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Foodservice Manufacturers: Addressing Leakage In Your Trade Spend

Foodservice Manufacturers: Addressing Leakage In Your Trade Spend

Recently, I came across an article titled, There’s A Massive Restaurant Industry Bubble, And It’s About To Burst. Independent restaurants seem to be the ones getting hit the hardest. “In 2016 the number of independent restaurants in the US dropped 3%” (Source: Chicago Tribune).

It’s unfortunate that the bubble is bursting. Many areas are affected by the downfall of the independent restaurants. Foodservice manufacturers are one of the areas that may see a hit to its bottom line if independent restaurants continue to become obsolete.

The Good News for the Foodservice Industry

Even though we might start to see a decline in independent restaurants, we are still seeing some promising feedback from the restaurant industry. Each month the National Restaurant Association provides information that tracks the health of and outlook for the U.S. restaurant industry called the Restaurant Performance Index (RPI).

Restaurant Performance Index

As you can see, there was some decline in 2016 according to the RPI. However, the good news is that restaurant industry sales have continued to grow. So, even as more independent restaurants close we are still seeing an increase in the overall sales.

Restaurant Industry Sales

 

What Foodservice Manufacturers Need To Do

With the decline in independent restaurants, foodservice manufacturers need to make sure they’re on top of their contracted business & trade spend process. Are you adequately addressing leakage in your process?

If you’re not addressing some of the major issues that could be costing you money, then you may be hit harder as more independent restaurants continue to close. So, let’s walk through the things foodservice manufacturers need to be doing to help improve their bottom line.

  • Invest in a Trade Promotion Management Solution – If you’re still using Word and Excel to manage your trade promotion, then you are probably losing money without even realizing it. The right TPM solution will give you insight into areas that can help to improve your business.
  • Prevent Double Dipping – Identify double dips and implement processes to prevent them. Double dips can gradually creep up and get out of hand quickly. It’s crucial to have a process in place to minimize overpaying distributors when they double dip.
  • Monitor Contract Performance – Monitor your contracts and keep them updated. Run reports on your contracts and their performance to identify areas for improvement and opportunity.
  • Take Control of Your Deduction Balance – A high deduction balance means you’re losing money. So many distributors will deduct and collect monies for what they already deducted. Unfortunately, many foodservice manufacturers will pay both because they don’t have a way to identify if they’ve already paid the distributor.
  • Minimize Claim Processing Time – Distributors have a deduction policy time frame. Therefore, they will deduct if their invoices do not get paid within that specified time frame. If you’re not processing claims quickly, then you may risk a deduction taking place and a check getting issued as well.
  • Maintain a Low Pending Count – Pendings on your claims will hold up payment, which will, in turn, increase the likelihood of a deduction occurring. So, monitoring your pendings and addressing them early on will help to lower your costs.

As you can see, there are ways foodservice manufacturers can keep their bottom line in good shape even if the restaurant bubble does burst. Each of these things are related and should be a part of your trade promotion management process. Keeping them under control comes down to having the right TPM solution in place. If you need help with your foodservice trade spend process, then contact GoSimple to learn more about how we can help.

 

“Record low deduction balance for year-end…it truly has been our pleasure! This, amongst other reasons, validates our decision to make the switch.” – GoSimple Customer

Alanna Jackson

Sales & Marketing Consultant at GoSimple
Alanna Jackson is a sales & marketing consultant for GoSimple. She has 10+ years of experience in the foodservice industry related to trade promotion management. She is also a founding partner at Jackson Marketing Services, a marketing firm located in Dunedin, Florida.

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