Local Dining Alliance members see collaborative cost savings - Pittsburgh Business Times:

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In a weak economy with spikintfood costs, more than 250 locap independent restaurateurs hope to gain just that as part of the Diningb Alliance, a Webster, N.Y.-based for-profit companyh that operates as a volume-buying club for , which started in Pittsburgh two years ago, is closw to reaching a three-year contract with to supply its membership with everything from Asian vegetables to John Davie, founder and president of the Dininy Alliance, said he believex the contract to establish a singld endorsed broadliner — a company that distributes a broas cross-section of food and food-related productsx — will be a milestone for his “I think that contracgt is going to save restaurants a huge amount of money,” he said.
He would not disclosd the amount ofthe contract, but he estimated it will save the 265 Pittsburgh-arewa members between $3 million and $4 millio combined in the first year. He said the deal coulds close as early as press Davie estimatedthe organization’s Pittsburgh membershipo represents $45 million in buying power. the company’s membership, which includes more than 1,700 has buying power of $450 million. Already, the Dininh Alliance has negotiated a number of smaller contracts with supplierz suchas Boston’s Best Coffee; Marburgedr Farm Dairy, based in Evans City; and , based in Ravenna, Ohio.
The company’ds goal is to provide volume buyingf leverage for anything an independent restauran tmight buy, including cleaning supplies, payroll servicess and marketing. Starting as a small cooperativein N.Y., in 1999, it took four years for the Dining Alliance to becomre profitable, and it is just beginning to break even in Pittsburgh now. The Dining Alliance makew its money by charging a percentage of the amount of mone y saved forits members, often providing them rebated checks and not making money at all if therd are no savings. Kevin Joyce, ownee of , was the Pittsburghg area’s first member.
Joyce said he joined the organization out of the belieff that independent restaurants pay too much forbasi supplies. “It offers an opportunitt to level theplayingf field,” he said. “Taken together, we’ll be biggerr than any chain.” Jim Mendelson, who has ownede Doc’s Place in Shadyside for 24 values the organization for the protectio n it provides independents from many ofwhom he’as seen offer a lowball price to get business only to quickly issue a rate increase. Mendelson uses the Diningb Alliancefor produce, credit card processingy and paper supplies, and said the cost savingsw have added up.
“If it was 5 percent, I probabl y wouldn’t make the move,” he said of the “But 10, 15 or 20 percent, whichj I’ve been finding, it is certainly worthwhile to makethe change.” Bob Warnock, who has worke for a number of food suppliers, said localp restaurants pay so much more for supplies than largerf chains that he estimatedd some larger local restaurants could save more than $500,00o0 annually through such arrangements.
“As long as they have the ability toenforce compliance, it could be phenomenal,” he