What is a GPO? And How Can They Save on Food Costs?

A GPO is a Group Purchasing Organization, which leverages the power of buying in bulk. Since many restaurants and businesses purchase the same products and ingredients, you can gain better purchase prices and improve your overall profitability by entering into a GPO. By purchasing more of the same products as part of a collective, the unit price is reduced, and businesses reap savings. When running a restaurant, negotiating prices can be a challenge and also be time-consuming. By becoming part of a GPO you’re certain to pay more competitive prices and also have a more streamlined and effective supply chain. 

Restaurant GPOs in More Detail

A restaurant GPO consists of a group of restaurants banding together to improve their purchasing power. The collective becomes stronger than the individual. Whether it be ingredients, uniforms or cleaning products, once you join a GPO you’re negotiating prices as a collective and you’re saving money. Another benefit of joining a food service GPO is they’re able to offer a wide selection of products and services to their members, which can result in more flexibility when it comes to restaurant operations and menu planning. Aligning with a GPO can also save time, and it means you’re freed up to spend more energy managing other aspects of your business.

However, there are also some disadvantages to aligning your restaurant with a GPO, which are important to consider. Firstly your businesses may be subjected to inflexible delivery schedules. This may result in higher levels of food waste, but these effects can be mitigated by the use of food distribution software, which can integrate with your GPO. Your restaurant may also experience less control over the choice and quality of the products it receives. Since GPOs prioritise price, you may also sometimes sacrifice quality. Finally, you’ll be saving when it comes to the unit prices you’re paying,  but you’ll also have to pay a membership fee to the GPO, so budget for that. Others have a fee structure that charges a fee for each delivery that is made. 

Food Distribution Software and GPOs

According to the Dining Alliance, nearly 40,000 independent restaurant operators are affiliated with GPOs, and this number is expected to grow. Leading food distribution software can automate your relationships with your GPOs, and track rebates and deviated pricing on your behalf. Restaurant managers and restaurant owners can take advantage of machine learning tools, and AI-powered software, which can analyse large amounts of transactional data, and gain more favourable pricing.  Leading food distribution software can also provide valuable insights into the purchasing capabilities of your GPO and your overall supply chain management. Via advanced analytics, powered by AI, you can analyze any potential savings and evaluate competitive, collective purchasing behaviors. 

Cashmere Systems offer a powerful suite of reporting, tracking and monitoring capabilities, which can connect with any 3rd party restaurant purchasing systems. Get in touch with Cashmere today to try a free demo of our software solutions. Let us help you find success.