Restaurant Values

  • Smallware & Supply Procurement Procedure and Buying Strategy

    Smallwares and supplies are generally purchased infrequently and the expenditures for this category can drastically increase if there are no controls in place. With out controls, expect the average product cost to be from 10-30% higher than necessary. Infrequent buying is not a rationalization for poor buying decisions. The savings can add up to thousands per year depending on the size of your operation.

    A minimum amount of research and planning can go along way to reduce costs.

    First, rank products in terms of usage. This list may be ranked and categorized as follows:

    1. Chemicals & Disposables
    2. Glassware
    3. Flatware
    4. China
    5. Miscellaneous Tabletop (salt & Pepper etc.)
    6. Miscellaneous Kitchen & Bar Supply

    The most crucial and difficult part of this is specifying. When specifying always use the manufacturer brand and factory model number. This will standardize and identify your product requirements and help you to avoid paying a higher price for less than expected quality. It will also make it easier for the DSR to source and avoid errors by ordering and shipping the wrong item. Obtain this information from existing product packaging or previous invoices. If you do not have a specification, do the necessary research to obtain it. Remember the important control is to have this information available before buying. If a substitute is proposed, which it will, scrutinize that item by getting a sample. A substitute may not work if the product must stack with existing product. The most difficult specification to identify will be category#6 but it is also the least significant, ranked at the bottom of the usage list.

    With the brand and model number, competitive pricing can easily be checked on the internet.  Example: The brand and model number of a 10” fiberglass tray keyed into a search engine immediately displays $71.82, 77.76 and 82.52 per dozen, a 14.6% pricing difference. Freight is always a factor so be sure to require a delivered prices.

    Finally, review product availability and return policies with all potential suppliers. These items must be on hand for immediate delivery. If not, inventory should be kept on hand or anticipated to allow for lead times. Work with your local E&S or Broadline distributor and insist on a delivered price to simplify price comparison. Maintain an inventory list with the last cost paid. Use this indicator for future orders and look for it to remain stable for one full year.

    Obtain equipment recommendations, sourcing, and basic information to help you qualify your buying decision by going to restaurantvalues.net

  • Equipment & Supply Procurement Procedures and Methodology

    In both theory and practice many of the techniques applied in food cost control can be applied to E&S depending on the type of product and usage requirements. Heavy equipment however, is a long term capital investment with useful life and long term operational considerations added to the buying decision. If managed correctly, cost control methods can easily be implemented to insure compliance with specifications, pricing guidelines and product availability. By planning, specifying, and maintaining equipment properly, a well trained staff will be empowered to deliver the highest level of quality and service and the return on investment can be accelerated significantly.

    There are three types of E&S Procurement scenarios; (1) new facility - contract package purchasing, (2) on going replacement of supplies and smallwares and (3) the replacement or addition of heavy equipment. This article will focus on new facility contracts.

    New Facility, Contract Purchase – Start up Package

    Bid Documents

    Completed and approved architectural drawing and specifications will provide most of the bid requirement details. Equipment will be listed on the equipment schedule indicating quantity, brand, model number, description and utility requirements. Bid forms can be created and are recommended. The floor plan will show the layout and location of equipment. Other sections of the drawings pertinent to the equipment bid will include elevation drawings, wall backing plan, walk-In refrigeration, and hood ventilation details.

    Equipment Vendor / KEC Contractor

    Not all foodservice equipment distributors specialize or get involved in contract sales. It is recommended that contract specialists bid a new contract package. A contract specialist is a full line equipment distributor that has staging facilities with separate project storage bays. Avoid internet and mail order suppliers. They most likely lack the ability to consolidate and do not have a system in place for contract work. Negotiate line item price variations with the supplier you are dealing with keeping the package intact. This will maximize service levels and help to insure expected results.

    Scheduling

    After the contract is executed, a turn over and grand opening date is established based on the construction schedule. Equipment Purchase orders are placed with the required ship date specified to meet scheduled deadlines. Equipment is shipped from the manufacturer to a distributor warehouse location. As equipment is delivered to the staging facility, warehouse personnel carefully receive, look for damage, and check in each item. Coordinators update reports daily, and issue job status reports weekly to insure the project line items are received on time. One late item can hold up the entire project delivery.

