Prime vendor agreement

By Marji · Updated October 11, 2026 · Sources and editorial policy

Also called: prime vendor · broadline agreement

A prime vendor agreement makes one distributor your main supplier for specified purchases. The written terms define your purchase commitment, pricing method and service obligations. The name alone does not establish a standard purchase percentage, lower prices or guaranteed availability. Compare the actual terms and a matched basket before committing.

The purchase percentage needs a denominator

For a historical example, the 2003 Sysco–Champps agreement, section 1 specified at least 80% of participating locations' dollar purchases of the covered products. That is one negotiated agreement, not a current Sysco offer or an industry benchmark. Ask which categories, locations and measurement period your own commitment covers.

What to check in the proposal

Term	Question to resolve in writing
Purchase commitment	What counts toward it, which purchases are excluded, and what happens if it is missed?
Cost and pricing formula	Which invoice or purchase-order cost, freight and allowances enter the calculation? Is the rate a markup on cost, a margin on selling price or a fixed fee?
Delivery and substitutions	What are the minimum order, scheduled deliveries, extra charges and substitution rules?
Price verification	Which records can you inspect, for which items and periods, and how are differences resolved?
End of the agreement	What notice, renewal and remaining special-stock obligations apply?

The 2011 Sysco–Muscle Maker agreement, sections 4 and 6 illustrates minimum-order conditions, possible small-order charges, and different pricing methods by product category. Some figures are redacted. Use it to identify questions, not to infer a rate available to your restaurant today.

Cost-plus pricing: a worked comparison

These are hypothetical offers for the same ingredient and pack. A uses a $40 base, $2 inbound freight, an 8% markup on their sum and a $1 allowance deducted afterward. B uses a $38 delivered base, a 10% markup and no allowance. Assume no other charges or credits for this example. These are chosen inputs, not vendor quotes.

Hypothetical case prices — same specification and effective date
Offer	Calculation	Case price
A: 8% markup	($40 + $2) × 1.08 − $1	$44.36
B: 10% markup	$38 × 1.10	$41.80

B's higher markup still produces a case price $2.56 below A. The base and the order of calculation matter. If A's $1 allowance were deducted before markup instead, the result would be ($42 − $1) × 1.08 = $44.28. Read the formula rather than assuming when a credit applies.

Markup and margin are different

8% markup on $42 = $42 × 1.08 = $45.36; 8% margin on $42 cost = $42 ÷ 0.92 ≈ $45.65

Before allowances or other charges. Confirm which definition the proposed percentage uses.

Carry the comparison into a portion

If each example case contains two 10 lb packs and has 80% usable yield, it supplies 16 usable lb, or 64 portions of 4 oz each. A costs $0.693125 per portion; B costs $0.653125, a $0.04 difference. Round only the displayed result. This is one ingredient's cost, not a complete plate cost or a measured saving.

For your decision, compare a basket weighted by your own purchasing quantities. Keep unknown charges and conditional rebates unresolved instead of treating them as zero or earned. A single cheaper line does not establish the better agreement. Have unclear obligations reviewed before signing.

Compare two actual supplier quotes

Enter the final case prices, pack contents and measured yields in the free calculator. Include each known fee or credit once; it does not interpret your contract or fetch supplier prices.

Compare supplier prices →

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