Mastering the Art of Restaurant Procurement: Best Practices and Strategies

By Jay Altizer|Feb 16, 2024|3:00 pm GMT

Whether you’re a seasoned chef running a Michelin-starred establishment or a first-time restaurant owner launching your dream bistro, mastering the art of restaurant procurement is essential for your success.

Procurement is much more than just buying food—it involves sourcing quality products, negotiating contracts, building relationships with suppliers, and ensuring timely and cost-effective deliveries.

Sound complicated?

We’ve got you.

This comprehensive guide offers practical insights and effective strategies to streamline your restaurant procurement process, enhance efficiency, and ultimately, boost your bottom line.

What is restaurant procurement?

Let’s start by making sure we’re all on the same page regarding what restaurant procurement is.

Restaurant procurement (or “food and beverage purchasing”) is the process of sourcing, purchasing, and managing the products and services needed for a restaurant to operate.

This includes food and beverages but goes well beyond this to include equipment, supplies, and services such as cleaning and maintenance.

What is the goal of effective restaurant procurement?

Obtaining the best quality products at the best prices in order to maximise profits for the restaurant. Or, to put it more bluntly, to get the best “bang for your buck” when it comes to what your restaurant needs, WITHOUT sacrificing quality.

Key elements of the restaurant purchasing process include:

• Sourcing Suppliers: Identifying and establishing relationships with reliable suppliers for various items, such as ingredients, equipment, beverages, kitchen supplies, and more.
• Negotiation: Working with multiple suppliers and distributors to find the best possible ingredients at the best possible prices.
• Quality Control: Inspecting and evaluating items received from suppliers to ensure that they meet the quality standards of your restaurant.
• Inventory Management: Implementing effective inventory controls to prevent both over and under-stocking.
• Cost Management: Monitoring and managing the costs associated with food procurement to maximise your restaurant’s finances.
• Compliance: Ensuring that your restaurant stays in compliance with relevant food standards and labour laws.

Understanding the restaurant procurement process

To manage the restaurant procurement process effectively, it’s essential to look at it holistically from start to finish.

Step 1: Outline standard operating procedures

Before you place orders or work with suppliers, you need to have procedures and policies in place that dictate how the entire procurement process works. If you don’t have these in place, you would be well-served to develop them ASAP.

Why? Because without standard procedures and policies, members of your team may be unsure of how to handle different procurement situations. This can lead to confusion, mistakes, and wasted time and resources.

An example of a procurement SOP might look like this:

All food and beverage orders are to be reviewed by the head chef before being placed. Orders should be placed at least one week in advance to allow for any potential issues or delays. Any changes to orders must be approved by the restaurant manager.

This tells us who is responsible for different steps and when these steps must take place. It also establishes clear lines of communication and accountability.

Step 2: Assess restaurant needs and demand

The next step in the restaurant procurement process is assessing what your restaurant needs based on predicted demand. This is where restaurant inventory management software, such as Fourth, can be incredibly useful.

Utilising cutting-edge AI forecasting, it can take into account historical data, sales forecasts, special events or promotions, and even the weather to help you determine how much of each item needs to be ordered. This way, you can avoid over-ordering or running out of essential items during peak times.

Step 3: Evaluate and select suppliers

After assessing your restaurant’s needs, it’s time to select your suppliers. You need to walk a fine line when it comes to how many suppliers you work with.

If you have too few vendors, you may be at the mercy of their pricing, delivery schedules, and product availability. However, having too many suppliers can lead to increased complexity and difficulty in managing relationships and orders.

While there are no hard and fast rules about the number of suppliers you work with, it’s best practice to have 2-3 vendors for your primary product categories, like meat, dairy, and produce.

You can work with fewer suppliers for specialty items, such as artisanal cheeses or unique ingredients.

When evaluating potential suppliers, consider factors such as:

• Reputation and reliability
• Quality of products
• Proximity to your restaurant
• Pricing and credit terms
• Customer service

It’s also important to have a contingency plan in case one of your suppliers runs into issues or can no longer provide you with the necessary products. Having backup options in place can ensure that your restaurant operations continue smoothly even during unexpected hiccups.

Step 4: Negotiate contracts and terms

Once you’ve selected your suppliers, you need to negotiate contracts and terms with them. This is where your forecasting data can be extremely helpful. Use this information to negotiate favourable pricing and delivery schedules based on your projected needs.

When negotiating with suppliers, make sure the following are clearly defined:

• Pricing
• Terms and conditions
• Delivery schedules
• Payment terms
• Quality standards
• Product specifications

What happens if you don’t have these things clearly defined?

You may end up paying more than you expected, receiving late or incorrect deliveries, or dealing with products that do not meet your standards.

Step 5: Order from suppliers

The next step in the restaurant procurement process is ordering from suppliers. Orders will be based on the terms you’ve negotiated with your various suppliers.

