?, incentives or kick-backs, do they exist?

Discussion in 'Professional Chefs' started by w.debord, Nov 9, 2002.

  1. w.debord

    w.debord

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    I've heard things phrased a couple different ways...that chefs recieve "incentives" or "points" from food companies, is that true? If so how does that work?

    I don't know much abut this...but I remember years ago when I was catering with my family and there was a big "to-do" over who was ordering the linens for parties. We were busy cooking and not very good with business issues....and we always prefered the parties ordered their own linens thru the party consultants so it would be one less hassle for us to attend to. But then we learned that the party consultant got some sort of kick back from the linen compnay since she used them so often. That of course angered my parents. It's been a while, I forget how it ended...other then we provided the linens for the big parties ourselves.

    Is this so? Do people get "kick-backs" for volume purchases? If so, how is this done? Panini you wrote about chefs you know get them from cisco type companies....is that so?
     
  2. snakelady1

    snakelady1

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    Wendy I know that when I was with Sodexho/Marriot purveyors entered bids and rebate type programs. Individual accounts then had to order prefered products so that corporate would get the rebate or kick back. The one I remember is Tyson Chicken ....when you are dealing with really big companies you have to follow their rules, this was sometimes a pain as while I was struggling to get the best price on all my food I would be restricted from ordering anything other that what was contracted at corporate. Valley Bakers Association has an end of the year rebate on all purchases but you have to be a member......
     
  3. kuan

    kuan Moderator Staff Member

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    Well, in an earlier post I talked about how you could attend food shows, book 10 weeks worth of product and get points. You then turn those points in for premium items like TV's VCR's, Stereos, and other items. You can even get a small fishing boat with a trolling motor. By knowing people and booking a coupla hundred grand in product, you could amass enough points to get quite a lot of good stuff. In my case I always gave the stuff to the employees either as gifts at the employee christmas party or for employee of the month awards.

    Sometimes you get invited to their suite at big food shows. Sometimes they take you out to dinner, a round of golf, etc.
    Sometimes you can get them to donate free food to your cause, like if you're doing a charity event.

    Kuan
     
  4. shroomgirl

    shroomgirl

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    Absolutely.....Any Chef d'Cuisine meeting has salespeople swarming around, there is definite back scratching happening. I saw a fish saleswoman totally harrass a chef at a Beard benefit for 10-15 minutes. There are prizes donated to contests where you have to use a certain product. There are companies that give the cost of food to a non-profit event ...the company gets access (HUGE thing to them) to chefs, they get to write off the donated food, and they get PR for donating....win win win.....
    why wouldn't you do it?
    My farmers don't understand alot of that sort of politics....I don't try to explain what they are up against, all I do is show up with really cool fresher than fresh products and share...salsify was a hit.
     
  5. panini

    panini

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    oh yes! very popular here!
    contract to buy out 90 percent of your products from sysco and the rebates will cover any bonus incentive program you have. You also contract that if you want something they don't have, they will get it for you(usually at a higher cost then normal, they just pick up the phone). They basically cut out any other vendor. They have been cutting my throat for years with their crap cheesecake and over priced frozen shortening desserts.
    The chef just shrugs his shoulders and tells me there is nothing he can do. Sysco type vendors have ruined our hospitality market here. They thrive and are very parasitic on a uneducated palate. They tie the hands of the purchaser!!! In a short word( they suck!!!!!) The sales people are order takers and provide no technical support what so ever. The practice of kickback is rampant in this area and they have found numerous loopholes to make it legal.Sorry for the rant, few margaritas out by the pool, 89 deg. today. Hate large monopolous food vendors!!!! The bottom line is much more important then the customer!!!!!
    Am I crazy, but didn't most of our fore-fathers fight against the large monopolies? Am I crazy, or is every thing monopolozing again? Am I crazy, or did I have one too many margaritas?:beer: :crazy:
     
  6. kuan

    kuan Moderator Staff Member

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    What, Chef Pierre is restaurant quality man! :) Chef Pierre man, best quality!

