Back to Basics: What's a GPO and How Can It Help Save You Money?

Joining a group purchasing organization (GPO) is an advantageous opportunity for foodservice companies to save time and money. However, many caterers are hesitant to take the plunge due to lack of awareness and understanding about what a GPO is and how it operates within our industry. 

Unfortunately, that means plenty of caterers are spending more time than necessary sourcing ingredients—and, in some cases, they also lose out on significant discounts.

If you believe GPOs are too difficult to join or will ultimately cost more than it saves, keep reading for a full rundown of how it works and whether it’s a good fit for your catering business.

What is a GPO?

A GPO, or group purchasing organization, is a collective of foodservice companies that leverage their purchasing power by combining orders to secure wholesale pricing—even if you only need a nominal amount. So instead of paying a higher cost per item for smaller orders, you can save money no matter how much you need to purchase.

For example, if you order a set amount of parsnips each month, you probably don’t need to buy them in bulk. (Otherwise, you might risk spoilage!) But when your order is matched with other businesses’ parsnip orders, you can access bulk discounts while the GPO ensures you receive only what you need.

As a GPO member, you also get to outsource the food buying process. From price-comparing to negotiation, your GPO’s team will handle the heavy lifting.

Is a GPO like a rebate program?

Not quite. While both offer discounts, rebate programs are essentially like the same cashback deals you may get as a consumer. They are typically tied to specific products with defined expiration dates. And since there is no group component, rebate programs are up to individual businesses to find and apply while purchasing ingredients.

GPOs, on the other hand, garner wholesale discounts on all products, providing caterers with significant savings on every purchase without needing to figure it out themselves. 

Where do GPOs source ingredients?

Food quality is the top priority for caterers, so it’s natural to want to know more about where a GPO sources your supplies. To find out, all you have to do is ask! Reliable GPOs value transparency and are happy to share more information about their distributors, which are typically major national food brands. If you meet resistance when inquiring about suppliers, it’s wise to seek out other GPOs you can trust with your business needs.

Is a long-term contract required?

No—and if you find one that tries to lock you into a set membership term, consider it a sign to look elsewhere. A great GPO is flexible and doesn’t infringe on your rights as a business owner. Other red flags to note are pay-to-play pricing structures, cancellation fees, poor customer service, and limitations on what, when, and how much you purchase. Always review policies and restrictions before signing a contract!

GPOs are a wise choice for caterers looking for innovative ways to cut down on expenses and increase profit margins. And since membership is free and flexible, there’s no harm in trying it out to see if it works for you and your business!