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Is Your Vendor Relationship Strategic?

Is Your Vendor Relationship Strategic?

by Sean Kashanchi

This is the second article in our series for restaurant leaders and describes the first step of The Golden Thread, Gallup's strategy for getting ahead of your restaurant competition. Read the first, third, fourth, fifth, sixth and seventh articles in this series.

It may seem odd to begin The Golden Thread with suppliers, but putting vendor relationships last is a mistake. Gallup's findings show that constructive B2B partnerships can lead to higher customer engagement. And vendors can provide a tremendous amount of value that restaurant leaders too often leave untapped.

Build a More Strategic Partnership Today

Good vendors want to be partners. What's more, they possess the expertise and equipment to be better partners than they currently are. Begin by:

  • creating a joint business plan with your suppliers and vendors for your new ventures and growth plans
  • talking with your suppliers and vendors about your problems so they can offer solutions

Then, gear all solutions toward profit margins and your customers.

Increase Your Profit Margin

Contract negotiations aren't the only place profit margins can be controlled. A good partnership should be designed to increase margins everywhere.

Pay close attention to the interactions between humans, machines and tech, because that interface can siphon margins quickly. The best POS machine in the world, for example, won't improve margins if it takes so much training that few employees learn how to use it properly.

A dishwasher that can only be fixed under warranty by a certified mechanic is going to be a liability if there are no certified mechanics in town. Suppliers who are looking out for you will find profit margin leaks and ways to plug them.

Improve Customer Experience


Brand promise and purpose dictate the customer experience, and suppliers need to understand your promise and purpose very well. Whatever affects your customers' experiences first should be a priority. That experience can be anything from a wrapper that keeps a taco shell crisp to the HVAC unit that creates an oasis for customers to dine in. If your customers frequently get takeout from your restaurant, control for that experience, too.

Vendor expertise is vitally important -- smart suppliers know the trends and potential trends in their industry and can bring that knowledge to you. And if you plan to grow your third-party delivery business, think about which of your suppliers can help you do this faster, smarter and more efficiently for your customers. How can they help you give your customers the same experience at home that they receive when dining within your establishment?

Take note of how your workers deal with suppliers and vendors. Ask your operators to rate the "ease of doing business" with your various suppliers (i.e., the liquor supplier or the produce delivery team). Talk to employees about their interactions with the materials and equipment they need to do their jobs. The closer the person is to the object, the better their perspective. From that, gain insights to guide product improvements that would help deliver your brand promise to your customers.

Vendors can provide a tremendous amount of value that restaurant leaders too often leave untapped.

Ideally, you should be able to invite your vendors to assess the kitchen and floor with you. A real-world perspective helps them visualize your needs according to their abilities and plans. Thinking futuristically can spur ideas that will benefit restaurants' growth and vendors', too.

If you have off-premise dining (OPD) plans or current operational issues -- and a lot of restaurants do, as that's the direction the industry is taking -- ask vendors to consider how they can support your initiatives or help you optimize your new offering.

It's Your Choice

Just like customers have the choice to give you their business, you have the option to give your vendors yours. A cost-benefit analysis only shows part of the profit potential available to you -- in fact, Gallup's B2B report, Guide to Customer Centricity: Analytics and Advice for B2B Leaders, shows that 60% of B2B clients are emotionally indifferent toward their suppliers. This is evidence that they're missing an opportunity to push partnerships to a more strategic and emotional level -- one that generates real business growth.

Suppliers who are looking out for you will find profit margin leaks and ways to plug them.

Your suppliers and vendors can make the customer experience better, neutral or worse. It's up to you to predict which of these is most likely to develop from your partnerships. Your suppliers can be more than just a transactional partner. They can be a strategic partner as well. If yours aren't eager to fulfill both roles well, look for a vendor that is.

Take these steps to gain a framework for sustainable business growth:


Sean Kashanchi is a Senior Managing Consultant at Gallup within our Retail, Restaurant and Hospitality Practice.

Jennifer Robison contributed to this article.

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