    Kuan
     
  7. w.debord

    w.debord

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    o.k. you guys your talking over my head! Nothing sounds questionable so far. Seems the company benifits more then the chef who purchases. Kick-back seems like way to strong of a word? So what if the company is benifiting.
     
  8. kuan

    kuan Moderator Staff Member

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    If managed correctly, both parties benefit. You get food ridiculously cheap, something like average 3% over cost. You can write the agreement so you get 1-2% back if you pay your bills within a certain amount of time. Trouble is, you can get a lot of your produce for about the same price if you bid correctly. A whore market we call it. Cheapest one wins. Produce can account for up to 15% of total purchases. Your big purchases like beef for example can be handled the same way. All the big houses get their beef from the same place so they will be withing pennies of each other. Salespeople don't like chefs who ask them to submit bids in order to get the best price possible. I've worked many systems (including buddy) and bidding is the best way to ensure that people compete for your business, offer you the best service, strive to bring you the best product, and answer your page when you page them. You should absolutely bid all your big dollar purchases.

    The perks, well, I'd rather spend the day coaching my soccer team than playing golf with someone I see once a year.

    Kuan
     
  9. shroomgirl

    shroomgirl

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    What do you wanna see in your food world Wendy? Panini is not crazy (drunk maybe but not crazy).The big boys don't play fair. If you buy all your food from a Huge corp that undercuts and gives mediocrity....if it is supported by schools and institutions then the generic public gets used to mediocrity....they won't know the difference in local fresh full flavors, they will not have that food memory. Too extreme you say....look at the surveys that say kids believe milk comes from the store not a cow. There are generations growing up with a rubber tomato and microwave foods. Taxes are supporting confinement farms....cheap eats...does it address the health of the land or the health of the consumer after eating the "cheap eats"....there is a deeper cost than what is seen on the surface. Is it connected to your question, I think so.....
    I just spent some time with a writer from Taiwan that talked yesterday at Wash U for Biz Week....Globalization....it is a trend that is being hammered in the media, I get it every time I show up at Ag conferences, if you can't think past the propaganda that is your vision and that is the quality you get. I hate chasing little white balls, I'd rather cook with REAL food.
     
  10. panini

    panini

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    Panini Dictionary
    "kickback" an agreed amount of cash or products to be given back to the buyer if he uses you exclusively and cuts out the competition. Maybe a strong word ,but my little mind can't think of another.
    The premis for this thinking by these large perveyors is giving discounts for participating in their volume buying so everyone will bebefit. They now have it formulated just like the '20's and 30's where you play their game or you won't survive.
    January, I throw in the towel on our wholesale business. I'm so tired of competing for the minicule part of the 10 percent the chef has from Sysco to go outside the box.
    NOTE I only use Sysco as an example of a large purveyor, I'm sure they are a very fine upstanding company and I know some friends of persons here, work for them.
    I can't agree more with Kuan!!! As small as we are, I send out a vendor bid sheet each week. I don't even edit them, I leave the prices and delete the names. My three companies actually know who is who. I don't care as long as I get the best price.
     
  11. fodigger

    fodigger

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    I guess everybody is different. Having been on the other side of the fence for a while I learned really well how the game was played so this is how I play the game.
    I use US Foodservice exclusively. I'm on a program w/ them them that states all items purchased through them will be at a certain % over cost. minus any rebates or payments they receive. I have twice yearly audit privledges w/ alows we total access to THEIR costs in corelation to mine. I also belong to a group that monitors my purchases and follows up on any rebates or incentives that I may earn for a fee of 25% of those moneys. Over all it is a good program for me.
    1. I write one check per month.
    2. I see only one salesman
    3. They follow my specs
    4. For my loyalty I'm rewarded w/ special service(The buck stops w/ them)

    Many "chefs" have gotten lazy or just don't know any better. They fall into the Have to have the lowest price game. While it's true that Heinz ketchup is Heinz ketchup how much time is being wasted meeting w/ several different salespeople to find out who has the lowest price this week. One of the things that I learned while on the other side of the fence is that they will make it somewhere. These companies didn't get to be the multi-billion dollar companies they are by giving it away. As we expect to make a profit so do they.
    Is my system the best? Probably not. But it works for us and that is what truely matters.
     
