GPO 101: Your Crash Course
GPO 101: Your Crash Course
By Clint Elkins, SB Value
Navigating the food service industry can be complex and costly, especially for catering professionals seeking to balance quality and budget. Yet many caterers overlook a powerful tool at their disposal: group purchasing organizations (GPOs).
By leveraging the collective buying power of its members, GPOs can help industry pros enhance their bottom line by reducing costs on every order. It might sound too good to be true, but there’s nothing to hide — GPOs are free to join with no minimums required.
Keep reading to discover how a GPO can transform your purchasing strategy and learn tips for choosing the right fit for your catering company.
What is a GPO?
As its name suggests, a GPO is a group of companies that organize to increase their buying power. Think about it like this: If you need one item per month, you can’t receive bulk savings unless you purchase far more than you need.
When pooling your purchasing order with other companies that need the same item, you can take advantage of bulk pricing while receiving only what you need. Since caterers typically purchase in volume, accessing bulk discounts per item really adds up.
More than just a pathway to savings, GPOs also provide members with concierge services to support sourcing, negotiation, and kitchen strategy. It’s almost like having a business partner with extensive industry knowledge!
Does a GPO work like a rebate program?
While rebate programs can help to increase profit margins, they are designed to reward businesses with cashback for purchasing certain products or brands. Any company can participate in a rebate program, receiving the full amount as an individual. Rebates also tend to run for a set amount of time before expiring.
On the other hand, GPOs rely on the strength of their members’ buying power. Discounts received are not accessible to individual companies. Since a GPO is built upon an ongoing agreement with the supplier, there is no “expiration date,” and discounts are not limited to specific products or brands.
In other words, rebates earn quick cash on certain purchases, whereas GPO membership is about long-term cost savings across your orders.
How to find the best GPO for your catering company
Choosing a reputable GPO ensures you’re partnering with an organization you can trust with your business’s interests. So before signing up for anything, research a GPO’s food suppliers to confirm your satisfaction with the source. Ideally, you’ll find that they work with nationally recognized food brands that provide safe and responsible sourcing for your needs.
If you have questions about suppliers or membership details, contact the GPO’s customer service and evaluate how well (and quickly) they can help you. Ideally, you’ll connect with a local representative knowledgeable about your market who can answer your questions without delay.
When you’re ready to take the next step, inquire about membership and review the agreement carefully. A GPO shouldn’t limit you from making decisions in your business; instead, it should allow flexibility in how much and how often you order. You should also feel free to leave at any time without penalty. Keep an eye out for other red flags, like unnecessary fees and unreasonable policies.
Finding ways to cut costs without sacrificing quality is crucial in a competitive market. Fortunately, GPO membership provides caterers a strategic advantage by unlocking significant savings and providing invaluable support services. And since it’s free to join, caterers can test it out to see if the GPO model fits into their business without risk.
Clint Elkins is the V.P. of Sales for SB Value, a Group Purchasing Organization that helps culinary professionals save an average of 17% on every food order. Membership is 100% free. No hidden fees. No extra work. Just extra profits. See how much you can save on your next food order when you become an SB Value member. Request a quote today.