Exploring Manufacturer Rebates—and How Restaurant Owners Can Get Them
The restaurant industry is known to run on razor-thin margins. Most operators are drawn to the business due to a passion for food and hospitality rather than a motive for profits. In fact, according to the National Restaurant Association, more than 7 out of every 10 restaurants are single unit operations.
However, operating small may come at a price. Restaurant groups of all sizes struggle with achieving economies of scale and taking advantage of all the ways they can increase their margins.
Manufacturer rebates for restaurants is one cost-saving measure that any operator can take advantage of, but few do. Keep reading to learn about how restaurants can earn cash back from manufacturers.
What are manufacturer rebates?
Manufacturer rebates in the foodservice industry usually come through Group Purchasing Organizations (GPOs). Restaurants of any size can participate in the buying power of these groups, which unlock lower pricing than what’s available as an individual business due to the bulk of the orders from the GPO.
The manufacturers that work with the GPOs then provide incentives for members to work with them. Those incentives are manufacturer rebates, which offer an opportunity for restaurants to save even more money on the items they buy. The rebates give major operators more wiggle room on plate costs and, at scale, on margins.
Single-unit operations and smaller chains simply don’t have the funds to buy at such a large scale, nor would they have the space or demand to order at such high quantities without the purchasing power of a GPO.
Are manufacturer rebates different than the discounted rates that distributors can offer?
Yes—in fact, they’re two totally different things. Consider major foodservice operators that own restaurant brands that are found in every corner of America. Consumers repeatedly visit these chains because they know exactly what to expect, so it’s vital that ownership can create consistency in every single location. As a result, these major operations are motivated to buy in bulk.
The orders are so large that the major operators often have leverage in negotiating prices with distributors. These pre-determined agreements are only between the distributors themselves and the businesses they serve. Small restaurants and restaurant groups may also be able to negotiate lower prices with their distributors, but because their orders are smaller, they may not be eligible for the best possible pricing on items without the support of a GPO.
Why would I want manufacturer rebates and not net pricing?
It’s a fair question! Unfortunately, not all manufacturers offer net pricing so they can protect their bottom line. Some may offer no special pricing, or only discount products to a certain point so they can route cost savings through rebates instead. This method blocks the “market”—or the businesses buying their products—from knowing just how low manufacturer prices can go.
Other manufacturers choose to track the rebates that businesses redeem to compare against price deviations from distributors in order to maintain price control. To put it simply, when rebates are filed, it gives the manufacturer an exact account of how much a buyer purchased against what the distributor actually sold, ensuring that no significant discounts are being offered to ineligible customers.
Long story short, you still want to get manufacturer rebates in case the products you buy the most aren’t eligible for net pricing.
Aren’t manufacturer rebates difficult to track?
Traditionally, yes—especially for the small businesses who could use them the most! Enterprise-level restaurant groups could have members of their team match rebates to the products their restaurants use frequently, but that’s just not a reality for a majority of restaurant owners.
A restaurant will make a large order, then have to look up each individual item’s manufacturer and see if purchased items are eligible for a discount. Then, proof of purchase must be submitted, along with invoice line-item details, in a timely manner in order to redeem the rebate.
Only after all of these steps are done correctly and on time will a product manufacturer issue a rebate check. Luckily, this process just got a whole lot easier.
Why would I go through this trouble for manufacturer rebates?
Manufacturer rebates may sound like too much trouble to track, but xtraCASH eliminates those hurdles to help restaurant operators get more money back in their pockets.
xtraCASH, a free program developed by xtraCHEF, gives restaurants of any size or scale access to Buyers Edge Platform’s GPO, one of the largest in the entire foodservice industry. By opting in, participants can unlock rebates for more than 165,000 products from over 350 different manufacturers.
Participants in xtraCASH are given free access to xtraCHEF’s best-in-class restaurant invoice digitization and extraction technology to find manufacturer rebates they’re eligible for, taking out physical product matching and replacing it with a streamlined solution for cash back.
There’s no need to change your buying behavior. You’ll retain your current distributors and the preferred pricing in place with them, while xtraCASH finds additional savings through manufacturer rebates available through your new membership in the GPO.
Manufacturer rebates just got a lot more appealing, right?
xtraCASH sounds awesome! How do I get started?
To get started, all you need to do is sign up for xtraCASH and opt in to earn manufacturer rebates. Then, xtraCHEF and Buyers Edge Platform will find the rebates you’re eligible for. It’s as easy as it sounds!
Participants in xtraCASH not only earn cash back on their restaurant purchases, but also get data-driven insights into food cost and purchase management, which can make all the difference for business owners operating on slim margins and reduced labor.
Don’t leave money on the table. Make the most of this opportunity and start earning extra cash today!
Let xtraCHEF do your dirty work.
See how our platform sets restaurants of all sizes and service levels up for success by scheduling a demo with a Product Specialist.