  12. daveb

    daveb

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    I believe the distinction between "incentive" and "kickback" is who receives the payment. An incentive goes to the business doing the ordering. A kickback goes to the person doing the ordering.

    Ther former is a standard business practice. The latter is unethical, if the "person" isn't the owner of the business. It may even be illegal.
     
  13. pete

    pete Moderator Staff Member

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    Personally, I don't find anything wrong with a "kickback" every once in awhile, as long, and this is important, as you don't allow quality to suffer or allow a company to send items at inflated prices. Doing that does make taking a kickback illegal and unethical. When I lived in Chicago, I never paid to see a professional sports game. If I wanted to see a game I just called up one of my purveyors and asked them to get me tickets. I would remind them of the good relationship I have with their company. I never used threatened to take business away, nor would I allow a sales person to feel like I owed them a "favor" and accept substandard products, or inflated prices. This really is no different than sending out an app. or dessert to one of your good customers every once in awhile, sure it would be considered a "kickback" but where is the harm, if everything is above board?
     
  14. panini

    panini

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    Pete,
    I think everyone would agree.
    For me, I feel passionate because this type of business directly affects me and is the real cause of the demise of small family business, something I strongly believe in.
    The end result of this type of behavior will end in huge monopolies, franchises etc. and mediocre products.
    Trust me, if these companies can afford suites at sporting events you are not getting serviced in the right way, your getting serviced period.
    If you run an above board small company or corperation you should not need to do this.
    There are many corperations who consider this type of activity very distructive and forbid it. Those I buy stock in.
     
  15. kuan

    kuan Moderator Staff Member

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    You can bid without spending time. You let the salespeople do it. Just make a few copies of a bidsheet and fax it every week. Let them fax back a copy with the bids filled in. At the end of the week you gather them and check off who you purchase from that day. They won't like it, but if they want your business they'll do it.

    Kuan
     
  16. shroomgirl

    shroomgirl

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    I got extra lamb liver and kidneys when I worked with a lamb farmer on rent for the farmer's market....(3 kids and no restaurant $s coming in) Ethical, not sure, other farmers paid on time....this one was struggling to keep the farm so I let them pay as they could. Just taking each case as it comes, not asking for benes but not turning them away either. If I offer to pay and a product is givin free is that still a kickback? hmmmm.
     
  17. panini

    panini

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    AGREE!!
    A Product spec sheet. Fax them out every thurs., takes nano second from the computer. Back on fri. Order!
    Competition used to be a big part of our industry. If you eliminate it by getting tied up to one vendor, there is no way in hello your product won't suffer or your paying the best price.
    The funniest thing about these big vendors is their claim that we take care of the little guy as well. They are correct!!!!!!! They take it to them!!!! They actually profile. There are structured pricing platforms based on the amount ordered. The smaller you are the higher the prices! I could go on and on. If they run as tight as they would like you to believe then where does the money for all these kickbacks come from??????????.
    Please don't be disallusioned, you'd be better served by just getting the right price in the beginning. Your bottom line would reflect that and you could probably pay to go to a sporting event.
    We're not talking about the salesman who takes a client out for a round of golf, pays and writes it off. We're talking kickback, moneys recieved back from these companies for not using the competition.
    I promise I won't post anymore on this topic.
     
  18. w.debord

    w.debord

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    Panini, on another thread you said you knew guys that made "60,00" above their salary from incentives/kickbacks....did I miss understand that?
     
  19. panini

    panini

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    from what I've been told by the recipient ,the funds go to the company which would be distributed down if desired. His could have been distributed lower but he opted not to.
     
  20. leo r.

    leo r.

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    Here in Britain,the Inland Revenue,our tax people are investigating so-called "incentives that are being offered.
    A number of big name chefs are supposed to be receiving "backhanders" from food suppliers.
    These take the form of tickets for sports events,flight tickets and other things. As yet,no names have been mentioned,but it`s only a matter of time.
    Tony Blair must be after a pay rise.:D Leo.