Cheap Versus Value

Learning the retail side of the restaurant business is a lot harder than I thought it would be. When I first interviewed with "Mr.T" almost five months ago, I did it with the swagger of someone who thought they knew everything, had seen everything, and had used everything they had to offer. I'd often been used in past restaurants as the procurement manager. I was good with budgets, how to prioritize acquisitions, and knew when to order items to put it under the right time-line. Unfortunately, all the big-ticket items were generally ordered from the head office, so I had no idea of the $-to-value ratio so many restaurants depend on. I was a "small-wares" expert thrust into a big-ticket maelstrom.

I now have an 8' x 10' room full of catalogs and the equivalent on my computer to put together bids and quotes on everything from toothpick dispensers to Vulcan 8-burner ranges and $20,000 custom made exhaust hoods. The ranges of quality for each item is stupefying, with varying prices according to construction. I'm now learning the hard way which brands I can successfully suggest to those who are wanting Lexus quality at Hyundai prices, and those which should never be uttered, even to those with limited accounts. One that comes to mind today is an account I visited yesterday who bought a sandwich grill, along with thousands of dollars of other things, from us back in April. This one item was of the, shall we say, discount variety. This deli/bistro is not high volume to say the least, but the grill is trashed. Screws snapped off, electrical cord fraying, grill coating peeling away. It was also about half the price of the "quality" grills we offer, the buyer opting for the frugal option. The manufacturer was contacted, and even though it had a 1 year "limited" warranty, they would not honor it. You gets what you pays for. Unfortunately, the salesman forgot to tell the customer about that, or else the buyer chose to ignore the warnings. I think the latter is closer to the truth.

Our company quotes many ice machines, four-burners, deep-fryers, etc. every single day. It's not an exact science, believe me. We have a list price and a net price. Our customers never pay list price, a number picked out of the blue by the manufacturer. The trick is to present a sale price that the customer can live with. Or pay for. Our big customers get bigger discounts to keep their business. But, you also don't want to overprice something to the smaller customers, since they may be big someday. Also, nicer people get better deals. Today, a chain manager came in today for some required items, thermometers, 1/6 pans, other stuff. He was also a manager who 6 weeks ago had me special order a heated fudge server ($295 list price), took up an hour or so of my time, and then reneged on the order when it arrived because he was over budget for the month. Normally, he would get a 25% discount. Today, he got 10%. I'm a bad, bad man. Although I think I will still sleep very peacefully tonight.

Now, some may think from this that the list price we post is over the top. It is not. We sell heavy-duty, restaurant quality items. And most of you know what kind of abuse this stuff has to endure. I went looking at Kohl's last night and we had some of the same stuff, and they were higher on almost everything. It's all about relationships. We have great relationships with very small establishments and huge conglomerates alike. It's all about reading people and figuring out if they're trying to use you. And if it's them or their bosses pinching pennies. Or if they can really afford Libby or fine crystal.

One company we're dealing with right now started out very promising in a mucho up-and-coming waterside tourist trap. Great credit, good concept, very promising indeed. Opened up in late spring to booming business. Unfortunately, one of those where the husband was starting up a business to get his wife involved in a business. Well, 50,000 dollars later, the marriage is as failed as the restaurant. With us holding the bag, and the debt. Who's at fault, the salesman who sold them all of that equipment, the accountant who okayed the credit, the owner who okayed all of the above? Good luck phoning the now-bad-credit customer.

As in life, we must all learn who to trust, who we must keep a short leash on, and those who need to shop at the "used equipment emporium" down the road.