How to make a contract with food and beverage suppliers

July 1, 2019


One of the most important financial decisions you need to make when operating your restaurant is to find the best supplier to buy food and beverage on convenient conditions. This article will show you the terms of the purchasing process and how to deal with food and beverage suppliers.

In the purchasing process, your target must be buying the adequate ingredients, in the accurate quantity, at the right time, and at the best cost. Not to mention that you must buy only what you predict to use until the next delivery so that you will not end up with deteriorated or wasted food.


Terms to consider when purchasing ingredients:

  • Payments terms and price.
  • Delivery times.
  • Quality of the goods.
  • Transport of purchased elements and returnable packaging.
  • Which supplier has the best quality at the best prices?


What may affect food prices?

  • Seasonality: foods in season are much cheaper, of higher quality and have a longer life than those that are out of season.
  • Weather: severe high degrees of temperature ruined some food items, which, in return, causes a rise in the price of these items.


How to make a contract with food and beverage suppliers?

When negotiating the contract with the supplier, be ready to compromise. Have your own standards of which terms could you compromise and which you could not. Moreover, be aware that your profits come from the difference between your expenses and your revenues, and this what allow your restaurant to grow.


Payments terms and price:

  • Start with getting prices’ lists from more than one supplier in your area. It is advisable to get lists from three suppliers, at least.
  • Choose the suppliers who have an appropriate cash flow to ensure that they will provide you with what you need when you need it.
  • Ensure to know the quality of each product.
  • Make sure to know the conditions of each supplier.
  • Identify the exact cost of every item from each list individually.
  • Compare these lists to deal with the supplier who offers you the best price for a comparable quality.


Delivery times:

Make sure to state delivery times on the contract to avoid any relevant issues in the future. These issues might be delayed delivery of important items, which will affect your restaurant’s workflow and create chaos in your kitchen, resulting in the unsatisfied customer. Accordingly, make sure to mention delivery times clearly in the contract. After all, you do not want to serve hot drinks in summer or a salad that is not fresh because of delayed delivery.


Transport of purchased elements and returnable packaging:

Make sure that the supplier you deal with has the appropriate transporting vehicles to deliver food in a sound condition. Also, make sure to mention in your contract that the supplier shall transport returnable packaging, since storing packaging in your restaurant will take wide space and put you in troubles with the local sanitary inspection.


Making a contract with your restaurant’s supplier:

When contracting with your restaurant’s supplier:

  • Get legal advice to draw up your terms and conditions.
  • Have a written contract, not a verbal one.
  • Ensure that your contract is written in a way that protects your interests and shifts any legal responsibility for any problem to the supplier.
  • Have a written confirmation from your supplier that the elements he is selling you are suitable.
  • Inform the supplier in writing how you are willing to use the purchased products.
  • Ensure to mention in the contract what to do when facing any problems with purchased products or service, stating the exact solution within the exact period of time.
  • Ensure to include exit procedures that should be followed if either party decide to terminate the contract.


Negotiation tactics to follow:

  • Don’t accept the first offer: try to get as many items as you could for the given price.
  • Don’t let suppliers entice you with promotional materials such as cups, shirts, aprons, or
  • A suspiciously low price means a low-quality product or a low-quality delivery. Check it out.
  • Remove any items you don’t need and lower the price.
  • Don’t force the supplier to give you a very low price since he would cut costs in another area such as delivery, which will cause problems for your restaurant in the future.


Bottom line:

Find the best price, but NEVER compromise quality.