Every food truck owner needs to buy goods for the operation of their business and these will often represent a large proportion of their overall costs. Any reduction in these costs will have a significant and direct impact on your profits. Negotiating your prices with your suppliers is the best way to achieve a cost reduction in this area.
When dealing with your vendors or suppliers, it is important to remember that you are usually dealing with salespeople who have been trained to get exactly what they want from you. However, negotiating with them need not be one-sided.
Practical tips to help your food truck supplier negotiations:
All good salespeople think about what they want from a meeting with a customer well in advance. They will know precisely what they want to achieve and how far from this target they will stray. Most buyers only start to think about what they want when in the meeting itself and so they are often unprepared to strike the best deal.
For a start, get hold of a price list. Then take a few minutes before a meeting to think about the prices and terms you need. Consider the arguments you will put forward to get these. What compromises would you be prepared to make? What can you offer them that they value, but which might cost you little? Can you barter? Even if you are short of time, setting aside just ten minutes to do this will give you invaluable negotiating muscle.
The first and most obvious way to get a better price is to ask for it, yet few people do. They just accept the list price. Get into the habit of asking, “What is my discount this month?” Some salespeople may just laugh and say “Good try,” but many others will respond: “I can only give you 10 per cent, I’m afraid.” That’s 10 per cent more than you had before.
Alternatively try asking, “What is your best price?” If they ask why, give any excuse: “Introductory discount for new customer”; “Loyalty discount for repeat customer”; or just state that you need a better price. You have nothing to lose.
Use the competition
Suppliers make the best offers when they know they have real competition. So, having established that you have other suppliers who can step in, drop their names early into a conversation with your current salesperson. However, keep the details of any rival offers unspecified as this puts the pressure on them to better an undisclosed proposal. They may start throwing in other concessions that you didn’t even know existed.
Seek other perks
Things other than just price can be important to your food truck business. Before narrowing the discussion down to price, broaden it to find out what else the supplier might be able to do for you. They might be able to give you extended payment terms, or offer you lower delivery charges if you agree to let them deliver when it suits them.
While the salespeople may not be able to give you additional discounts, their marketing department may be able to contribute in other ways. Such as providing you with a branded refrigerator for your truck if you sell their beverages. Suppliers often have a separate marketing budget and are eager to find good ways to spend it.
The supplier may also be in a position to offer added value for your customers, like give-aways. Only after you have explored all these extras should you focus on price.
Never accept the first offer. If you do, you may find that extra charges begin to appear because the salesperson thinks you will just accept them. Start low and trade every concession for something specific that you value: “I’ll do this if you do that.”
If they reject your counter offer, give yourself time to think. Use a calculator to stall for a moment, if necessary. Then amend your proposal if it suits you, but make it tougher for them each time you do this. For example: “OK. I will pay your price if you agree 60-day payment terms.”
Learn from your past
Think about what went well in negotiating previously with a supplier, and use it again next time. Conversely, remember how you lost out last time, and remember the salesperson’s approach. To stop them always doing the same to you, change your approach occasionally. Arm yourself with figures to rebut the claims they made last time. Rehearse the arguments you should have used then and will use next time. It always pays to take notes of negotiations to jog your memory of whom you dealt with, the prices agreed and the promises they made.
Pool your requirements
Don’t negotiate on the basis of one order, but pool as much of your requirements together as possible and negotiate on the basis of your quarterly or annual purchases. Consider pooling your order with other food truck owners in your area. Bulk orders generally receive more generous discounts.
Be a friend
It can’t hurt and it could help to make friends. Salespeople have limited room for maneuver and if they are not authorized to give you the discount you seek, they will need to make a case to their sales manager. They are more likely to do this if they like you.
If you can find other ways to help them meet their targets, you can also negotiate better terms. For example, you will have them eating out of your hand if you can introduce them regularly to prospective customers. So develop your network.
There’s more to life than price
In many cases, there are other factors that can be as crucial to your business as price such as reliable delivery, expert technical assistance and so on. Bear this in mind before walking away from a deal, and if you do walk away, never burn bridges – always remain on good terms with former suppliers.
Remember that the most successful negotiators go into meetings armed with facts and figures. They know what they want, when to bow to the inevitable, what their limits are and what they can trade. They leave their emotions at the door and are prepared to walk away if the deal is not right for them. They can do this because they know they have alternatives to turn to.
If you follow these tips, you will improve your food truck supplier negotiations and ensure you always get a better deal for your food truck business.