Cafe Supplier Agreement Checklist: What To Include

Jess runs a small cafe in Brisbane. Her coffee supplier usually delivers beans every Monday morning, but one week the delivery arrives late, two blends are missing and the invoice includes a price increase she wasn't expecting.

None of those issues are unusual in hospitality. The tricky part is working out what your rights are when the agreement is mostly based on emails, text messages and a handshake.

A clear supplier agreement doesn't have to be complicated. It just needs to spell out the practical things that keep your cafe running: delivery times, quality, pricing, minimum orders, recalls and what happens when supply goes wrong.

Do You Need A Written Agreement With Cafe Suppliers?

Yes, you should have written terms with your key cafe suppliers, especially for coffee, fresh food, milk, baked goods and packaging.

A written agreement helps you avoid arguments about what was promised. It also gives you a clearer path if a supplier misses deliveries, changes prices suddenly or sends products that don't meet your standards.

For low-value or occasional purchases, you may not need a long supply agreement. A purchase order, quote and standard terms may be enough. But for regular supply, exclusive arrangements or anything your menu depends on, it's worth setting things out properly.

Your agreement might be called any of these:

• Food supplier contract for ingredients, produce, baked goods or prepared items.
• Coffee supplier agreement for beans, equipment, training, branding or exclusivity.
• Cafe supply terms and conditions for ongoing supply on standard trading terms.
• Hospitality supplier contract for broader supply arrangements across your venue.

The name matters less than the content. What matters is that the document reflects how supply actually works in your cafe.

If your supplier gives you their standard form contract, don't assume it's non-negotiable. Under the Australian Consumer Law, unfair contract term rules can apply to standard form small business contracts. Since 9 November 2023, unfair terms in those contracts can attract penalties, not just be declared void. That doesn't mean every tough term is unfair, but it does mean one-sided terms deserve a closer look.

What Should Go In A Cafe Supplier Agreement?

Your cafe supplier agreement should cover the products being supplied, how orders are placed, delivery standards, pricing, food safety, liability and the steps for fixing problems.

Here is a practical clause outline you can use as a starting point. A lawyer should tailor it before you use it, because templates often miss industry-specific details that matter in a busy cafe.

1. Parties - write the legal names, ABNs or ACNs, trading names and contact details for your business and the supplier.
2. Products - describe the goods clearly, including blends, pack sizes, grades, allergens, packaging type and any approved substitutes.
3. Order Process - set out how orders are placed, cut-off times, order confirmations and who can approve changes.
4. Delivery - state delivery days, delivery windows, locations, temperature requirements and what counts as late delivery.
5. Quality Standards - refer to agreed specifications, samples, freshness, shelf life, batch codes and compliance with food laws.
6. Pricing And Payment - list prices, GST treatment, invoice timing, payment due dates, late payment consequences and credits.
7. Price Changes - require notice before prices change and set out when you can reject the change or end the arrangement.
8. Minimum Orders - include minimum quantities, minimum spend and what happens if your cafe is closed or trade drops.
9. Exclusivity - state whether you must buy only from that supplier, for which products, in which locations and for how long.
10. Defective Supply - set out inspection rights, rejection timeframes, replacements, refunds, credits and urgent alternative sourcing.
11. Recalls - require immediate notice, clear recall steps, traceability information and responsibility for recall costs.
12. Term And Termination - include start date, renewal, notice periods and immediate termination rights for serious issues.

You can add other clauses depending on the deal, such as equipment loans, barista training, marketing support, confidentiality or branding rules.

How Should You Deal With Delivery Times And Missed Deliveries?

You should set delivery windows, notice requirements and clear remedies for late or missed deliveries.

In a cafe, a late delivery isn't just inconvenient. If milk arrives at 11am instead of 6am, you may lose breakfast trade. If takeaway cups don't arrive before the morning rush, you may have to buy emergency stock at a higher price.

Your agreement should cover:

• Delivery days and windows - for example, Mondays and Thursdays between 5am and 7am.
• Cut-off times - for example, orders placed by 2pm for next-day delivery.
• Delivery location - front door, loading dock, back kitchen or another secure area.
• Temperature and handling - especially for dairy, meat, seafood and other perishable items.
• Proof of delivery - signed docket, photo confirmation or electronic delivery record.
• Notice of delays - how early the supplier must tell you if stock won't arrive on time.
• Remedies - replacement delivery, credit, refund, reimbursement for reasonable emergency stock or cancellation of the affected order.

Worked Example

Say Jess orders 30 kilograms of coffee beans each week at $38 per kilogram. Her agreement says the beans must arrive by 6am Monday, and if delivery is more than 2 hours late, the supplier must give her a 10% credit on the affected order unless the delay is caused by something outside the supplier's control.

