Market Report: First Choice Purchasing
Published on Oct 1 2012 5:55 PM in Features
First Choice Purchasing
Whether you are a 150-bedroom hotel or a 15-seater restaurant, getting the best quality product supplies at the best available price is perhaps the most important part of your business model. One of the best ways to ensure that is to position your business as key to that of your suppliers - be so important to them that they become compelled to offer you the the best quality and service and the most competitive price in the marketplace.
Given the fractured nature of our hospitality industry – in that the vast majority of our operators are independent, in competition and in a terribly difficult position of requiring new agreements with suppliers just to keep afloat – the options out there to consolidate your purchasing power came a little later than perhaps it should have.
First Choice Purchasing is an organisation which seeks to help out operators of hotels, restaurants and nursing homes through a complete audit of your supplier set up, evaluation of your businesses potential growth and subsequently improved terms for anything from your glassware and linen to your cuts of beef and breed of potatoes.
Located in Cork, the 18 month old company has already grown from seven clients to 100, taking on a new property every week, and so far not one client has subsequently felt the need to walk away. Well, if you improve your margins, why would you?
“When we first meet with potential new clients they are all after the same few things,” explains Eoghan Donnellan, General Manager at First Choice Purchasing. “Obviously they would like a lower cost price for their goods, but they also want to maintain the high standards that they currently have. It’s no point paying pennies for the cheapest produce, as your customers will know that very quickly and you will soon lose business. Thirdly they want to know the logistical capability of any new agreement, because it’s no use entering into a projected agreement and then find out that what you want can’t get to you in time. And finally, they want to know the credit terms.”
I’m sure many readers will relate to this, as the key to any good customer supplier relationship can be summed up in quality, price and supply chain security. “What we do is very honest,” says Eoghan. “We don’t take any of the savings, we don’t charge for our services and we only ever promise exactly what we can deliver.”
First Choice’s business model is as simple as it gets. They come in and do an audit of your monthly invoices, completely free of charge and completely confidential. This usually takes a day and, having gone through the supplier list, First Choice Purchasing then come back two weeks later with a full presentation of where they can best save you money, offer you a projection of the annual savings they can make in the different aspects of your business, allow you to meet your potential new suppliers to see what you think, then let you get on with managing your business. Through building such an impressive client base in such a short space of time, First Choice Purchasing can command far more attractive prices across their selected suppliers – 35 in total across food, beverages, catering equipment & supplies, laundry, stationery, furniture, printing, medical supplies, recycling & refuse and utilities.
“No one has walked away from an agreement with us yet. Our client retention is 100 per cent. That’s because we are open and honest. We don’t touch your profits, we don’t get involved with your credit flow or your terms with your supplier, the savings all go back to you. And they are immediate,” explains Eoghan. But where are these savings? “We, for example, could come in and look at your books and see you have 80 suppliers in total, for all your services. We then compare the prices with our chosen suppliers, who we have thoroughly researched and dealt with to ensure that standards are at a premium, and show you the difference. Then, by reducing your suppliers from 80 to 30, or 30 to 10, we save you time, back door management and above all, money.”
In a world where price is so intrinsically linked with volume, First Choice Purchasing suppliers can offer vastly reduced costs to what you may already be paying. So when would these savings come about? “After our audit and our presentation, the prospective business can decide if they wish to go with us. Having been on the other side of the table for most of my working life — I used to work as a supplier in the hospitality industry — I know what these businesses want. If they choose to come with us and make the savings which we promise them, we simply ask them when they would like to begin and then it starts.”
Remarkably simple, yet remarkably effective. Roganstown Golf and Country Club recently signed up with First Choice Purchasing. “ Jason and the team made the transition extremely easy,” explains Ian McGuinness, managing drector at Roganstown, in Swords, Co Dublin. “ We retained many of our existing suppliers – but with better prices because of First Choice – and where we moved supplier for one or other product the prices were excellent and for similar quality and service. For a small company like ours First Choice offers us the benefit of a fully staffed purchasing department with the buying power of a large group. So far we’re delighted with the results and even better because it costs us nothing.”
Eoghan and his team are based in Cork but, given the nature of the job, are travelling around Ireland most of the time, stay out of your affairs unless you have a problem to clear up, in which case they are only ever a phone call away. “It’s funny, some of our clients I wouldn’t need to be in contact with more than twice a year because they come in on the agreement, start to generate their savings and then just get on with their job, maximising their profits. Others I am in contact with on an almost daily basis. It really is different with each property.”