If your distributor raised prices mid-contract, the first move is not a phone call, it is a line-by-line comparison of this month's invoiced case prices against the margin schedule in your agreement, because most mid-contract increases are either allowed by the contract or a mistake in the price file.
Operators notice this the same way every time. The same case of chicken costs $4 more than it did in February, the rep says costs went up, and there is no way to tell from the invoice whether that is true. One of our clients watched a single item change price three times in a quarter. The explanation turned out to be inventory timing: the supplier took a 5% increase on January 1, the distributor was still shipping product bought in December, and the higher price appeared on the invoice weeks after the announcement. Nothing on the paperwork said so.
Why can prices change during a contract at all?
Most broadline agreements are cost-plus. You did not negotiate a fixed price per case, you negotiated the distributor's margin on top of their landed cost. When the landed cost moves, your price moves, legally and automatically. What the contract does control is the margin, the list of items covered, and how deviations and manufacturer allowances flow back to you.
So the real question is never "did the price go up." It is "did the margin go up." Those look identical on an invoice, which is the whole problem. We took that apart in how distributor pricing actually works.
How do I tell a real cost increase from margin creep?
Work from the deviation report, not the invoice PDF. Ask your rep for the deviated price report or the sales detail file for the last two months, then for each item divide total sales dollars by case quantity to get the price you were actually charged. Compare that to the price your margin schedule implies at the current landed cost.
| What you see | What it usually means | What to ask for |
|---|---|---|
| Price up, margin unchanged | Real landed cost increase | Written notice and the effective date |
| Price up, margin up | Contract breach or a price file error | Correction back to the effective date, plus credits |
| Price up on one item only | Item dropped off a manufacturer deal | Deal reinstatement or a substitute item |
| Price up after a delivery gap | Old inventory sold at new pricing, or a substituted pack size | Item and pack comparison, month over month |
One caution when you run the math yourself: split cases distort it. Distributors report case quantity in cases but include split and each dollars in total sales, so a heavily split item can look like a large overcharge when it is not. Check the invoice detail before accusing anyone. We have chased that ghost ourselves.
What should I say to the distributor?
Bring items, not feelings. A list of ten items with the old price, the new price, the date of the change, and the clause of your agreement that covers it gets a different response than "our costs are out of control." Ask for three things: the effective date of the increase, the reason by item, and a credit where the change predates any notice you received.
Ask in writing, and copy the person above your rep. Reps rarely control the price file. The people who do respond to documented requests with a date attached.
What can you do if the increase is legitimate?
Several levers stay open even when the cost increase is real. You can move volume to items with better deviated pricing. You can pick up manufacturer deals your group is eligible for and is not claiming. You can re-cut the market basket and bid it, which is what an RFP is for. And you can tighten order size and delivery frequency, since both are priced into the agreement whether or not you use them.
That is the work FoodServiceIQ does for clients on a monthly clock. We rebuild the invoiced case price for every item, flag anything that rose more than 5% against the prior month, research each flag before it reaches your rep, and report the result with the math attached. Our fee comes out of the savings we can prove, so an audit that finds nothing costs the restaurant nothing. Published outcomes include $335,000+ in annual savings at Oasis Restaurant and $521,000+ at Thunderdome Restaurant Group.
How do I stop this happening again?
Put a review on the calendar rather than waiting for the next surprise. Monthly, pull the deviation report and check the top 50 items by spend. Quarterly, check that margins and manufacturer deals still match the agreement. Annually, take the market basket to bid. If you want a starting point for the monthly version, how to audit a Sysco invoice walks through it step by step.
Questions operators ask
Does my contract have to allow written notice of increases? Not always. Many cost-plus agreements are silent on notice, which is a term worth adding at renewal.
Can I get credits retroactively? Often yes, when the price file diverged from the agreed margin. Six to twelve weeks of credits is a normal outcome once the item list is documented.
Is switching distributors the answer? Sometimes, but it is the last step. Bids read better than they deliver if nobody audits month three onward.
What if my rep says the margin is confidential? Your margin schedule is part of your own agreement. You are entitled to the terms you signed.
Send us three months of invoices and we will tell you which increases your contract allowed and which ones it did not. The process is on our how it works page.
