Orderly is here to help restaurant owners run a smarter business. And we can’t do that if we’re just giving you our perspective.
So each month our CEO, Bill Jones, takes a deep dive into a topic of his choosing. He’s got thoughts, tips, and things to watch out for – all designed to help you out.
And we have them right here, for you.
Why We Need Supplier Price Transparency
What do food supplier pricing, healthcare costs, and airline ticket prices have in common? Turns out a lot. Unless you’re a really big player in the restaurant market, you’re pretty much kept in the dark as to whether or not you have good prices. You also know little about how the whole pricing thing works.
The reason? We (thankfully) live in a capitalistic system, and the people with that information deem that it’s in their best interest not to share it with you. It’s not that anyone is necessarily a “bad actor” – it’s just they have a job to do, which is to maximize their profits. Think of it this way: If you knew that all of your customers would be just as happy and buy just as much from you if you doubled your prices, you’d probably do it in a heartbeat.
The problem is that bad pricing makes your profitability suffer, and we all know how hard it is for independent restaurants and small groups to be profitable. That’s the thing that inspired Orderly to invest in creating the Restaurant Food Index (RFI).
It’s an ambitious project. To pull it off we needed an up-to-date feed of enough purchases to compile a statistically-accurate price trend for ingredients. We had to know:
- That BNLS SKLS CHK and B/S C BREAST are actually the same thing
- How to resolve the purchases to a common unit of measure.
Finally, we needed a wide diversity of suppliers represented. So, you need enough purchases to understand geographically-significant pricing differences.
Today, we can do all of this for 958 ingredients (when we launched a year ago we had 115!). It’s already pretty great, and it’s only getting better. Compiled from more than 18,000 line item purchases processed every day, the RFI provides useful benchmarks from the prices restaurants like yours actually paid for ingredients.
So why can a reasonably small company like Orderly do this where no one else in the industry (to my knowledge at least) has been able to (or has wanted to) do this? The reason is that our data-driven, do-it-for-you approach requires it. For us to provide value for your customers, we need the data. So, in the true spirit of capitalism, it is in our best self-interest to do the mind-numbing, crazy-inducing, and super-tedious chore of detailed line item entry. Fortunately for you, it means that our self-interest aligns with what our customers need.
You might be able to tell if $382 is a good price. But you can now know if $3.82/lb is a good price for 6 oz Chicken Breast.