Archive for Friday, May 29, 1998

THE AIM IS TO LEVEL THE PLAYING FIELD BETWEEN BIG CHAINS AND INDEPENDENT OPERATORS.

May 29, 1998

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A few years ago, Richard King realized independent restaurants were out of a key ingredient: The buying clout the big chain restaurants have.

So he figured out a way to give smaller operators the volume buying power they need to sweeten their bottom lines -- an association that's banding together independent restaurants in Lawrence and across the Midwest.

``Basically, we just try to provide the benefits and the pricing of a regional or national type of restaurant while maintaining the individuality of an independent restaurant,'' he said of his Independent Restaurant Assn. ``Everything's volume. Volume speaks for everything. The more volume we get, the better deal we have.''

It's simple economics: If you buy more stuff, you get better prices. Big chains -- like Chili's, Perkins or Pizza Hut -- that are buying food, linens and beverages for hundreds of stores get better deals than Paradise Cafe, Molly McGee's or Teller's, which are supplying one.

By banding together, the independents get clout they can use to negotiate a break on prices.

``Everybody else in the world is doing this for other industries,'' King said. ``It's overdue for restaurants.''

The association is just getting started, but King said he'd have about 40 members in Lawrence, Kansas City, Wichita and Topeka by the end of this month. By the end of the year, he expected to expand the association's geographic reach and have more than 100 members.

Here's how it works:

The association works out contracts with purveyors of goods and services used by restaurants, everything from food and linens to credit card clearing, insurance, accounting, legal services and advertising.

``We make them compete for the contracts,'' King said.

Membership is free, but restaurants pay $150 for the association to do an analysis of its books. That's intended to pinpoint what the business has been spending on supplies and where savings might be found.

``We simply say `Here's what you have and what we can do,''' King said. ``We typically find $20,000 or $25,000 a year a restaurant can save.'' The goal is to find ways to return from 2 percent to 5 percent to the bottom line.

King is a Lawrence resident who's been in the restaurant business for a number of years and does local restaurant promotions. He said the association makes money by keeping a percentage of rebates negotiated with suppliers on volume sales.

But he insists he's not in it for a payoff.

``This has been a labor of love,'' King said of the two years he's been studying and planning to start the association. ``It's just been great to be able to go into restaurants and say `Here's a better way for you to become a better operator.' There's a real satisfaction in that.''

And he draws a distinction between his organization and other restaurant associations whose focus is lobbying government on issues such as minimum wage, deductibility of business lunches and the like.

``We don't get together and talk about issues, we just look for ways to put money in the independent's pocket,'' he said.

-- Richard Brack's phone message number is 832-7194. His e-mail address is brack@ljworld.com.

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