Your Foolproof Guide to F&B Purchasing — Control Your Orders, Deliveries & Food Costs
Rebates from one supplier. Bulk order discounts from another. Hours-late delivery trucks that are making you bite through the side of your desk because all your steaks are in them…
But there you are, as cool as a cucumber, solving problems on the fly.
You know the name of the game, don’t you?
It’s called the restaurant F&B purchasing process, and you’re a Jedi Master at it.
Purchasing (or procurement… never ‘buying’) is such a fiddly part of restaurant operations that it pays to be at the top of your game at all times.
That’s because, next to inventory management, F&B purchasing mistakes are the number #1 reason why operators struggle to get their food costs under control.
And while you might be a natural at sourcing and vendor negotiations, if you don’t optimise your process from start to finish, those purchasing mistakes will keep piling on. And they add up. Especially when you’re running point on purchasing for a multi-outlet operation.
In this F&B purchasing guide, I’ll help you sharpen your purchasing process claws until they’re all nice and shiny. And ready to tear down those mounting food costs to shreds.
Here’s what we’ll cover:
- What is Restaurant F&B purchasing, and why is it important?
- The 6-step F&B purchasing cycle;
- Outlining SOPs & policies (whenever you can);
- Demand as the trigger that activates the cycle;
- What vendors to choose (& how to choose them);
- How to prepare & place your F&B orders;
- Receiving, monitoring, and storage of goods;
- Verifying invoices & payments;
- How a bit of software goes a long way in controlling F&B purchases (& food costs).
Ready to dive in?
What Is Restaurant F&B Purchasing (Procurement)?
Like I mentioned, when we talk about getting food and beverages into a foodservice operation, we never talk about simply ‘buying’ stuff.
It’s not just that the word ‘buying’ is too common (it really is).
Or that it lacks certain pizzazz (it really does).
It’s that ‘buying’ makes the whole thing sound simple.
And this restaurant function is all but simple:
Restaurant F&B purchasing (procurement) is an intentional, goal-oriented, and meticulously planned function concerned with search, selection, purchase, receipt, storage, use, and control of a business-vital commodity. The goal is to maintain optimal inventory levels without overspending or wasting.
That is why we talk about F&B purchasing (or procurement) over buying.
Food and beverage purchasing is a process that leads you towards your goal, and that goal can be summarised as → don’t run out, don’t waste, keep a lid on food costs.
You do that by focusing on:
- Getting the right product
- With the right quality
- For the right price
- At the right time
- From the right source
Well, even if your first gut check is telling you ‘no, that’s not simple’, you can still make it as painless and straightforward as possible. You do that by focusing on (& optimising) every single step of your F&B purchasing cycle before you run into problems.
And here’s how you do that.
The 6-Step F&B Purchasing Cycle (The No-Fat Version)
If you want to stay on top of your restaurant F&B procurement activities, you need to start thinking about the whole process as a cycle, and not a one-off.
While this means that your job is never done (restaurant purchasing is not a ‘set it & forget it’ type of activity), there are still ways to optimise the whole thing so it runs like a well-oiled machine.
Here’s a trimmed-down, no-fat version of a restaurant food purchasing process:
- Outlining policies & SOPs
- Determining demand
- Deciding on vendors (& contracts)
- Placing your F&B orders
- Receiving, monitoring & storage
- Verifying invoices & payments
When you’re purchasing for a large, multi-outlet or enterprise operation, following these steps will help you do a better job. Select better vendors, serve better food, and keep your food cost down. And you’ll do it all without fumbling and making costly mistakes.
1. Outlining Policies & SOPs for F&B Restaurant Purchasing
I’ll open this with a caveat:
Small to medium foodservice operations generally don’t have very robust purchasing standard operating procedures (SOPs) and policies.
Some don’t think they need them… others don’t know what they are.
Be that as it may, these F&B purchasing SOPs are step #zero in the restaurant purchasing cycle.
If this is new to you, too, think of it as a set of instructions about how and why certain purchasing activities are done the way they are.
