My last post covering this topic dealt with the advantages to using contracts between a restaurant and a supplier, a list you can find here.
As we saw in that previous post, there are several advantages to dealing with food suppliers that require contracts, but there are an equal number of disadvantages to consider, including:
- Limited flexibility: Contracts can be restrictive in terms of the products and quantities that can be ordered. This may make it difficult to adjust orders quickly if there are changes in demand or if you need to switch suppliers.
- Higher costs: Contracted suppliers may charge higher prices than non-contracted suppliers, as they have a guaranteed market for their products.
- Limited competition: Contracting with a single supplier may limit your ability to compare prices and quality from other suppliers, potentially limiting your options.
- Risk of supplier failure: If you are heavily reliant on a single supplier and they fail to deliver, it can cause significant disruptions to your business.
- Time and resources: Negotiating and managing contracts can require a significant investment of time and resources, particularly if you are dealing with multiple suppliers.
In my own opinion, going without a contract is preferable, allowing you the maximum flexibility you need to run something as hectic as a restaurant. Contracts only become an issue worth considering when you have a large company that has many different locations, a setup that provides greater consistency and less confusion in the home office due to fewer invoices. One can imagine the added work of organizing all of the invoices of 150 locations, each with their own local milk provider and produce supplier. You don’t want to saddle the accounting department with all of the local broadline distributors.
It’s important to weigh the potential advantages and disadvantages of contracting with food suppliers and consider how they align with the needs of YOUR business. Ultimately, the decision to contract with a supplier should be based on a careful evaluation of the risks and benefits, as well as a consideration of your overall business strategy.