Supplies are needed by every small business to survive. Although supplies may mean different things for each business (for example, supplies for clothing stores can either be shirts, pants, or shoes, while supplies for an auto company can either be four-wheeled automobiles or automobile parts), supplies are used to for the company’s daily operations with the aim of the supplies being converted into goods to be sold to consumers. The goods are expected to be translated to sales for the company in which the sales will be used to recover all the company’s expenses (cost of goods sold, tax expenses, salary expenses, and other overhead expenses), and the amount remaining from all the deducted expenses results in income for the company.
When it comes to restaurants, the supplies which are needed for daily operations are mostly food ingredients. These ingredients can be pork, beef, fish, chicken, vegetables, fruits, condiments, and other artificial ingredients (such as additives, preservatives, and flavor substitutes) used to create dishes. Unfortunately, not all restaurants can provide their own supplies for their use. Most restaurants, especially the startups, do not produce or manufacture their own ingredients or tools.
Even the most popular restaurants and fast food chains do not even produce their own goods as they partner with suppliers so that supplies will be delivered to their restaurants on a daily basis. These restaurants would rather use the money coming in from their sales for other important expenses such as salaries, rent, and other overhead expenses. It will be much more expensive for restaurants to maintain a farm or land where they grow all of their produce. Their expenses will double as they will be spending for fertilizers, water, and labor, and this does not even include the costs of purchasing and maintaining farm equipment.
Before restaurants could get their supplies, they first need to sign a supply agreement with the supplier. Here are some supply agreement and other multipurpose agreement templates you can use.
Supply agreements are needed for your restaurant, cafe, or bakery. They make sure supplies are replenished in your restaurant on a daily basis. Here are some tips when making supply agreements:
Executive summaries are found in almost all business documents, although they are more prominent in marketing business plans and feasibility studies. The executive summary is usually found on the very first part of any business document, as it is basically a summary of the entire document and prepares the reader for what’s to come in the entire document.
Executive summaries are very handy if the recipient of the agreement wants to know more about the company (or in this case, the restaurant). Even if the restaurant and the supplier have already met and discussed the terms of the supply agreement, it is much better if additional details, especially the executive summary, are put into writing to make the agreement more formal.
Your agreement with the supplier will depend mostly on the supplies he or she will deliver to your restaurant on a regular basis. That is why it is important for you to specify the terms of supply in the agreement. Supplies can either mean food or other kitchen utensils and tools; either way, the exact amount of supplies need to be delivered to your restaurant so that business operations can run smoothly. You may also like agreement templates in a word.
Listing down the exact amount or specifying the supply terms is a no-brainer when it comes to supply agreements. You do not want to run out of ingredients when your restaurant is in the midst of receiving a number of orders at the same time. Listing down a lower quantity of certain ingredients or supplies such as pork or table napkins in the agreement, then when the time comes the need for these items do not match your actual supply, you could end up in big trouble and you lose a number of customers (maybe including your loyal ones). You may also like consignment agreement templates.
The importance of supply terms goes hand in hand with payment terms. Unless you are growing your own ingredients or manufacturing your own equipment, you have to pay the supplier. Both of you can benefit from the agreement as your restaurant will be receiving high-quality supplies which you will be selling to your customers, and the benefit which the supplier will gain is receiving payment from your pockets. You may also like supply contract templates.
You should specify the payment terms in the lease agreement so that there will be clarity between you and the supplier regarding the payment terms, and also to avoid any future legal action in terms of lack of payment. You should also take note of inflation in terms of supplies as prices for all sorts of goods, especially raw ingredients for food dishes such as meat, vegetables, fruits, salt, pepper, sugar, flour, etc. gradually increase every few months. The agreement should be comprised of a section where price inflation is included. It is up you to negotiate with your suppliers on the prices in terms of inflation.
When things are going well with you and your supplier, you are hoping that the situation stays that way and there is no need to cancel any form of written agreement with you and the supplier. The relationship between any company and a supplier depends on trust and quality. That relationship develops when the supplier provides consistent high-quality products to a specific company and that company also consistently provides adequate payment to the supplier. You may also like business non-compete agreements.
Do not be afraid to pull the plug on the supplier if he or she is not performing on his or her end of the agreement. List it down in the supply agreement when you can terminate the agreement at any time when issues arise in the delivery of supplies (such as the quality of goods delivered is compromised, the late delivery of goods, arguments with the supplier, costs of goods and other restaurant items being too expensive, etc. This portion of the supply agreement should be discussed ahead of time with the supplier so that the supplier will not be surprised or confused if the situation arises when the agreement gets terminated. You may also like sample agreement templates.
Supply agreements don’t need to be very lengthy, as you will only be listing down and specifying the payment and supply terms as well as incorporating the executive summary. Keep your supply agreements short and concise, and get directly to the point so that the supplier won’t have to navigate a number of pages just to see the section where he will be paying or providing the supplies. You may also like vendor agreement samples.
Do not write your supply agreement like a business plan where you will be including sections like marketing and finance. If you want to give a short description of your product or company and how it gives an advantage to other competitors, list it down in the executive summary instead.
If you are looking for a supplier in your location or even in another location, price and quality are two factors which you should highly consider. The supplies may be cheap, but the quality is very inferior compared to your competitors, or quality is very good but the price is unreasonably high; either way, you should a strike a balance between quality and price. If you managed to get a good deal, you can maximize your profits as you will be earning more while spending much less. You may also like legal agreement templates.
Quality should never be compromised when you are selling any type of product especially when it comes to restaurant supplies. In restaurants, raw ingredients still need to be converted or mixed with another ingredient before they can be cooked and served. Customers will know if a dish does not taste well, especially if low-quality ingredients are used. The restaurant’s rating among its customers will definitely decrease and it will now be hard for the restaurant to gain new customers. You may have to compromise on price for a while as long as you won’t be spending over your projected budget since higher costs will result in lower income. You may also like business agreement templates.