Today, independent restaurants use a multi-distributor purchasing strategy to get the best price for an item, splitting orders for each product category between several distributors, according to Andreas Koutsoudakis, Co-Founder of TradingTable.
Operators are ordering blind, and distributors are chasing orders the old fashioned way – pen, paper, fax, and phone calls.
It used to be that restaurants often divided up their orders between two or more distributors to see who charged the least. But operators only found out the price after the product was delivered.
But, no more. Along with his Co-Founder, restaurateur Gus Plaitis, the TradingTable platform they built allows restaurant operators to source products, connect with their choice of distributors, and access true real-time pricing from their distributors and submit all of their orders from one platform online, making the process far more efficient.
“As an attorney representing restaurants, I saw what was happening in the industry, from a regulatory standpoint, from a food cost standpoint, from rising rents and overhead,” says Koutsoudakis. “Comparing them to what it was like in the ‘70s, when our fathers first came here from Greece, it’s a totally different picture today,” says Koutsoudakis. “Back then, the margins were so big because labor was cheap, rent was cheap, and food cost was low. You didn’t need to be a good operator to make money. You had room to make mistakes and still go home with a profit.”
That’s no longer the case. “The cowboy days are over,” he says. “Today, you have to be at the top of your game to stay relevant and in business. The only way you can do that is if you’re keeping up-to-date with all the different solutions out there. Our solution helps operators, distributors and suppliers with the glaring inefficiencies currently inherent in the purchasing process between distributors and restaurants,” he says.
“In the past, distributors’ sales reps would walk into a restaurant, hope to get its business, and basically say, ‘give me your order sheet and I’ll get you pricing,’” says Koutsoudakis. “Now, all they need to do is build a relationship with the restaurant, then connect with them on Trading Table. You won’t have to do anything with your order other than enter what you want. There’s complete transparency and visibility into the relationship and complete exposure into all the products that a distributor has.”
Right now, the average independent restaurant owner doesn’t have buying power, Plaitis says. “If you’re Hilton or a large national chain, you can command your pricing. But an independent operator, who has one, two or three restaurants, doesn’t have that kind of buying power. So the way they keep distributors on their toes is having multiple distributors for each product category, three guys splitting your produce order, another two or three vendors for your grocery items, and so that’s how you end up with 15-20 distributors. Through that process you have sales reps who manage on average 40 restaurants, and restaurants who manage between 15-20 sales reps. They’re all left playing phone tag. ‘Joe, I’m ready to place my produce order.’ ‘Sorry, I’m with a customer, I’ll call you back.’ They call back, but now it’s lunchtime. Or dinner. It’s a $263 billion industry. That’s how much business restaurants placed with distributors last year, and it’s crazy that it’s done offline the same way it was done 50 years ago.”
The TradingTable platform, on the other hand, brings together operators, distributors and suppliers and streamlines the process of buying and selling for both operators and their network of distributors.
It also allows distributors to get more business because sales reps are no longer tied up in the time-consuming tasks – usually 50 to 60% of their day — of order-taking and price-setting. “In the offline world of foodservice distribution, the primary job of a sales rep consists of four tasks: order taking, price setting, collections and consulting,” says Plaitis. “There is no time to meet with an operator and say, the price of avocados is going up next week, or Latin dishes are a really big trend for 2015. You’re sitting there, wasting time, just taking orders, not building new accounts for the distributor, or enhancing existing accounts, or helping the operator in any way, which is what operators really want. Our goal was to eliminate those first two tasks of order taking and price setting from the sales rep’s role in order to free up time to be a true consultant, improving a distributor’s ability to help operators improve their business, thereby improving the distributor’s business.”
Today, TradingTable solves that problem by automating order-taking and price-setting functions. “No one is doing that,” he says. “We created a pricing engine that’s controlled by the distributor, where he sets certain variables, parameters and a range of pricing for each one of his products. What the proposed order from the operator turns out to be will determine the price per case for that operator from each distributor,” Plaitis explains. “Then the system optimizes that and tells the operator, this is the best order combination from your network of distributors. At that point the operator can select and modify his order. TradingTable goes within the operator’s network, retrieves pricing from each distributor, depending on the size — cases, line items, and other variables — and we provide real-time actual pricing, as opposed to directional pricing.”
Distributors will set their minimum and maximum standards when they create their account. “This is what it takes to order from me, the total number of cases and line items, this is my optimal order, this is my best-case scenario. If an operator does that, he gets great pricing. From there, the platform engine reads and interprets, based on the total cases and line items ordered and says, this is your price on your proposed order from me,” says Plaitis.
Do sales reps need to fear for their jobs?
“The need for that human interaction and input from sales reps who are ‘in the know’ is how to understand the market and report back to operators. Those who are just focusing on order-taking and price-setting are going to have to find a way to enhance their consulting skills and market knowledge. It’s a really good tool for a smart sales person,” he says.
Another important way TradingTable helps operators is that it is the only platform connected directly to suppliers. “We don’t connect with the distributor for product information. We connect with the supplier and we do that in a way that provides pictures of what the product looks like on the plate, in a case, on a palette,” adds Koutsoudakis. “We have nutritional information, point of origin, allergens, ingredients, recommended preparation methods and more. Any kind of data point is brought onto the platform for every product, not just the five products a distributor buys from Heinz, for example. Instead, we’re going to that supplier and saying, this distributor buys certain things from you. Why don’t you publish your entire product line on TradingTable for free so every operator can view that information? It expands the portfolio of both distributors and suppliers.”
“What TradingTable does is provide a platform for suppliers to publish their products to TradingTable for free, where any operator in the world can see it,” Plaitis says. “Then, if you find something you like, and which distributor in your network can get it, or you want to get more information, you can do it all over the platform.”
And new products operators might like? “They can say, ‘I found this product, I want to buy it’ to the distributor, and it’s helping the distributor. You’re providing a catalog with 100s of 1000s of items that their sales reps don’t need to do a single piece of selling on. It’s all there for operators to view and suppliers are publishing for free and getting visibility that just doesn’t exist anywhere else,” says Koutsoudakis.
It’s also a terrific resource for chefs looking to find new products. “Say you need gluten-free pancake mix,” he says. “You can view every supplier who makes it, then see if your network of distributors carries it. If not, you can request more information.”
He recalls a young businessman in the meat business. “He had 50 or 60 operators he was selling meat to in New York and he decided to take the business and make it into a regional broad liner. He went from 50 skews to 2,500 skews but operators still only saw him as a ‘meat’ man. ‘How do I expand that to, I also carry all the other things you buy, why don’t you let me compete and see what I can offer you on those?’” he says. “It was an easy way for him to explode his business.”
And what about the businesses who have a relationship with their distributors that goes back years? “The value for that operator is to have access to what else is out there,” he says.
“You’re buying blind on a good chunk of items you expect to stay static,” Plaitis says. “The pricing system as it is now is, ‘what are you ordering from me, then I’ll go back and put a price on it, and you’ll see it when I put it on the invoice.’ You have to make the decision before you see the price. With TradingTable, that same process happens in a structured way, and you see the price and modify your order, all upfront. It’s true transparency.
“It’s what’s already happening, except now, it’s happening much quicker, right in front of you,” says Koutsoudakis. “As far as sourcing goes, there’s nothing else like this out there.”
For more information, visit www.tradingtable.com.