Restaurant Buying Groups - What is restaurant buying group
Their time has definitely arrived.
We've seen an explosion in restaurant food service group purchasing organizations in the last few years.
And they're only getting started!
The stats are pretty impressive.
As are the savings.
As for the growth, that's only accelerating and with good reason.
Hospitality businesses are being hit with a series of cross-winds:
Lots of pressure.
If there's ever been a time to investigate the savings of using a gpo or restaurant buying group, it's now!
But which one?
Great question and place to start.
We've already created a comparison of the major restaurant buying groups here but let's jump right to the question on hand.
What are the top food service GPO's?
Maybe more importantly, what is THE top GPO.
You can jump to any of the subtopics here:
Let's get started.
There is literally $1000's at stake for your restaurant.
A quick refresher first...
Better yet, what is a GPO or Group purchasing organization?
Sometimes, it's one major supplier (think US Foods).
Other times, it can be 100's of suppliers.
It depends on the foodservice gpo and that definitely figures into our consideration.
Most of your day to day processing is still with the supplier.
What we're really after is the purchasing agreement.
We want pricing that will save us up to 30%!
That's the ONLY reason we're here.
Think of a GPO as a sports agent.
The savings is significant.
The GPO aggregates all this smaller purchasing to provide the same or similar pricing structure.
It's a slam dunk.
You can quickly see what this pricing difference means to you here:
It's also a reason why we we're seeing double digit growth for foodservice GPOs.
Let's take a look at the direction the whole market is going now.
Up, up, up and away.
The food service gpo market is still young.
Compared to the hospital or medical gpo market at least.
That started way back in the 60's and went through a period of rapid adoption.
The foodservice segment is trailing behind but about to have a similar explosion.
In fact, we're right in the middle of that period now!
Here's an estimated view of where we are for foodservice:
So...who are main players in this space?
Let's look at the dominant players in the space.
Each has different strengths and weaknesses.
Let's look at each one.
We'll start with the two that focus on the restaurant segment of food service...Leverage Buying Group and Dining Alliance.
LBG is a relatively new addition to the foodservice GPO but they're growing quickly and have one huge advantage.
Their contract with US Foods is a significant reason to consider them as a foodservice GPO.
Here's the deal...
All the GPO's talk about their bells and whistles (market trends, purchase analysis, etc) but really, we want the preferential purchasing contract.
Now, what we can buy and from whom becomes really important.
That's why LVG's top supplier as a partner is so important.
We'll talk more about this in the which foodservice GPO is best section below.
You can quote LVG's pricing on actual invoices here:
Next, the other big restaurant player in foodservice...Dining Alliance
Dining Alliance is really the big player for restaurants specifically.
They are growing very quickly and have spread into other foodservice segments but their strength is still in the restaurant and hospitality sector.
LVG's supplier is definitely the bigger player for foodservice distribution but Aramark is right up there.
It's a solid addition partner as well.
Founded in 1998, estimated revenue of $41M makes it a contender in the foodservice space.
Foodbuy was originally created to address the purchasing needs of the massive Compass group.
As a result, it's massive itself!
Foodbuy is strong across many sectors including restaurant, hospitality, hotels, and hospitals.
Think hospitals, long term care facilities, and the like.
It takes a real expertise to pull off this type of purchasing and they definitely have it.
Of the three that are not restaurant focused, Foodbuy is the biggest with an estimated $27M in revenue primarily driven by fees from its contract negotiations.
Entegra is a monster player in the hospital sector.
They also participate in the hospitality and multi-unit housing sectors as well.
Think LVG and their top 2 US Supplier.
Sodexo purchased Entegra in 2017 making it an even bigger player.
Again, Entegra's strength has been in health care (hospitals, senior living centers, etc) for food service.
Speaking of dominating a sector, let's look at Avendra.
Avendra is the largest GPO for the hotel sector.
They are actually an Aramark subsidiary with a footprint in:
Boasting over $4B purchasing power and $127M in revenue, they are definitely a contender.
You have to be in the hotel space which is very competitive.
Over 8000 customers and self-reported 99% retention speaks to their effectiveness in that space.
As you can see above, each gpo has strengths based on the sector (health care, hotel, restaurant, etc).
So how do we compare them?
We have an entire article on how to compare the major restaurant gpo's and buying groups here.
Here's the first concern:
A contract to purchase at a discounted, group rate.
But from whom?
THAT is the key question.
The supplier(s) that you have access to is the key question.
All your day-to-day process will be with the supplier:
What good is a discount if you don't like the actual process!
This brings up the second consideration...
The five food service gpo's have certain market segments that they really focus on.
Supplier strength takes priority but there can be advantages based on market segment.
Here's the comparison for the top foodservice GPO's:
So...which is the best food service gpo?
This can depend on your market segment but two stand out.
Let's look at it based on segment.
If we have to choose one...we'll choose a top US supplier!
That means Leverage Buying Group.
We want the supplier with the broadest sku availability.
A one-stop shop for almost everything we need.
LVG currently has that contract and that's hard to beat!
We've mentioned how to compare the gpo's throughout this article but here's the list in decreasing importance:
Those are the key factors.
Many of these are dependent on the supplier or suppliers that the food service gpo works with.
The discounted pricing is probably comparable across the GPO's since the raw margin is about the same with the suppliers versus street costs (direct to independent restaurant).
This makes supplier our key concern.
Who do we have access to?
That's the real question.
Just upload your invoice or a sample range of items here:
You'll get a quote with discounted GPO pricing to see if it makes sense for your business.
It's that easy.
Of course, if you have questions, we're happy to help.
This depends on the GPO but it's pretty simple.
In some cases, it can take 10 minutes!
Each is slightly different but basically, we're just signing a contract.
We can still buy outside the contract but in most cases, it won't make sense to due to the pricing.
There are requirements for minimum orders depending on the food service gpo but these are rarely an issue for most restaurants.
Of course, we're happy to help!
As least, see what the pricing looks like for your situation here:
Again, there is absolutely no cost to you for our services. Email us at email@example.com
"No... Thank you. I wish I had found group purchasing earlier. It's a no-brainer"
"We have seen a reduction of 18% for last quarter for one location. Can't wait to roll it out other sites."
"The cost savings I realized on purchasing went right back into upgrading our meat and produce quality. We basically subsidized the needed move to higher grade at no cost."
"Thank you so much! Very happy with service. If there is any way I can contact supervisors to let them know about your great service let me know"
"I'll be honest...I didn't believe the pre-rollout saving estimates. Seemed to good to be true. I'm pleasantly wrong on that"
"After test at one location, we're ready to move forward across chain. Great resource to have. "
"Wow, I can't thank you guys enough for your help...I couldn't imagine trying to tackle this on my own!"
"Thank you so much for your marvelous work. I don't want to tell any of my restaurant buddies so this stays with us"