[mattm]

Suppliers were quick to add fuel surcharges as oil and gas prices went up. Are they reducing the surcharges as fuel prices go down?

And when prices get to where they were before all the suppliers go on the fuel surcharge bandwagon, will the suppliers eliminate the surcharges?

[mattm]

On July 21 Ruby Tuesday sent a letter to all of their suppliers stating that they will no longer pay fuel surcharges.

I don’t know how much luck they had with this, but they say they are going to remove the fuel surcharge from any invoices they receive. Have other restaurants tried pushing the surcharge issue?

[4dabirds]

Over the past two years, we have slowly moved from purchasing from the major suppliers to independents and Sam's Club/Costco.

How it works...

We have a 20' enclosed trailer
You fax/click-n-pull your order at Sams/Costco
You show up, check your order, pay for it, and go
Then we stop at the local bread store about 1 mile away
Then we stop at one beer distributor and then the next on our way back to our two locations.

Round trip, it costs us 1 fuel surcharge and approximately 2 hrs of our time.

What we save...

Sams/Costco is often 30-50% less on items vs. Sysco and US Food Service. Things like portion cups, napkins, coffee, tea, seasonings, canned goods, and cleaning products offer the largest savings. Napkins alone are 68% less at Sams. With what we save per ounce on onion rings we can almost double our portion size...

The bread store offers Brauns breads... we buy their buttermilk, wheat, and rye at $1.09 per loaf tax exempt. Brauns breads have that premium look and texture but are more than 50% less than comparable brands delivered.

Stopping on the way back to our properties at the beer distributors saves us another $20 per location (we have two) and since we have the room in the trailer and it is not out of the way it makes sense...

We time our return trip so that it is during our down time... it takes about 15 minutes for everyone to unload the order and put it away. This is time that they would be spending putting away the order even if Sysco, et al had brought it. In a way, it is easier because our delivery comes at a set time and is ONE delivery being put away onto empty shelves... when you order 1-2 times per week with multiple purveyors, you have stock to rotate, and have to deal with the drivers coming during peak (and slightly unpredictable) times. You are also losing one employee to inventory 4x per week in order to facilitate ordering.

Downside...

It can be a pain, but with two locations and 8 deliveries a week being surcharged we are looking at $5k per year in additional costs.

Add to that the additional savings by buying from Sams/Costco and the bread store and the savings is a whole person's salary every year EASILY. I've never cost it out over the year - just on individual orders (to make sure it still makes sense), and the minimum savings per order is $600 x 52 + the surcharge (roughly $80 x 52) ... for $35k+ per year, I can be inconvenienced a little. It's like I am paying myself $340/hour just to go run some errands.

For meats and veggies and specialty items, we buy local/independent for the same price or less than the purveyors. On some things we buy loss leaders from the major chain stores... it takes a little planning and creativity to keep it working, but that also keeps us more aware of our market and it keeps the menu both seasonal and fresh.

Larger chains have pull and contracts... smaller, independent outlets have to make decisions based on time vs. money. Maybe you don't have the time to do this... or maybe once you look at what you are saving, you may find you don't have the money not to find the time!

Kim

[Psychlone]

While I agree with Kim that purchasing from smaller 'independents' is more beneficial for some items, I personally can't go this route because of time and distance (64 miles to the nearest Sams and Costco) and time, because my restaurant takes MOST of my time from me.

But, I've found that just talking with your sales reps about going 'Prime Vendor' with them will give you an idea of what kind of savings are available to you.

For instance, my Sysco rep told me that if I purchase 80% of my product from Sysco, that they will waive my fuel surcharge, along with a 4% total invoice discount - which really adds up when I'm receiving 3 trucks a week from JUST Sysco.
The US Foods rep one-upped Sysco by stating that I wouldn't even have to sign any sort of contract of purchase percentage, because my sales volume through them is sufficient to allow a 7% discount on all individual items purchased through them, but would still charge the $7.90 per drop (again, 3 times a week) (I purchase alot of the Escoffier line which can be really expensive)...so it's really sixes at this point, but my main goal is to sit down and do a comparative analysis of items purchased and determine which vendor would really be the best one to go with.
(i.e. price EVERY item in my inventory (~$66,000 at it's lowest) through Sysco, then do the same through US Foods - with the exceptions of special items that only one or the other carries that aren't interchangeable.) - I won't sacrifice quality for price...my customers would know it in a single bite, and those are my Le Cordon Bleu and ACF accreditation certificates on my wall 1 step inside my front door of my restaurant, so I have a reputation to uphold.

On the other hand, what Kim had said would most certainly work for a smaller operation - the cost differences would be sufficient enough to justify the time and distance for me if we were smaller.
Another thing that could be of interest, is going direct to the manufacturer of specific goods, like Styrofoam, plasticware, etc. - We happen to have a Genpak and Nampak here in my town that makes Styrofoam and plastics (buckets, plasticware for to-gos, etc.) and I've spoken with them directly and can order whatever I need, whenever I need at obviously seriously discounted prices. Could possibly work for paper product manufacturers as well, I just have none near me to try.

Psychlone