    Delivery & Installation

    A complete contract package includes consolidation, installation and one or two deliveries to the job site depending on the size of the package. Direct shipment of the hood system and walk-ins are standard practice to avoid excessive shipping costs and the likelihood of damage due to double handling. Another reason to ship these items direct is due to the construction schedule normally requiring the hood and walk-in to be installed on site before the balance of the equipment package is delivered. The KEC will quote the complete hood system delivered and the HVAC contractor will be responsible to install and balance the ventilation system. The fire suppression system can be included with the hood package and installed by the KEC. The KEC will normally be responsible to hire a refrigeration contractor to receive and install the refrigeration system complete for the walk-in and any other remote refrigeration items in the contract. Beer systems, millwork and furniture are also typical items for the KEC to furnish and install, but not always the case. These items may also require direct shipment. The main equipment package will be loaded at the consolidation warehouse and delivered on site. An installation crew normally a part of the KEC’s contract will receive, unload, unpack, assemble and set in place ready for final connection by the various trades. A start and check service order should be included with the KEC contract and performed after all the equipment is connected. Shortening should be on site for accurate calibration of the fryers.

    Smallwares & Supplies

    If smallwares are provided by the same distributor a lump sum total can be represented as a line item and a breakdown can be attached as a separate bill of goods. Smallwares are normally delivered one week after the equipment installation is complete.

    Bid Outline

    Itemize and compare bids competitively as follows:

    Equipment – Consolidation Package - Itemized
    Freight out – Hood
    Freight out – Walk-In
    Freight out – Furniture / Millwork
    Incoming Freight – Consolidated Package
    Delivery – Consolidated Package
    Installation – Consolidated Package
    Installation – Refrigeration
    Installation – Fire System
    Installation – Beer System
    Total
    Sales Tax
    Grand Total

    Terms & Conditions

    Application, Terms and Security Agreement should be included for review and signature. Typically in two or three parts with an initial deposit of 40-50%, second payment 45-55% one week before delivery and the balance one week after satisfactory completion. Some suppliers require the full balance before delivery. Applications are required to set up an account and UCC forms are filed to protect the distributor. Responsible distributors release the UCC filing immediately after final payment.

    Obtain equipment recommendations, sourcing, and basic information to help you qualify your buying decision by going to restaurantvalues.net

  • Designing & Specifying a New Foodservice Operation

    Planning a New Foodservice Facility

    The task of planning a new facility or a remodeling project is complex. It requires interaction between management, the fooservice designer and architect to clarify objectives and outline the “scope of work” necessary to complete the project on time and within budget.

    Concept Development

    The plan to open a new foodservice operation starts with the owner/ operator’s enthusiasm but ultimately begins with the process of Concept Development. Although some of the components of Concept Development are beyond the scope of this article, it is a precondition to the Facility Design phase of the project. Concept Development lays the foundation of the business and requires a comprehensive business plan that determines the Menu, Market, Capital Investment, Management Team, Food Production Methods and Food & Beverage Control Systems. It also develops a strategy for growth and (ROI) return on investment. In order to complete the business plan, a Market and Financial Feasibility Study must be completed. The Market Feasibility study analyzes the demographics, traffic patterns, local economy, competition and eating habits of local patrons. The Financial Feasibility Study projects profit and loss, financial statements and a cash flow projection and analysis. Regardless of the operators experience or background, employing a team of professionals is highly recommended, and from a functional standpoint, necessary. Once the Business plan is in place, the Design & Specification phase can be formulated.

    The Purpose of the Design Function in a Foodservice Project

    To more thoroughly explain the purpose of the design function, let’s assumes the construction of a new facility. Initially, a project manager or architect obtains requirements for plan approval from the local building, fire, and health departments. National codes establish a base line, but local requirement always prevail; and will vary in different municipalities. If an architect is not required, the project manager or someone else assigned must take on the role of managing the design and specification process. With any new facility, architectural drawings are necessary in order to demonstrate compliance with local and national codes and to obtain permits. HVAC, electrical, plumbing, waist and lighting plans are normally included.  Final drawings provide the road map for the general contractor and subcontractors to bid from and follow in order to complete the project as specified.

    Selecting an Architect and Foodservice Consultant

    Since most architects are not kitchen designers, a foodservice consultant must be hired to work in conjunction with the architect to communicate foodservice equipment and furnishing requirements that must be integrated with the overall plans. These requirements are established thorough managements interaction with the consultant and architect. Some architectural firms do specialize in restaurants and retail establishments. They are staffed with kitchen specialists, interior designers and the more prominent firms focus on chain restaurants and retail stores providing complete Concept Development and Design packages. The typical independent operator; however, will have access to local architects. It is advisable for the architect to have some restaurant background. It is always best to contract the foodservice design agreement separately and not include it in the architect’s scope of work; otherwise outside consultant fees will be charged. A separate foodservice design agreement will allow for more control over the design process that requires a great deal of interaction with the consultant. Another option to an independent foodservice consultant is to utilize the design capabilities of a restaurant equipment distributor. If they have AutoCAD capabilities and design personnel on staff, they may offer the most economical approach by discounting design fees on the equipment purchase based on the size of the final contract. The possibility of the distributor inflating prices to offset the discount can be reduced through the bidding process. Interior Design can also be contracted separately; however, most architects have the capability of providing this service as well. Foodservice designers and distributors may offer interior design as well. In this case you may or may not find the same results with a separate interior design agreement. It would be advantageous to discuss interior design capabilities with all parties offering this service before making a final decision. Interior design is a critical area that ties in closely with the theme you are developing. The end result must satisfy Concept Development requirements no less than everything else.

