What are manufacturer rebates?
Most shoppers have encountered rebates at some point, perhaps on larger ticket items like major electronics, but what are rebates? Rebates are a deal that refunds a buyer a portion of their money after purchase. For restaurant owners/operators, rebates are typically accomplished through Group Purchasing or Buying Organizations (GPOs or GBOs). Group Buying is the aggregation of individual restaurants into a large collective that has the purchasing power to negotiate lower prices from manufacturers and distributors. Once programs are negotiated, the GPO/GBO can pass along any eligible rebates to individual restaurants that have signed up to be a part of the organization. Restaurant manufacturer rebates are available for many of the staple items of a working kitchen, such as dry goods, poultry, meat, seafood, paper products, and many more. The issue with GPOs and GBOs is that the rebate money gets so diluted from the top down that there are typically only minimal amounts left for the actual restaurants.
Rebates can be compared to other money-saving alternatives like net Pricing. Net Pricing is a pricing practice that recognizes discounts or promotional savings before the buyer parts with their money. The list price less discounts is the net price and is usually handled through broadline distribution. This is the most common form of discounting and has the advantage of being quicker and more straightforward than restaurant manufacturer rebates. But net pricing or deviations may not be available on many of the products you use in your restaurant unless you are aware of how this process works.
The advantage of rebates for manufacturers (as opposed to up-front discounts, aka net pricing) is that buyers are notoriously bad at filling out the rebate forms and actually collecting the money. Thus, the manufacturer who offers rebates gets the advantage of incentivizing purchases by price-sensitive buyers without bearing the cost of refunding all the eligible purchasers. The key as a buyer of products with rebates is to be sure you collect the money for which you’re eligible. That entails two steps:
- Knowing the rebate exists
- Following the manufacturer’s procedure to apply for the rebate
We’ll examine these steps in detail.
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How to use manufacturer rebates… the intelligent way.
The traditional approach to restaurant manufacturer rebates has been for a restaurant manager or accountant to search through manufacturers’ and distributors’ websites, checking for the presence of rebates on goods recently purchased. Once managers locate a rebate, they have to read up on how to apply, which often means downloading and printing a rebate form, filling it out by hand with your purchasing and contact information, and then attaching copies of relevant purchase orders or invoices. The entire process is usually such a hassle that many restaurants have decided rebates aren’t worth their time, especially given the diluted money return they’ll get back anyway.
In comes the RASI Manufacturer Rebate Program. RASI has rethought the rebate process from the ground up to optimize for convenience. Our Manufacturer Rebate Program and Purchasing Services take all the hard work out of redeeming rebates. We provide a dedicated purchasing team that monitors your purchases, conducts rebate searches, and completes applications to manufacturers quarterly. Then 60 to 90 days later, RASI service fees are reduced by an amount equal to 100% of the rebates.
RASI Purchasing Program & Manufacturer Rebate Program
Recognizing the inefficiencies of Group Buying Organizations (which always claim a slice of revenue for themselves), RASI has built a program that eliminates the middleman and delivers 100% of rebate savings directly to clients. RASI’s program gives you the power of a dedicated purchasing team so that even small restaurants can benefit from the negotiating power of high-volume organizations. RASI will conduct a Market Basket Analysis of your restaurant’s purchases for interested operators, comparing your costs against other restaurants and revealing where and how you can save money. The savings RASI realizes are not tied to specific distributors, so everyone can participate and bring down their Cost of Goods (COGS).
How rebates combine with menu optimization to improve restaurant profitability
When considering how to improve profitability at your restaurant, it’s critical to reexamine your COGS regularly. Are you purchasing ingredients at the best price, in the most cost-effective quantities? Can you save money by switching to equivalent products made by other manufacturers or changing distributors? Ask yourself these questions at regular intervals, and take the time to conduct a thorough analysis. Or, even simpler, participate in RASI’s Manufacturer Rebate Program, which will answer these questions for you.
Beyond finding efficiencies within your current buying patterns, you should consider where you can optimize your menu to reduce costs and increase sales. If you haven’t established a menu engineering process with your chef in the last year, now is the time to do so. A well-engineered menu will expose what dishes are selling at a high velocity with low margin as well as poor selling plates that would put more dollars to the bottom line if sales were to increase. When you combine these changes with optimized purchasing, you’re in a position to make substantive improvements in your COGS.
Using software to increase restaurant profitability
Once you’ve whet your appetite for savings through manufacturer rebates, it’s time to take a close look at your financial performance. RASI offers purpose-built software for restaurants to help you get a handle on your costs, understand your financials, and chart a course for increased profits. As a leading restaurant accounting software solution, RASI integrates with your POS system so that you have the latest sales and performance data. RASI’s system delivers integrated accounting, compliance, payroll, cash management, treasury solutions, and financial operating metrics.
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Thousands of restaurant operators across the nation have made RASI their choice for restaurant management. When you sign up with RASI, a dedicated account team will onboard your management staff, configure the software to match your operational flows, continuously provide industry education and best practices, and coach your team on how to use the software to set and meet financial goals. Contact us today for a free demo!