It takes over 50 vendors to open and operate a restaurant on a daily basis—and that number is before you factor in your food and beverage purveyors. For first-time operators, vendor selection can be particularly challenging. How do you find the best people? Ask a friend? Google?
Neither of these are great alternatives, and the risk of falling victim to the shady business practices of one vendor could lead to irreversible damage to your operation, sometimes even before you’re open for business. For more experienced operators, revisiting your vendor relationships periodically is a great way to increase your restaurant’s operational efficiencies and give a boost to your bottom line.
If you are already up and running, we’d suggest giving your business an annual vendor checkup. Examine your contracts, agreements, and pricing for all recurring expenses to make sure your vendors are doing the best they can to provide you with the most competitively priced services that are aligned to best suit your business’ needs. A little bit of negotiation can go a long way.
Insurance is a big one that is typically renewed annually and can sometimes hit you with a shocking increase in premium year over year. We recommend reaching out to your broker 60 days in advance of your policy renewal date to allow them the time to shop around for the best policy at the best price for your business.
In certain situations, there are measures that can be taken on behalf of the operator to help reduce premium costs. For example, sending your staff to be TIPS certified can net you significant deductions if your restaurant has a bar component. Also, this is a great opportunity to make sure you are fully covered in all aspects of your operations. A common oversight: coverage for any offsite catering.
All of your employees need to be paid accurately and on time, making payroll processing one of the most important back-office functions in a restaurant. Recently we have witnessed lots of changes to the federal, state, and local employment laws pertaining to the restaurant industry, and we will only continue to see more in the months ahead. We’ve also seen a surge in labor-related lawsuits, oftentimes stemming from improper employee classification and compensation-related issues.
Working with a payroll company who fully understands restaurant operators’ specific needs is critical. Many payroll companies also offer additional back-office support packages that can assist in record keeping and compliance, benefits administration, workers’ compensation, and other HR-related functions. If you simply don’t have the manpower to manage these functions in house, it’s a good idea to rely on professionals to help you maintain compliant operations.
Credit Card Processing
Every time you swipe a guest’s credit card through your POS system, you incur a processing fee. This fee is a small percentage of the transaction amount, and these fees are billed monthly through your credit card processing vendor. Often times your POS provider recommends their processor of choice, and you — typically in the throes of an opening — engage their services automatically, without shopping around for the best rates and terms.
Likely what you weren’t told, and what was conveniently noted in the fine print somewhere in your contract, is that many credit card processors carry fee structures that escalate over time, and there is little if any notification if and when your rates increase. At a time when consumers frequently pay with credit and debit cards, it’s important to know what it’s costing you to swipe those cards.
This vendor assessment is quick and easy — all a credit card processor needs is a copy of your most recent statement and a ballpark of your monthly sales volume to be able to quote you new rates. With processors competing aggressively against one another for your business, many processors will slash their rates to win your business. The switchover to a new processor is a seamless process—once you give the go-ahead, you won’t even know it happened.
Carting & Linen
I group these two together because they are probably two of the most challenging vendors to maintain good working relationships with, primarily due to the fact that both of these services are billed based on estimates. Your carting company (read: garbage man) will quote and bill you based on the estimated weight of garbage being disposed. They’ll perform a week of exploration by picking up your garbage and weighing the bags. You’ll then receive a weekly quote, based on the average estimated number of pounds of garbage collected and the frequency of your pick-ups.
A similar model is employed by the linen companies. Typically, you’ll be receiving weekly deliveries of all sorts of linens — tablecloths, napkins, kitchen rags, dishwasher coats, aprons, and the like. Your billing will be based on an estimate derived from the weight of the bags of dirty linens that they pick up for laundering and the par stock of clean linens you require to have on hand at any given time.
Once estimates have been drafted and weekly pricing has been set, in the case of either of these vendors, it’s rarely revisited or reevaluated. Changes in staffing, meal periods, and dining room décor can all impact your linen usage, in the same way that implementation of recycling, composting, and sanitation programs can impact your garbage disposal needs. Start by asking your existing vendor for a reevaluation and if they are resistant, let that be a red flag that you may be paying an inflated rate.
More about Allday Industry: Allday Industry has set out to change the way restaurant and bar owners find their vendors. We’ve create a powerful marketplace for clients to engage our expertly curated family of vendors, all who specialize in serving the needs of the hospitality industry. Whether it’s our Architects, Designers, and General Contractor’s or our Apron and Uniform vendors—our clients gain a leg up from being connected to some of the best in the business. In addition, Allday Industry offers fully customizable consulting services, including concept development, budgeting and forecasting, menu development and beverage programs, staff hiring strategy, recruitment and training, branding, marketing and PR, and local support for out of town operators.