Lyle's Blog

Purchasing

Thursday, March 26, 2009

This has to go back to when I first started with Jake's. I had been unemployed for some three months after a short stint at Kmart as a temp over the Christmas season. Back then, there was only a short line of jobs in the paper and I was hitting the street daily determined to get one of them. Anything would do since I had my small family of four to take care of.

I had been to Jake's and interviewed with Kim sometime in January and something must have impressed him (maybe it was my powder blue suit, not sure). Anyway, two months later, he called me back in for a second interview. It was funny since I had been called by Frito Lay the same day for an interview later in the day.

As I talked with Kim, I told him about the other interview and he returned that he would think about me and that I should go to the other interview. I left dejected since I felt that I fit there. I called him right back shortly there after and told him that I wanted to work at Jake's. I would do anything he wanted, clean toilets....whatever it took. All I wanted was to go to college on my GI bill. While at college, he would have a dedicated employee. Kim thought about it for a second and then told me to come in that afternoon to start. I was to be the second person on swing shift pumping fuel.

Those early days as a pump jockey will be ones that I won't forget. I remember running in to an old girlfriend from school who was driving through with her new husband who had some fancy job. Although she seemed happy to see me there also seemed to be some looking down also or at least it felt that way. Another time, while fueling a cattle hauler, I laughed as my partner got peed on while bumping the tires. I told him that I would finish the job as he went up to take a shower. I found out that lightning can strike twice in the same place as I found myself next to him in the other shower shortly after finishing off the truck.

About three months into the job, I was called in and asked if I wanted to go to work in their office. I was studying accounting at the time and it was a great opportunity to practise what I was learning and jumped at the opportunity. A few months later, I voluntarily purchased some things to help develop our store and shortly thereafter, Kim asked me if I would be interested in purchasing for the restaurant. It was a job that both he and the office manager did not care for and since I was doing such a good job in the store, they were willing to give me a chance there.

I jumped at the challenge. They were buying most everything from one supplier out of Portland called Continental foods. I began looking at our local cash and carry pricing and then ran across another big supplier by the name of Pacific Fruit. Pacific Fruits pricing for many of the items that we needed were far superior to Continentals and I began purchasing some items from them. This drew anger from the Continental salesman. After all, he had been serving us for quite some time and had given us his best, why would we consider anyone else. I calmly told him that he would need to sharpen his pencil a little as someone else was offering the same thing for a better price. He then challenged Kim who quickly told him that he would have to deal with me. Upon returning to me, he threatened to pull out. I told him that I hoped he didn't but would understand if my business was not worth his while. He left for a couple of weeks and then returned with an apology. I gladly brought him back as for me, it was not about ego but about saving the company money.

Slowly, Continental began buying back various products until he and Pacific Fruit were about even in what they were selling us. Over the years, I have strived to keep that same relationship between the two companies that have now been bought out by much larger ones and are called Sysco Foods and Food Services of America.

I remember a restaurant owner who had a restaurant in the building that now houses Pizza Hut. He came down to school this young upstart in the fine art of purchasing. I wondered if he was sent by Sysco but listened as he told me that I was foolish for working so hard. "I can get you corporate pricing.", he said. "You are beating your head against the wall for mere pennies and if you don't watch out, you will offend one of the companies who will leave and then the other will just up their price once they have you.". I politely thanked him for his time and a couple of years later, when his restaurant went under, Kim and I were there at the auction where we purchased such things as the refrigerated cashier station that I now use. I went into his office area to look over cabinets and found that he still had all his purchasing files. I asked the auctioneer if I might have some of his invoices and he gladly allowed it. Ten years later, I was still buying things cheaper than he was before he closed.

Fast forward to the present and both of these companies still sell me the major part of the foods that I buy. Local meat and produce companies have tried from time to time to sell me things and I have always obliged them and none have ever been able to come close to the two large companies prices. That is until now.

It started with a meat company named Childers from Eugene. The prices and the quality of product that he offered suddenly was bringing him into the fray. I at first thought that he was low balling his prices (a sometimes common occurrence where they give you great prices and then sneak them up later). I called the salesman in and gave him my speech of how a previous produce salesman had used that tactic and even now, I will not even entertain their prices. He assured me that his pricing was sound and that he wouldn't mind staying in touch with me on them on a regular basis.

Shortly there after, Aloha Produce showed up and the same thing seemed to happen. With superior product and prices, they have now taken that part of the product away from the big two.

Both of the big guys seemed to be concerned after losing half of their product that they sold me and the longer they go without competing, the harder it will be to take them back from the locals who can give much better service and surprising better quality.

I love our new meats that are leaner and give us more steaks per pound. And the produce that is fresher and crisper. The only thing that I can figure is that the big guys thought that they could make more money off of us by sliding up the price on things that they felt they had a lock on. There just does not seem to be any other explanation especially since I have seen a increase from year to year in my food percentages.

There are two percentages that can make or break a restaurant. Together they are called the 'prime costs'. One is food cost and the other is payroll. For a restaurant to survive, they must control both to a level that the rest of the costs can be covered with the remaining percentages.

Now, it will be interesting to see just what the big boys do to try and get the business back. It is just an interesting part of the business that most don't realize when they come in and sit down. And one of the larger parts of the many variables of running a restaurant business.

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