    The Design Process

    The Design Process is interactive and the foodservice consultant must be sure to understand the plan objective and adjust for any changes as they occur. The operator should also be sure to communicate objectives and changes clearly to insure that the design process is in sync and on track with the goals of the business. A foodservice operation fits the definition of a manufacturing concern and the same principles of design apply. Space, work flow and efficiency are key principles to the design process.

    Phases of Designing & Specifying a Foodservice Facility

    A. Initial agreement between the owner and the Foodservice consultant and architect

    B. Functional Space Analysis

    1. Receiving
    2. Storage & Handling
    3. Preparation
    4. Cooking (Including Steam & baking Equipment)
    5. Wait Stations & Service Areas
    6. Furnishings & Front of the House (Furniture & Décor)
    7. Smallwares & Supplies
    8. Signage

    C. Initial Design & Budget

    D. Plan Development and Engineering

    1. Specifications
      • a. General Conditions
      • b. Workmanship
      • c. Equipment Specifications
        • 1. Equipment – (Buy out Items)
        • 2. Custom Fabrication
      • Agency Approvals

    E. Scope of Work

    1. General Contractor
    2. KEC, Kitchen Equipment Contractor
    3. Equipment & Furnishing Installation

    Obtain equipment recommendations, sourcing, and basic information to help you qualify your buying decision by going to restaurantvalues.net

  • Equipment & Supply Industry Representation

    There are organizations that provide representation to channel members. Representation is for many reasons; however, the primary purpose is for the benefit of the group and to create a platform for effective communication as well as establish standards of conduct. Operators can tap resources within some of these organizations, but not all. Some are closed to members only. Membership lists may be available from the association web site; others are available for a fee, and then others you will need to enter a name to confirm membership.

    Manufacturers

    NAFEM - North American Food Equipment Manufacturers
    Search manufacturer members displaying web site and contact information.

    Independent Manufacturers Representatives

    MAFSI - Manufacturers' Agents Association for the Food Service Industry
    Closed to members and manufacturers agents only - Manufacturer Rep contacts can be obtained by contacting the manufacturer.

    Distributors / Dealers

    FEDA - Foodservice Equipment Distributors Association
    Dealer name can be entered to check membership. Membership lists can be obtained for a fee.

    Service Agencies

    CFESA - Commercial Food Equipment Service Association
    Service agencies in your area can be located for all types of certified equipment service.

    Consultants

    FCSI - Foodservice Consultants Society International- The Americas
    Search Utilities are available on the web site to find consultants worldwide

    End Users

    NRA - National Restaurant Association
    The leading end user organization and resource for all types of restaurant information

    Obtain equipment recommendations, sourcing, and basic information to help you qualify your buying decision by going to restaurantvalues.net

  • Channels of Distribution: Equipment & Supply

    Developing a clear understanding of the channels of distribution within the E&S community is a prerequisite to effective procurement strategy. Interrelationships and dependencies exist among members that will affect buying decisions.

    Due to competition and market saturation, companies are forced to step up the effort to increase market share. The E&S distribution channel is complex and with the advent of “non-traditional” players the complexity has increased. It should be noted that the channels of distribution can change given the fact that companies continue to seek new ways to reach the end user.

    The E&S Product Distribution & Sales Network includes the following players:

    – Manufacturers
    – Manufacturer Sales Reps
    – Foodservice Design Consultants
    – Independent Manufacturer Representatives
    – Stocking Distributors
    – Equipment & Supply Dealers
    – Broadline Distributors
    – Non-Traditional Distributors
    – Fabricator Dealers
    – Service Agencies
    – End User

    Direct and indirect relationships take place between players in various ways.

    Manufacturer Sales Reps interact with all players in the supply chain. They may or may not fill the role of the Independent Manufacturers Rep. They are a direct employee of the manufacturer dedicated full time to that product line. In many cases the Manufacturers Sales Manager monitors the activity and performance of the Independent Rep Group and supports them with dealer / distributor and end user product introduction and training.

