Food service vendors, just like the restaurants they supply, are operating on very slim profit margins. Vendors are constantly purchasing product on the open market which is a moving price target with seasonality, bulk buying terms etc.
So, when every dollar counts toward your bottom line, it’s a daunting task to monitor all your vendor’s prices when they seem to be constantly changing. When it’s very common for an invoice to show a price that’s above (or below) the contracted price, a restaurant must have immediate visibility if they are being invoiced correctly.
If you don’t, then you risk paying too much and losing profitability and never understanding where the money is leaking out of your business.
3 Common and ineffective ways restaurants deal with vendor product pricing.
“Blind Faith” They hope for the best and trust they are invoiced correctly. (Yes, this happens more often than you think!)
Restaurant managers will periodically check invoice prices against a vendor price list.
An improvised system such as a spreadsheet or a feature in the POS that is used to semi-automate contract-to-invoice price comparisons
- Blind Faith
You’re running a business, you wear many hats, you are constantly fire-fighting – you just have no extra time in your day. You can barely find the time just to enter all those supplier invoices into your system, let alone spend the time to go through line by line and compare it to the price list. You are just hoping the invoice pricing is correct.
We get it! However, the reality is that errors due to incorrect pricing, incorrect quantities or substituted product occur in 11-23% of all food vendor invoice. Think about that and the cost ramifications that has for your business.
- Periodic Checking
In this situation the manager is doing a random and manual task, eyeballing stacks of invoices against incomplete vendor price lists. This will often suffer from human errors, and success varies greatly on frequency and consistency. Sometimes it works great and sometimes it doesn’t. What’s more, a manager’s time is better spent circulating through the restaurant, improving food production operations, reducing waste, and training people.
- Improvised System
The savvy restaurant manager knows that running a tight ship is key to having a successful operation. They realize that there needs to be a system in place and has explored the very few options available. They can’t afford a large and expensive enterprise system (which would take 5-10% off their bottom line).
So they improvise, by building a spreadsheet or making a “work around” in the POS inventory modules. In the end, they’ve created a successful means of keeping an eye on their vendor prices/quantities. The only downside is the amount of maintenance and manual keying and double entry the home baked system requires, and if they go on vacation, they lose the consistency during that time.
There’s a better way!
It is imperative that consistently, every vendor order, every day be checked. Because as with so many things, getting the basics right day after day is the key to better restaurant food cost management.
To achieve consistency, you need to have a system that is fully automated and does this work for you!
AccountsFlow, with its Price Checker module, automatically loads all of your supplier invoices, line item by line item as soon as the vendor creates each invoice – no data entry by you! Next, it will automatically compare to your vendors price list (that was previously imported) and highlights any discrepancies, immediately, and color codes for easy identification, so you can take action, contact the supplier and get your invoice changed and billed correctly.
It’s that easy!
AccountsFlow Price Checker will save you tens of thousands of dollars by finding vendor price discrepancies and help your operation get vendor prices under control.