F&B beverage purchasing: can you save money?

As club managers throughout the country begin to clean their desks, read those piles of unread magazines, and think of the year ahead, there is no better time to look for new ways of saving money. The food and beverage department is often the toughest department in which to cut expenses due to the potential for a perceived loss of value or service. However, a few avenues may exist for unexplored savings.

General Purchasing Organizations (GPOs)

Although fairly new to the club industry, GPOs have been around for a long time. Conceptually, the idea is simple: Clubs buy together, which collectively gives each individual club more buying power. Organizations like VGM Club, PAPC, and Avendra specialize in meeting the needs of the club industry. Each organization has different areas of emphasis, cost requirements, and, in many cases, set levels of required purchases (or compliance).

Non-Food Purchasing

The largest area for potential savings comes in the equipment and supply area. These items can be easily compared, shipped, and delivered from practically anywhere. Your club's ability to save money is based on your success in finding the lowest price. If you need to buy smallwares for the beginning of your season, for example, you would be best served by consolidating the order into one large ticket and then competitively bidding the order. By using a GPO you obtain the benefit of national account pricing and the leverage of a larger organization buying in bulk. Manufacturers and distributors affiliated with GPOs often have their own distribution network, and can save money regardless of location. Edward Don and Hubert are two of the larger F&B supply houses shipping throughout the country that work with GPOs.

Food Purchasing

Although often your largest expense in the club, the ability to save money in food purchasing is often limited by the quality of your food. If the club buys from many small, specialized sources--including individual farmers and artisan vendors--you cannot save much money. However, if you buy the majority of your food from a broadline distributor (Sysco, FSA), there may be some savings available to you. Discounts from broadline distributors are often available for drop size, delivery scheduling, and quick payment. Having larger deliveries on the days benefiting the distributor often may result in discounts for you. GPOs have relationships with distributors that often can result in additional discounts as due to contracted lower pricing.

Food Rebates

As you may be aware, food manufacturers pay rebates to distributors on food purchased that is subsequently sold to you. If you are not receiving a share of these rebates, you are leaving money on the table. Many of the GPOs will collect the rebates for you since the individual tracking per club would be economically impracticable. As an example, VGM Club's "Cash Back Advantage Program" collects rebates from more then 300 national manufacturers and is included in their annual fee. This program does not require any specific compliance.

As you begin to investigate GPOs, make sure you ask what is expected of you. What will it cost the club? What savings are guaranteed? What compliance is required? After receiving this information, carefully evaluate whether the program works for your club and if there is a viable return on your investment. Clubs have found multiple GPOs to be beneficial and have joined more than one. Peter M. Homberg, CCM, general manager of The Penn Club in New York City and secretary-treasurer of CMAA, said, "We have joined both VGM Club and RDM (a local food GPO) because both offer different areas of specialization and each brings us savings."

Isn't 2007 the time to see if a GPO works for your club?

By Charles D, Dorn, CCM

Charles D. Dorn, CCM is managing director of The Dorn Group, Ltd., a full-service hospitality consulting firm based in Rye, NY. For more information call 914-921-3150 or visit www.thedorngroup.com.