Palo Alto, CA-based Instill Corp., e-business systems provider to the foodservice industry, announced Purchase Insight, a monthly for-pay purchase information subscription service that provides contract compliance and rebate capture for foodservice operators, including restaurant chains, hotels, hospitals and foodservice management companies.
The new service, targeted at what Instill estimates to be a $350 billion foodservice industry, will help operators improve profitability by providing visibility to purchasing information at the headquarter level.
"For multi-unit foodservice operators, purchasing food--the number-one raw material for their business--is a critical strategic operation," said Mack Tilling, president and CEO of Instill. "Because our industry is a low-margin business, reducing food costs by a couple of points can have the same impact on the bottom line and shareholder value as a 20% increase in revenue."
Initial foodservice customers include Delaware North, Harrah's and Bon Appetit.
One of the main challenges the foodservice industry faces in improving profitability is industry-wide product language inconsistency. Unlike the grocery industry, where a bottle of ketchup, for example, carries a standard UPC code at any point in the supply chain -- the same bottle or case of Heinz ketchup in foodservice may carry a different product description, product number, pack, and size description depending on the distributor. These product naming inconsistencies make it nearly impossible for corporate purchasing managers to accurately view consolidated purchasing information across all units and regions.
Instill says its Purchase Insight offering is aimed at supporting a seamless flow of data across the foodservice supply chain, through a proprietary data warehouse that can be used to standardize product and transaction information. Developing a system to standardize product codes across different distributors has long been beyond the means of individual restaurant chains or operators because of the enormous number of products and the frequency of product turnovers.
Major national foodservice operators including Bon Appetit, Delaware North Cos., Harrah's and Meristar are already experiencing significant profitability gains through Purchase Insight, the vendor claims. Additional companies signed on include Fine Host Corporation, Gordon Biersch Brewing Company, and Marie Callenders.
Instill describes its value proposition, partly, as being able to uncover "purchasing trends and volumes that give added leverage for better pricing and terms, foodservice operators can identify new opportunities for programs, contracts, and rebates." Benefits include improved unit buying compliance, better transaction-level tracking, and visibility to pinpoint and eliminate off-contract purchases that cost a foodservice company significant dollars.
The system is now available at a cost of $2,000 per month and upward, varying by and the number of foodservice locations, distributors, distribution centers, and volume of transactions. Average implementation time: 60-90 days.