High unemployment coupled with uncertainty about existing jobs is causing consumers to be ultra conservative when it comes to luxuries such as dining out. As a result, cutting costs is becoming even more important now as restaurants suffer from the current economy. When the economy was strong, restaurant owners were able to purchase replacement supplies without a second thought. Location and convenience was a greater concern than saving a little money.

However, in rougher times, restaurants owners are much more cost conscious and willing to go the extra mile to save on costs for replacement supplies. An example of this can be found in restaurants that are located in small cities or less populated mid-west states. These restaurants have few options available when looking for restaurant supplies, whether it is for starting a new restaurant or for replacement supplies. Restaurants are typically in one of two scenarios: 1. the city is so small that a restaurant supplier does not exist. 2. the city is large enough to have a restaurant supplier, however there is only one or two and their prices reflect the minimal competition in the area and/or their product selection/inventory is small.

Restaurants in these situations end up paying a premium for their restaurant supplies and settle with the local selection available. However, there is an alternative for restaurants in this situation. Restaurants can look for restaurant suppliers in larger cities in nearby states. Often restaurant suppliers in larger cities have more competition, making their prices much more competitive and thus lower than restaurant suppliers in smaller cities/states. The second benefit for getting your restaurant supplies from out of state is non-residents of the nearby state are not subject to that state’s sales tax. The cost savings from sales tax and lower prices can often outweigh the shipping costs. Please note that some states impose a use tax on their residents. This means that although the neighboring state does not charge you sales tax, the state you are a resident of may still impose a use tax for that product.

A good example of this scenario is states that are near Texas: New Mexico, Oklahoma, Louisiana, Kansas, and Arkansas. Restaurants in these states either do not have a local restaurant supplier or there is only one or two available. Rather than paying a premium, restaurants in these states can buy from a restaurant supplier in the Dallas/Ft. Worth area. By purchasing restaurant supplies from a large nearby state such as Texas, restaurants are able to pay less for their supplies, save money on sales tax, and incur minimal shipping cost due to the proximity of the out of state restaurant supplier.

If you are a restaurant owner in this situation, check your states use tax laws. Obtain a quote from your local supplier and an out of state supplier in a larger, more competitive market. Make sure to compare the total cost of the order: include shipping for out of state suppliers and include taxes for the local supplier. You may be surprised to find out that purchasing out of state will save you a significant amount of money. If you research prices, and plan ahead, you may be able to save a bundle!