How a GPO Works to Save Caterers Money

In a year where business owners everywhere are looking for ways to cut costs, it’s a good time for caterers to consider joining a GPO to reduce expenses and increase profit margins. A GPO, or group purchasing organization, is a professional association that allows its members to leverage their collective purchasing power to reap the benefits of lower pricing and better service.

Although this type of group isn’t specific to the catering industry, it has become an increasingly popular way for food service providers to save on costs. In fact, nearly 25 percent of food purchasing in the industry is done through a GPO.

So, what’s the advantage?

As a solo purchaser, you are at the disposal of your food supplier’s pricing. They may be open to negotiation, but you’re on your own when it comes to researching market prices and making a fair case for your company. Additionally, working directly with a food provider ultimately limits your access to brands as you’re generally bound to the selection of manufacturers that partner with your distributor.

As a member of a GPO, you get access to more brands, increased flexibility, and additional support throughout the purchasing process. Additionally, since you are pooling your resources with industry peers, the group has stronger buying power to compete with billion-dollar foodservice giants. Think about when you save for buying bulk goods; now, think about that on a major industry-wide level.

A great GPO will provide pricing upfront and work to reveal (and save on) hidden expenses in the supply chain that a single person may not be able to detect. You no longer have to worry about tracking market pricing and you have the added benefit of a network of like-minded individuals that can provide support for everything from menu development to equipment purchases to contract negotiations.

With that said, it’s important to find the right GPO — one that has your best interest in mind and can work with your unique needs. Here’s how to find the one that fits your company best.

Consider the size of the group

A larger group means more buying power, so be sure to ask about the size and expertise of the GPO in question. Additionally, a GPO with thousands of members is surely a reliable one that has been thoroughly vetted by its members.

Ask about local support

Since GPOs are national (and sometimes international) groups, it’s important that you have a contact that you can feel comfortable reaching out to as your business grows. It’s nice to know someone with a name and face who can support you in your time zone, as opposed to reaching out to a generic support email with no certainty about response time.

Avoid GPOs that charge fees

Most reputable GPOs don’t charge members to join, so if you’re seeing the fees add up, it’s a red flag signaling you to look elsewhere. GPOs are designed to help its members save, not to nickel and dime them out of that profit.

Request estimated savings information

A good GPO has data about past savings and provide you with a ballpark estimate of how much you will save based on your business needs. If you’re considering several GPOs, these numbers can help you determine the best fit for your company. 

Read the contract carefully

Before finalizing anything, be sure to review the contract carefully to ensure you’re not signing yourself up for unreasonable parameters. For example, a GPO should not restrict you from making external purchases and you shouldn’t be locked into a timed agreement. GPO members should be free to participate as much or as little as they want and should feel comfortable leaving the group at any time for any reason.

There’s a reason GPOs have become increasingly popular in recent years and more foodservice providers are taking advantage of the savings that come with collective buying power. With the end of 2020 approaching, it’s safe to say this year has presented economic hardships for many businesses and there’s really no better time than the present to start cutting expenses.

Learn more about the benefits of joining SB Value and getting started on your first purchase here. Still have questions? Check out our most frequently asked questions or contact us directly.