An annual contract with your supplier can save you thousands of euros. Many restaurant owners miss out on discounts by paying per order. In this article you'll learn exactly how to calculate what an annual contract will bring you.
What are the benefits of an annual contract?
An annual contract with suppliers usually offers three major benefits: discounts on purchase prices, fixed prices throughout the contract, and priority during busy periods.
- Volume discount: 3-8% discount on your total purchases
- Price certainty: No surprises from seasonal fluctuations
- Delivery guarantee: Priority during shortages
- Better payment terms: Often 30 days instead of immediate payment
Calculate your current annual purchases per supplier
For a good calculation you need your purchase data from the past year. Check your administration or POS system for the exact amounts per supplier.
💡 Example:
Restaurant 'The Taste' purchases annually from supplier ABC:
- Meat: €45,000
- Fish: €18,000
- Vegetables: €22,000
- Dairy: €12,000
Total annual purchases: €97,000
Calculate the potential savings
Most suppliers offer 3-8% discount on an annual contract, depending on your purchase volume. Larger restaurants often get more discount.
💡 Savings calculation:
At €97,000 annual purchases and 5% discount:
- Annual savings: €97,000 × 0.05 = €4,850
- Monthly savings: €4,850 ÷ 12 = €404
- Weekly savings: €4,850 ÷ 52 = €93
That's almost €100 per week in purchase cost savings!
Factor in the risks too
An annual contract also has disadvantages that you need to include in your calculation. You're locked in with one supplier and can't benefit from temporary offers from others.
⚠️ Watch out:
Check if your contract has an exit clause for poor delivery or quality issues. Without an exit clause you're locked in for a year, even if service deteriorates.
Compare with your current situation
Add the 'hidden costs' to your current purchase costs: time spent on multiple orders, administration for different suppliers, and missed discounts.
- Time savings: 1-2 hours per week less ordering
- Administration: Fewer invoices and payments
- Inventory optimization: Better planning possible
💡 Calculate total savings:
Example of total annual savings:
- Volume discount: €4,850
- Time savings (2h/week × €25/hour × 52 weeks): €2,600
- Reduced administration costs: €500
Total savings: €7,950 per year
Negotiate the terms
Use your calculation as a negotiating tool. Show what you purchase annually and ask for the best terms. Many suppliers have room to negotiate.
Ask specifically about discount percentages per product group. Sometimes you get more discount on meat than on vegetables, depending on their margins.
How do you calculate the benefits of an annual contract? (step by step)
Gather your annual purchases per supplier
Check your administration for the total purchases from the past year per supplier. Add up all invoices and break them down by product group (meat, fish, vegetables, etc.).
Request quotes for annual contracts
Contact your current suppliers and ask about their annual contract terms. Ask specifically about discount percentages, price guarantees and delivery conditions.
Calculate the total savings per year
Multiply your annual purchases by the discount percentage. Add the time savings and administration benefits for the complete picture.
✨ Pro tip
Don't just negotiate on discount, but also on payment terms. 30 days payment terms instead of immediate payment can significantly improve your cash flow.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What is a realistic discount percentage on an annual contract?
Most suppliers offer 3-8% discount on annual contracts. Large restaurants with high volumes can sometimes get 10-12% discount. It depends on your purchase volume and product group.
Can I exit an annual contract if the supplier performs poorly?
That depends on your contract. Always make sure you have an exit clause for poor delivery, wrong products or quality issues. Without an exit clause you're locked in for a year.
Do I need to put all my suppliers on annual contracts?
Not necessarily. Focus first on your largest suppliers where you spend the most. For small suppliers (less than €10,000/year) the savings are often too small to justify the inflexibility.
What about seasonal products in an annual contract?
Many suppliers use seasonal pricing, even in annual contracts. Check if your contract has fixed prices or seasonal adjustments. Fixed prices give more certainty for your cost price calculations.
Can I still get special offers with an annual contract?
That varies by supplier. Some give extra discounts on top of your annual contract, others don't. Ask about this explicitly during negotiations.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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