So an example of a purchasing SOP would be:
Example: ordering policy #1
“F&B orders for all XYZ outlets are reviewed and sent to the vendors by the group procurement manager every Friday and Tuesday afternoon. Ordered items are delivered by the vendor to locations every Monday and Thursday morning”.
What does this tell us?
- purchasing is centralised
- recipes and menus are costed
- optimised delivery schedule
- deliveries made to outlets
- receiving training needed
And another one:
Example: Food specs policy #1
“Outlets in the ABC group have menu items that require the use of Grade: Prime cuts. Outlets in the XYZ group do not serve expensive meat cuts, and should only request (and use) Grade: Good cuts.”
And what do we learn from this?
- one procurement department handling several concepts
- wrong deliveries potentially very costly
- receiving staff needs to know quality grades
Regardless of the size of your operation, I encourage you to codify the basics of your purchasing process, at least. If you’re in the management division, this will help every new procurement officer hit the ground running.
And if you’re currently heading procurement, you’ll be making your life easier when you’re either on vacation or training your replacement.
2. Purchasing to Meet the Demand (& With a Built-In Safety Margin)
Remember your core responsibility as the purchasing manager?
The right product… for the right price… at the right time?
Well, to get to that ‘right time’, you’ll need to know your inventory like the back of your hand.
Recommended reading: Developing an F&B Inventory Management System for Multi-Unit Restaurants
What you’re looking for here are accurate inventory counts and your ingredient par levels.
You should always purchase to par levels because they’re calculated based on historical sales data. They’ll help you get as close as possible to the right amounts (without over or understocking).
Barring daily counts, there are two ways to get to these numbers:
- Running inventory — every item from the stock is requisitioned and noted down on the inventory sheet before hitting the production line. At the end of the day, those requisitions are tallied and taken out of the beginning inventory. If the end-of-day count for a particular item is below the par level, that item is added to the next order list.
- Digital inventory — restaurant management software, such as Apicbase, keeps track of inventory levels automatically. Sales, production, and internal transfers deplete the inventory based on recipe spec sheets. Once items fall under par levels, the system creates an order form, and you can review and approve it.
Both methods are valid and produce great results when used correctly.
Can you imagine working with running inventory in 20 locations?
That’s hundreds of times (per night) that someone, somewhere, might forget to jot something down, throwing the counts out of whack. In this case, it’s a lot better to let software deal with this since it checks and breaks down the POS data to come to the number of individual ingredients that need to be depleted. And if there’s one thing that’s certain, it’s that you definitely won’t forget to print out the bill for the customer.
Make sure your purchasing orders are based on accurate inventory data.
Apicbase integrates with your POS, creating money-saving ordering suggestions by combining your sales data & your current inventory status. All you have to do is tap a button and an order form will be sent directly to your vendor.
3. Deciding on Vendors That Are the Right Fit
When it comes to vendor selection, you’re going to have a lot of choices and combinations.
The first thing you have to decide on is what your optimal number of vendors is. If you have too few vendors, you’re risking shortages and overpaying. Too many, and you might be spreading your budget thin (and not qualifying for bulk discounts).
What is the optimal number of vendors?
There’s no golden rule here, but best practices dictate having 2–3 vendors for your main categories (meat, dairy, and produce), and a handful of vendors for speciality items (cured meats, mushrooms, wines). This way, you have alternatives for your essentials, but can accept occasional bids to keep your vendors on the straight and narrow.
There are also several different ways you can approach vendor deals:
The five ways to approach vendor deals are:
- Purchasing by contract — either quantity or set period contract. The pros are a steady supply at better prices. The con is that you can’t shop around.
- Cash & carry purchasing — buying from a local food warehouse (on the day and without a contract). The pro is that you simply walk in and buy for the best price you can find. The cons are no delivery, no guarantee, and cash payment.
- Market basket — buying a group of products (produce or meats or fish) from a single vendor. The pros are price and less hassle. The con is that there’s no guarantee that you’ll get what you need.
- Total supply — buying everything from a single vendor. The pros are predictability and great prices. The biggest con is that you’ll rarely find speciality items. (Still potentially good for fast-casual and similar foodservice chains.)
- Paid reserve purchasing — paying upfront for a predetermined quantity of a speciality product (organic fruit or local fish). The pro is guaranteed delivery. The cons are (potentially) higher prices and the fact that trust is essential in this relationship.