Here are some tips for efficient and effective ordering:

• Double-check orders: Before confirming an order, make sure all items and quantities are correct. This can help prevent costly mistakes.
• Order on a regular schedule: Stick to a consistent ordering schedule to ensure you always have the necessary products on hand.
• Maintain good communication with suppliers: If there are any changes to your order or delivery schedules, make sure to communicate them promptly with your suppliers. This can help avoid delays or misunderstandings.
• Consider bulk ordering: If you know certain products will be in high demand, consider bulk ordering to save on costs and ensure availability.
• Evaluate sustainability practices: Sustainability is increasingly important for restaurant-goers. Consider whether a supplier’s practices align with the values of your restaurant.

Step 6: Receipt of goods and quality control

The final step in the procurement process is receiving the goods you’ve ordered and ensuring they meet the agreed-upon standards. Here are some best practices for this step:

• Inspect all deliveries: Before accepting any deliveries, make sure to thoroughly inspect them for damage or discrepancies. If there’s an issue, document it and contact the supplier immediately.
• Check product quality: Once you’ve confirmed that the delivery is correct, check the quality of the products. This can include checking expiration dates, freshness, and overall condition.
• Communicate any issues: If there are any problems with the delivered goods, make sure to communicate them to your supplier as soon as possible. This can help resolve issues quickly and maintain a good working relationship.
• Maintain records: Keep detailed records of all deliveries and product quality checks. This can come in handy for tracking inventory, identifying recurring issues, and for any future audits or inspections.

9 restaurant procurement best practices

Now that you have a thorough grasp of the steps involved in restaurant procurement, let’s look at some best practices.

1. Select reliable suppliers

This may seem obvious but it’s so important it’s worth stating. You absolutely need to choose reliable suppliers.

The ramifications of not choosing the right suppliers are significant.

First, there’s the stress that comes with delayed orders, items being out of stock, or products that don’t meet your quality standards. On top of this, the quality of your dishes can start to suffer, which can have a direct impact on customer satisfaction and can lead to complaints. Dissatisfied customers lead to bad reviews, which hurts your restaurant even further.

Bottom line?

Be very careful and thorough when selecting your suppliers.

When researching suppliers, you want to consider:

• Reputation and references: Look for reviews, testimonials, and references from other businesses, especially those in the same or similar field. Additionally, consider reaching out to other restaurants that have worked with any suppliers you’re considering.
• Quality of products/services: Request samples or trial products before signing on with a vendor. Also, take note of any certifications or quality standards a supplier adheres to.
• Reliability and consistency: Late deliveries or inconsistent product quality can significantly hurt your restaurant. Evaluate suppliers’ ability to deliver quality products on time. Also, evaluate whether a supplier is able to scale with your restaurant business as it grows.
• Financial stability: Financially stable suppliers are more likely to deliver quality products on time. Be cautious of suppliers who are facing financial difficulties as it could impact their ability to consistently provide products.
• Flexibility: Assess the supplier’s flexibility to accommodate the restaurant’s specific needs, such as custom orders, packaging requirements, or delivery schedules.

2. Build long-term relationships with suppliers

Building long-term relationships with suppliers can significantly help with the restaurant procurement process.

How?

Several ways. First, developing strong relationships with suppliers helps ensure consistent quality. The reality is that suppliers are more likely to provide their best goods and services to restaurants they have strong relationships with.

Long-term relationships with suppliers also help build trust and reliability with suppliers. If a particular supplier values your business, they’re going to go the extra mile to ensure they deliver on time and handle your orders efficiently.

Strong relationships also translate into more negotiating power for you. You can more easily negotiate better prices, payment terms, and delivery schedules. This, in turn, can produce significant savings for your restaurant.

Finally, strong vendor relationships reduce the risk of procurement issues. If there is an unforeseen problem with the supply chain, you’re more likely to be prioritised when it comes to distributing limited items.

3. Establish a strong, structured procurement system

Having a strong and structured procurement system is essential for any restaurant. A well-defined procurement process ensures all your restaurant purchasing, invoicing, and receiving needs are met while staying within budget.

Not having a robust procurement system in place can result in procurement being conducted in chaotic, inefficient ways, such as through random calls and emails. It can also lead to confusion over whether procurement will happen centrally or in a decentralised manner across all restaurants in a chain. This can result in overstocking, understocking, and significant inefficiencies.

How can you build a strong procurement system? Here are a few strategies:

First, centralise your restaurant’s procurement process. This can help with better tracking, streamlining orders, and reducing costs through bulk purchasing. It also reduces the chances of duplicate orders or items being missed.

This is where restaurant inventory management software can significantly help with the restaurant procurement process. For example, with Fourth’s inventory management software, you can centralise your supply chain, optimise procurement, and streamline your inventory lifecycle all from one platform.

Second, establish clear procurement guidelines and communicate them to your team. We touched on this already, but it bears repeating.

Without clear guidelines and SOPs in process, your procurement operations can quickly become chaotic and inefficient. Everyone on your team should be crystal clear about how the procurement process works, who is responsible for what, and what the expectations are.

Finally, regularly review and evaluate your procurement process. Doing so can help you identify areas for improvement and potential cost-saving opportunities. Keep track of:

• Vendor performance
• Pricing
• Market trends
• Quality of products

By keeping track of vendor performance, pricing, and market trends, you can continuously optimise your procurement operations for maximum efficiency and cost savings.

