Operators sold on new purchasing strategies

Nation's Restaurant News,  Nov 12, 2007  by Catherine R. Cobb

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He said when working with fixed, versus variable, pricing structures, a company must be aware of any risk premiums that might be embedded within the costs.

"This is all about which suppliers we do business with and under what terms and conditions, and is in the context of doing business with the most competitive suppliers who can meet our specifications," he said. "We will not sacrifice our quality standards."

Consultants are helping to rein in costs at Tom Catherall's Here to Serve Restaurants and Fifth Group Restaurants, both in Atlanta. Officials at both companies said that given their sizes, nine restaurants for Here to Serve and five for Fifth Group, hiring a consultant was more economical than hiring a full-time purchasing professional.

David Abes, director of operations for Here to Serve Restaurants, which owns such eateries as Prime, Twist and Lola, said his company has been working with Dallas-based Lee Plotkin of LP Enterprises for about six months. Here to Serve is still in the preliminary stages of receiving bids through the consultant and comparing what's on paper to what Here to Serve is paying.

"We are going to save a ton of money, probably a couple hundred thousand dollars," he said. "It was definitely less expensive to hire him as it would have cost us double to hire someone."

Abes would not disclose the amount of the retainer-based fee the company pays to Plotkin.

Robby Kukler, co-founder and owner of Fifth Group Restaurants, said using an outside consultant was the best choice for the company with five restaurants and a catering company.

"We just didn't feel as if it was a full-time job, but we knew we had to leverage our economies of scale," he said.

Fifth Group, which owns Food Studio, two South City Kitchen restaurants, Ecco and La Tavola Trattoria, also used Plotkin.

"So many other costs are going up that we cannot control, like health insurance, utilities, liability insurance," he said. "We have one of the most price-sensitive industries out there, so we cannot constantly pass on price increases to guests. So we asked ourselves, 'Where can we manage our costs?"

Kukler estimated that Plotkin has saved the company somewhere in the six-figure range.

ccobb@nrn.com

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