether you are enrolled in any rebate programs, then that discussion is worth having now. And when you are bargaining that business by yourself, and do not have the weight of a greater buying pool behind you, you are probably not receiving the whole picture.
The restaurant market is too competitive, with its margins being too low to leave a source of revenue unexploited. Food and beverage rebates are an actual, trustworthy, and frequently neglected avenue of enhanced profitability, one that does not involve a menu re-invention or an operational transformation.
The key is just the right alliances, the right buying plan, and the synergy that follows being a member of a network designed with operators like you.
That is what FRPG provides- on a daily basis.
Ready to begin earning more on each dollar you spend on food and drink? Check out FRPG1.com to check into FRPG membership and find out just how much your restaurant might be earning back.