    Foodservice Design Consultants provide consulting and specifying services to end users, owners and operators, architects, and developers. They design and specify foodservice facilities by providing floor plans, elevation drawings, equipment schedules, electrical and plumbing rough ins, ventilation and refrigeration requirements in compliance with national and local codes.

    Independent Manufacturer Representatives are independently owned agencies normally representing multiple manufacturer lines and are compensated by commission. They are not employees of the manufacturer. Some representatives inventory product. Most independent rep firms employ outside sales people covering a region or large portion of the country.

    Stocking Distributors have exclusive arrangements with the manufacturer, selectively selling to dealers, distributors and end users alike. They quite often handle “specialty” products that require a higher level of technical training to operate and service. In addition they install and repair the equipment as an authorized sales and service agency. Example: Pressure fryers, soft serve machines, and ice makers.

    Equipment and Supply Dealers historically have been the primary outlet for the manufacturer. They handle a full line that includes all categories. They will stock items that have acceptable inventory turns and they typically sell to end users. They can and do offer discount programs to resellers.

    Broadline Distributors have evolved over time to become a major supplier of E&S products. A convenient source to the end user, E&S has evolved naturally to the broadliner. Although they have the buying power to sell a full line; E&S products must conform to the broadliners method of distribution and inventory control. Case goods such as disposables, china and glassware are adaptable; however, heavy equipment products are normally drop shipped direct to the end user without service. DSR’s have struggled with the added time requirements to sell E&S and often lack the training and expertise to improve sales or create profits in this category.

    Non-Traditional Distributors include Wholesale Clubs, Buying Groups and Internet Sales Organizations. The typical wholesale club that primarily caters to the retail market has some impact but is difficult to quantify. Commercial Foodservice Clubs have emerged with a wholesale club strategy offering equipment, supplies and food products. Internet sales organizations have made a big impact driving prices down and significantly affecting traditional distribution channels.  Buying Groups have been strongly supported over the years by the distribution community. This trend is likely to continue and new buying group alliances will emerge creating additional opportunities that will benefit the end user.

    Fabricator / Dealers are focused on contract sales combining manufacturing and finished goods (buy outs).  A competitive advantage can be achieved by combining low margin buy out items with high margin fabrication. The cost advantage realized can facilitate additional services such as consolidation, delivery and installation into one contract package theoretically creating a lower total cost. The trade off is that they become a competitor of the dealer/distributor community; sacrificing a significant share of the market.

    Service Agencies work directly with the manufacturer to resale parts and provide service. They also provide service to all the other players. Some service agents fill the role of Stocking distributors and vise versa, most notably when it comes to soft serve machines, ice makers and other specialty products.

    End Users buy direct from manufacturers based on volume commitments. These end users tend to be chain operators who prefer to have total control and employ their own in house services that distributors typically provide. Direct manufacturer sales are the exception rather than the rule.

    Obtain equipment recommendations, sourcing, and basic information to help you qualify your buying decision by going to restaurantvalues.net

  • Foodservice Equipment and Supply Categories

    Equipment and Supplies play a key role in the success of any foodservice establishment. As with all foodservice decision-making, the menu directs the process of choosing the appropriate equipment and supplies. E&S, sometimes described as non-food products are grouped into categories and sub-categories.

    Equipment – by size:
    - Light (toasters, blenders, etc.)
    - Heavy (ranges, refrigerators, etc.)

    Equipment – by application:
    - Storage and Handling
    - Preparation
    - Cooking and Warming
    - Serving
    - Warewashing
    - Custom Fabrication

    In general, items defined, as equipment will require some type of assembly or installation and may or may not require utility connections.

    Supplies and Smallwares – by type:
    - Maintenance and Cleaning
    - Cooking and Kitchen
    - Tabletop and Dining Room

    With regard to new construction and remodeling projects, furnishings are specified on the construction plans. The General Contractor, FEC (Foodservice Equipment Contractor), and the Interior Decorator provide all or part of this product category.

    Furnishings Include:
    - Millwork (Service Cabinets, Bar Tops and Bar Dies, Back Bar, Office and Rest Room Counter Tops and Cabinets)
    - Furniture (Dining Room Tables and Seating)
    - Window Coverings
    - Décor (Theme and Wall Decoration)

    Foodservice equipment manufacturers provide equipment, supplies and furnishings to the commercial, non-commercial, institutional and industrial segments that include Quick

    Service and Full Service Restaurants, Bars & Taverns, Cafeterias, Recreation, Supermarkets, Hotels & Motels, Convenience Stores and other retailers; Business & Industry, Hospitals, Schools, Nursing Homes, Airlines and Vending operations.

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