How to keep supplier price rises under control
To keep supplier price rises under control, compare each product’s price per kilo, litre or unit on every invoice with the previous one. Focus on the products that weigh most in your purchasing and, when one goes up, recost the dishes that use it. That way you decide in time whether to raise the menu price, adjust the portion or switch products, before losing margin for a whole month.
Why price rises go unnoticed
- They arrive on the invoice, not on the order. You order the usual and the new price turns up days later, among dozens of lines.
- They are a few cents. 3% on one product goes unnoticed. On twenty products over a year, it doesn’t.
- The pack size changes. The tin goes from 1 kg to 900 g at the same price, or the 25 kg sack becomes 20 kg. If you only look at the pack price, you miss it.
- A discount disappears or a new delivery or packaging charge appears.
Step 1: pick the products to watch
You don’t need to watch everything. Sort a month of purchases from highest to lowest spend. A handful of products usually make up most of it: oil, meat, fish, dairy, your best-selling drink. Start with those 15 or 20.
Step 2: always compare the price per unit
Convert each price to euros per kilo, litre or unit, before VAT. That way a price rise and a pack size change look the same.
| Invoice | Pack | Price before VAT | Price per litre |
|---|---|---|---|
| September | 5 l jug | €42.50 | €8.50 |
| October | 5 l jug | €44.75 | €8.95 |
The oil has gone up €0.45 a litre, 5.3%.
Step 3: check the delivery note and the invoice
- When the goods arrive, check quantities, weights and condition against the delivery note, and write down anything missing or damaged before signing.
- When the invoice arrives, compare it with the delivery notes and the agreed price. If you have an agreed price, get it in writing.
Step 4: see which dishes it hits
A price rise only matters for what it takes from each dish. If a portion of patatas bravas uses 0.05 l of oil, the rise in the example is 2.25 cents per portion. At 300 portions a month, that is €6.75 a month on that dish alone. And oil goes into many dishes.
To see it you need the recipe cost of each dish with the new price. You can recost one in the recipe costing calculator.
Step 5: decide what to do
- Raise the menu price by a few cents on the affected dishes you sell most.
- Adjust the portion or the garnish, if the dish allows it.
- Switch product or pack size, for example to a bigger jug.
- Ask another supplier for a price and use it to negotiate with yours.
- Do nothing, if the dish can take it: that is a decision too, but one made with numbers.
How often to check
With every invoice, if you can. At least once a month, for the products on your list. The later you see it, the more days you will have sold at the old margin.
Checking every invoice line by line takes time. It is exactly what Rikavo does: it reads your invoices and delivery notes, tells you about every price rise and recalculates the margin of the dishes that use that product.