4. Leverage group purchasing

Group purchasing, also known as “collective buying”, is another effective way to strengthen your restaurant procurement process.

The primary advantage of group purchasing is cost reduction.

When multiple restaurants join together to pool their purchasing power, they’re able to negotiate better prices from suppliers than they would on their own. They also have more leverage when it comes to delivery schedules, payment terms, and even quality standards.

This, in turn, can open access to a wider range of products or higher quality products that might not be available otherwise. It can also help restaurants’ supply chains. restaurants be more efficient in their ordering since it reduces the number of individual suppliers they must deal with.

5. Negotiate lower costs

We’ve touched on this already but it’s worth stating more clearly. Don’t be afraid to negotiate with your suppliers for lower costs or better terms.

Yes, you want to ensure that the terms you negotiate benefit both parties. You don’t want to take advantage of a vendor, as this will put a sour taste in their mouth and could impact their service.

That said, you should regularly evaluate your suppliers against current market conditions and your business needs to see if there are any areas where you can reduce costs. You may also be able to negotiate better terms based on your volume or loyalty as a long-term customer.

When negotiating terms with suppliers, consider the following:

• Support your requests with sales and market data
• Establish realistic goals and expectations
• Don’t be afraid to walk away if the terms are not beneficial for your restaurant

6. Manage restaurant inventory effectively

Restaurant inventory management and restaurant procurement go hand in hand. In other words, your procurement process won’t be effective if your inventory management process isn’t.

Effective inventory management can help you:

• Avoid overstocking and understocking
• Identify trends in demand
• Implement just-in-time ordering
• Reduce food waste
• Track and control restaurant prime costs
• Forecast and budget for the future

If you are seeing problems in the procurement process, take a hard look at your inventory management practices. Are you ordering too much of certain items? Are you not tracking inventory levels closely enough? Addressing these issues can lead to better procurement decisions and ultimately, cost savings for your restaurant.

 7. Engineer your menu

Menu engineering is the process of identifying the most profitable and popular dishes on your menu. Based on this data, you can make informed decisions about what items should and shouldn’t remain on your menu.

Walking through this process can strengthen your restaurant procurement process.

The primary benefit of menu engineering is that it allows you to make optimised purchasing decisions. When you understand what menu items are profitable and popular, you can then make strategic procurement decisions. You can prioritise purchasing ingredients for your high-performing menu items, ensuring you always have the proper amounts on hand.

This, in turn, reduces the risk of overstocking and understocking. You can also eliminate items from your menu that are not performing well, reducing waste and freeing up budget for other purchases.

8. Utilise inventory management software

Without robust restaurant inventory management software in place, you’ll have a hard time optimising your restaurant procurement process. You’ll struggle to:

• Keep track of stock levels
• Forecast demand
• Identify patterns in purchasing and usage
• Monitor supplier performance and pricing

Investing in a strong inventory management system, like Fourth, significantly improves your procurement process.

How? Here are just a few ways:

• Automating key tasks
• Real-time visibility into inventory levels
• Streamlining purchasing
• Real-time recipe costing
• Predictive ordering
• Reliable inventory tracking from order and delivery through production

When you combine these features with Fourth’s AI forecasting capabilities, you have a formidable procurement process in place.

9. Build a sustainable, ethical supply chain

It’s important to build a supply chain that is both ethical and sustainable. This means considering the environmental, social, and economic implications of your procurement practices.

What does this look like practically? Specifically, it entails:

• Ethical Sourcing: You should purchase from suppliers who uphold fair labour practices, provide safe working conditions, and pay fair wages.
• Sustainable Procurement: Whenever possible, seek to purchase locally sourced ingredients. Not only does this reduce the carbon footprint associated with transporting goods long distances, but it also supports local economies and results in fresher, better food.
• Reducing Waste: A sustainable, ethical supply chain seeks to minimise waste wherever possible. If you’re concerned about the amount of food waste produced by your restaurant, consider conducting a food waste audit.
• Animal Welfare: Restaurants committed to ethical and sustainable practices should consider sourcing from suppliers who uphold high animal welfare standards.
• Transparency: Customers increasingly want to know where their food comes from and how it was obtained. Being transparent with customers about your procurement practices can build trust, while also encouraging suppliers to adhere to sustainable practices.
• Fair Trade: When procuring things like coffee or tea, seek out suppliers who maintain Fair Trade practices. Fair Trade practices ensure that suppliers in developing countries receive fair payment for their goods and work in safe and healthy conditions.

Succeeding With Restaurant Procurement

Clearly, the restaurant procurement process is integral to running a successful restaurant. And while there certainly are numerous moving pieces, following the above best practices can help both simplify and strengthen the entire process.

When combined with robust inventory management software, restaurant procurement can become a streamlined, efficient, and profitable task. So whether you’re just starting out or have an established restaurant, it’s never too late to reassess your procurement practices and make improvements for the long-term success of your business.