Why the Cheapest Is Rarely the Cheapest
Radical but “Normal” and Efficient Ways to Run a Restaurant #2: On choosing contractors and purveyors
When you are opening or operating a food business, it is common to line up bids, compare numbers, and assume the lowest one represents the most responsible decision. That way of thinking puts the weight on the estimate itself, even though an estimate shows only a small part of how the service will be provided and very little of where the real cost will surface later.
Construction is where the cost shows up first
I learned this most clearly during the buildout of our full service fine dining restaurant in North Beach. At the same time as our buildout, the building itself had to undergo a seismic retrofit. Given the scale and complexity of the project, this was not a light renovation. It was a full, intricate construction effort that required coordination, sequencing, and a high level of trust between everyone involved.
Our landlord collected five bids for the seismic work, and our contractor came in the middle. Their proposal made practical sense because they already knew the building well and could coordinate the retrofit alongside the restaurant construction. Even so, the landlord ultimately chose the cheapest bid.
Almost immediately, the difference became visible in how the site was being run. The workmanship itself was noticeably worse, and the overall condition of the job site reflected that. Workers smoked and spat on the premises, left tools and materials scattered, and treated the space with a lack of care that was hard to ignore. The contrast became especially clear when compared with our contractor, whose crews were consistently professional, respectful, and deliberate in how they worked. They took safety seriously, ran a tightly organized site, and operated with the expectation that the work would be done properly rather than simply finished.
As the seismic work moved forward under the lowest bid, the consequences of those choices began to surface. Corners were cut, small issues compounded, and eventually our contractor was brought in to correct portions of work that had already been signed off as complete. By the end of the project, the landlord had paid more than what our contractor’s original bid would have cost from the beginning, without even factoring in the delays, disruption, and additional coordination required to fix the problems.
Our contractor Eric F. Anderson Inc. had been one of the greatest blessings of that special restaurant we were able to build and run for a little over two years, right after the COVID shutdown recovery. During our build, the SBA representative who came to check progress, since the loan disbursed payments directly to the contractor in stages, looked around the site and commented that they had never seen anyone work like this. The paper trail was exceptionally clean, everything was on schedule, and the entire process felt unusually well managed. Our architect said something similar, noting that after experiencing that level of execution, it would be very difficult to work with anyone else going forward.
That level of organization, accountability, and care was not accidental. It was built into how the contractor staffed the job, how they treated labor, how they documented progress, and how seriously they took responsibility for the outcome. The lowest bid did not eliminate cost. It simply shifted it elsewhere, where it eventually surfaced as rework, delays, and added expense.
Why the right purveyor matters more than the “right” price
This dynamic shows up repeatedly in food businesses because so many of the systems we rely on are fragile. Large national purveyors can offer lower unit prices because they operate at scale, and on paper those savings can look compelling. In practice, those systems often externalize risk onto restaurants and workers. There are well documented incidents of drivers being overworked, corners being cut, and raw food being left outside restaurant doors early in the morning, long before staff arrive.
We work with very few vendors by choice. One of them is Burroughs Family Farm, a regenerative farm that focuses on practices that put more back into the soil than they take out, producing the most amazing tasting eggs we use at our restaurant Cassava, as well as their almond milk. They are not the cheapest, but their prices are more than fair for the quality they deliver and for how they run a respectful, well managed business. Their products are consistent, their practices are sound, and their pricing allows us to use their ingredients confidently in our menu offerings while still building dishes that work within our overall pricing structure. When the egg shortage happened, their prices did not spike dramatically, their shortage period was shorter, and their supply remained steady.
On paper, smaller vendors often appear more expensive than large distributors that advertise volume pricing and efficiency. In reality, those apparent savings can disappear once problems emerge from the way those systems operate, including corner cutting, labor exploitation, and inconsistent handling. That difference is not about luxury or excess. It is about operating in a way that does not generate preventable problems downstream.
I hope this article was helpful in offering a different perspective when choosing partners for your business. Choosing vendors is no different from hiring your working team. Steady, dependable relationships create the stability a business needs in order to grow, adapt, and succeed.
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Lessons worth remembering for anyone hiring a contractor (house painter, plumber, electrician, mechanic, appliance installer, etc.). How do they conduct themselves and their business?