Additionally, you’ll get to pick between broadline and speciality vendors, group purchasing organisations, deals with manufacturers, warehouse clubs… and the list goes on.
Don’t get tangled up in the options.
If you’re running a large operation, you’ll likely get a list of pre-approved vendors from corporate. Use it — those vendors are pre-approved for a reason. If you’re a smaller operator, check out what your competition is doing. If most of them have 2–3 broadline deals + 1 speciality deal + 1 group purchasing deal, that’s because that combination works well in your area. No need to reinvent the wheel here.
That said, once you have a healthy list of vendors you can cooperate with, you should definitely figure out who’s offering the biggest bang for the buck.
Most operators evaluate vendors based on three things:
- Price — remember, you’re not looking for the cheapest price… you’re looking for the best price for your requirements. In the restaurant biz, something is a great deal only when we’re talking about the same quality for the lower price (credit and delivery terms remaining equal).
- Quality — can the vendor deliver per specs when it comes to the quality? How many times have they substituted your order with a lower-grade item? Were they upfront about that?
- Delivery — can you and the vendor agree on delivery times that work for you? If they are consistently running late, they’re likely causing problems for your production crew.
After you’ve had a few runs with the vendor, you can score them on all three metrics. Most operations use a numerical grading system, with the highest vendor score being 10/10/10. This means that, out of 10 suppliers, this supplier has the best price, the best quality, and the best delivery terms.
While this is the ideal case scenario, in real life, you’ll likely have to settle for a lower price score if you’re looking for top quality items and on-time delivery.
What about beverages?
Most operators source beverages from wholesalers since shippers are not inclined to work in small batches (other than wine shippers working with select Michelin Star restaurants).
Quality is standardised, and the prices don’t vary much throughout the year, which makes inventory control and pricing more straightforward.
Focus on finding the best possible deal from a trusted wholesaler and keep an eye on timely delivery & payment terms.
4. Preparing & Placing Your F&B Orders
Most restaurant operations order on a weekly or a bi-weekly basis, with some operations placing monthly orders.
A good rule of thumb is to place orders as frequently as you have to if that is what’s going to help you control your food cost. Your goal here is to be production-ready at all times but without tying up your money in inventory because you’ve made a miscalculation.
Typically, ordering is a three-step process:
- Order lists based on forecasted sales — for every ordering period, estimate the demand for specific ingredients based on forecasted sales (you can do this for the month and divide by four to get weekly numbers, provided there are any big weekly oscillations due to events or holidays).
- Check recipes for amounts — look at your recipes to determine ingredient amounts. Translate those amounts into purchasing units (kilos, cans, bottles, etc).
- Subtract inventory on hand — if you’re using the perpetual inventory method, check the numbers from the previous night. If you’re using software, your purchase forms have already been generated (yay). And if you’re doing neither… well, you’re going to have to do your counts.
Now that you have the quantity for each ingredient, you need to determine the quality. Your recipe costings will likely refer you to a production spreadsheet that contains product specifications, like the one below:
(If your specifications are not as detailed, that’s usually okay. Most items are standardised — for example, when you say ‘prime cut contre-filet’, most vendors know that it’s the best cut of meat, deboned, with suet deposits and gristle removed).
When you have your quantities and qualities, you can proceed with filling out your purchase order form. You’ll need several copies of this document, and your receiving clerk (at each location if you’re operating a multi-outlet) needs to have one so they can control the deliveries.
Your order form needs to be detailed but without turning into a 3-page document. The most important things to hit on include:
- Restaurant, vendor & delivery details
- Name of the product
- Unit of quantity (10-kilo crate, 24-bottle case)
- Standardised or descriptive quality
- Individual pricing + net for the line
- Total price for the order
Note: By this point, you’ll already know which vendors are getting which order forms. However, if you’re buying non-perishables in large quantities, it’s a good idea to put out an RFP in your local trade publication (or shop around for bids more informally). If you’re in no rush to lock this deal down, you might be able to get a better price for the same products.
Just so you know — If you’re using the Apicbase F&B management platform, this step becomes ultra short.
Apicbase already knows your inventory levels and automatically generates purchasing suggestions.
These suggestions were informed by your POS, inventory, and bills of materials, so the order form email (with all the details) is ready to go.
5. Receiving, Monitoring & Storage
Here’s the deal…
… you can have the best restaurant purchasing SOPs…
… be super careful about who you buy from and at what price…
… spend hours every month begging and pleading for discounts.
But if you don’t carefully inspect everything that’s delivered, you might as well do none of the above. That’s because you have no control over what’s coming in (in terms of quantity and quality) and whether or not it’s usable, but you’re still paying for it.
So how do you prevent that?
You arm your receiving team (a receiving clerk, chefs, or managers, depending on your set-up) with the info and the skills that they need to do their job accurately and conscientiously. This includes regular training on receiving procedures and food quality. Also, the receiving team needs to have access to order forms so that they are working with the right set of data.
The receiving clerk (manager or head chef in smaller operations) is responsible for:
- Inspecting the quantity and weight — all deliveries are measured against the purchase order and specifications. Under and over-deliveries are recorded in the daily record and dealt with appropriately.
- Inspecting the quality of deliveries — thorough checks on expensive items (meat, wines, spirits); spot checks on produce (check the bottom layer of the case for wilted or rotten produce).
- Recording the daily deliveries — special attention should be paid to recording off-quality deliveries, anything that was over or under-delivered, or deliveries of items that have passed their expiration date.
- Handling items & following proper storage procedures — marking what goes into the freezers, cold rooms, and general storage. Making sure that rotating inventory procedures are followed.
- Preparing the necessary paperwork — this includes double-checking the delivery form to make sure that all the discounts and corrections have been applied; preparing paperwork for unsatisfactory items, and delivering the necessary documents to accounts.
In operations that have central vendor delivery (goods delivered to one location and then distributed to the outlets by the operator) some of these steps can be skipped.
However, if you have the bandwidth, I suggest going through the receiving process at every location. This acts as a safeguard in case something was missed during the first inspection or if there’s pilferage happening on the way from point A to point B.
Apicbase users use the central kitchen module to keep tabs on orders and deliveries from one unit or outlet to the other.
6. Verifying Invoices & Payments
The last step in the F&B restaurant purchasing cycle is also the one that is often skipped by operators.
Of course, I’m talking about verifying invoices and payments.
When the going gets tough, we’re all sitting there, turning every coin over two times before we spend it. But… when things are going good? Well, you pay your invoices in time with no more than a perfunctory check, right?
That makes you a great buyer. But it could also be costing you money.
Your procurement department and your accounting need to work together every month to verify invoices before they’re paid. This means double-checking the quantity and the quality of delivered goods, and matching them with order forms and daily lists of received goods.
If any discounts, rebates, or corrections were approved, these need to be reflected on the invoice. If they’re not, it’s best to clear this with the vendor before the payment.
Periodically (once every 6 months), make sure to go through your payments to verify that you’ve deposited the right amounts to vendor accounts. If you’re automating your payments, an error can slip in here occasionally — if you’ve paid less, you hear about it from the vendor. But if you’ve paid more… well, you probably aren’t getting it back unless you ask for it.
In a solid tech ecosystem, the back-of-house software will integrate with the accountancy software. The link ensures purchase orders are matched with the corresponding invoices. Only after validation by the supply chain manager payments are made by the finance team.
Apicbase will help you in this area as well of course.
Apicbase — The Easiest Way to Control F&B Purchasing (& Food Costs)
There you have it…
A foolproof, start-to-finish F&B procurement process that leaves no stone unturned. No avenue unexplored. And no penny idly spent.
Because let’s face it…
The reason why all operators focus on the purchasing side of the equation is to see where they can knock those food costs down a percentage point or two.
There’s no shame in that — it’s exactly what you should be doing.
And Apicbase can help you take that even further.
Since restaurant inventory and procurement are so tightly knit together, it pays off to have software in place that can manage both things simultaneously. It saves you hours of manual work but, more importantly, it drastically reduces the probability that you or someone from your team will make a costly mistake.
What do you say?