The delivery arrives at 10am with no prior notice. The affected order is worth $1,140. Under the agreement, Jess can claim a $114 credit and, if she had to buy emergency beans from another roaster at a higher price, she may also have a basis to ask for that extra reasonable cost if the contract allows it.

This kind of clause won't fix the bad morning, but it gives both sides a clear outcome.

What Quality And Food Safety Standards Should You Include?

You should include product specifications, legal compliance requirements and a process for rejecting goods that don't meet agreed standards.

Food supply is different from many other business purchases because quality issues can affect your customers, your reputation and your compliance obligations. Your agreement should require the supplier to comply with the Australia New Zealand Food Standards Code and all relevant state or territory food laws that apply to their supply activities.

Depending on what you're buying, you may also want the supplier to confirm:

• Products will match agreed samples or specifications.
• Food will be safe, suitable and properly labelled.
• Allergen information will be accurate and updated promptly.
• Perishable goods will be delivered within agreed temperature ranges.
• Products will have a minimum shelf life on delivery.
• Batch numbers, use-by dates and traceability information will be provided where relevant.
• Packaging will be food grade and suitable for its intended use.

Your agreement should also say when you need to inspect goods and report issues. For example, you might require obvious issues to be reported within 24 hours of delivery, while hidden defects can be reported once discovered.

Be careful with very short rejection timeframes. If a supplier says you must reject all goods within 2 hours or lose all rights, that may not work for hidden contamination, incorrect allergen information or sealed products you don't open straight away.

For packaging suppliers, quality standards might include cup size, lid fit, leak resistance, compostability claims and branding accuracy. If your packaging says it's compostable or recyclable, make sure those claims are backed up. The Australian Consumer Law prohibits misleading or deceptive conduct, including misleading environmental claims.

What Happens If There Is A Recall Or Defective Supply?

Your agreement should require fast notice, cooperation and a clear allocation of costs if there's a recall or defective supply.

If food is unsafe or incorrectly labelled, time matters. You need to know what product is affected, which batches are involved, what customers may have received and what steps to take next.

Food recalls in Australia are generally coordinated through Food Standards Australia New Zealand, working with state and territory food enforcement agencies. Your agreement won't replace those official recall processes, but it can make sure your supplier helps you act quickly.

A recall clause should cover:

• Immediate notice if the supplier becomes aware of a safety issue, contamination, undeclared allergen, incorrect label or regulatory notice.
• Traceability including batch numbers, delivery dates, quantities and affected products.
• Instructions for isolating stock, stopping use, returning goods or disposing of products.
• Customer communication if your cafe needs to contact catering clients, wholesale customers or delivery platform customers.
• Costs such as replacement stock, refunds, disposal costs and reasonable costs of managing the recall.
• Records that both sides need to keep, including delivery dockets, invoices, batch records and photos.

For defective supply that isn't a recall, your remedies can be simpler. You might ask for replacement goods, a credit, a refund or reimbursement for reasonable alternative stock. The right remedy depends on the seriousness of the issue and what your agreement says.

Keep records every time something goes wrong. Save photos, labels, delivery dockets, temperature logs, emails and staff notes. Without a clear record, you may struggle to prove what happened or recover your losses.

Can A Supplier Increase Prices Or Require Minimum Orders?

Yes, a supplier can ask for price increases or minimum orders, but your agreement should control how and when those changes happen.

Hospitality margins can be tight, so sudden supply cost changes can affect your menu pricing quickly. You don't want to find out about a 12% coffee price increase when the invoice arrives.

A fair price change clause usually covers:

• How much notice the supplier must give before prices change.
• Whether the increase applies to confirmed orders or only future orders.
• What information the supplier must provide to justify the increase.
• Whether you can reject the increase and end the agreement without penalty.
• How often prices can be reviewed.

Minimum orders can also be reasonable, especially where the supplier has delivery costs or production runs to manage. But make sure the minimums match your real trading pattern.

For example, if you operate a 40-seat suburban cafe, a minimum order of 20 kilograms of beans per week may be fine during normal trade. But if your lease requires you to close for building works, or a public holiday period cuts your opening days in half, you may want a temporary reduction right built into the contract.

You can also include flexibility for seasonal changes, renovations, equipment breakdowns or government restrictions that affect trading. The goal isn't to avoid every minimum order. It's to avoid being locked into buying stock you can't reasonably use.

Should You Agree To Exclusivity With A Coffee Supplier?

It depends, because exclusivity can be worthwhile if you receive real value in return, but risky if it limits your flexibility without enough benefit.

Coffee supplier agreements often include an exclusivity agreement or exclusivity clause. The supplier may provide discounted beans, loan equipment, branded umbrellas, a training agreement for staff or marketing support in exchange for being your only coffee supplier.

Before you agree, check exactly what the exclusivity covers. It might apply to:

• All coffee products, or only espresso beans.
• Your current cafe only, or future venues as well.
• Retail beans sold on shelves.
• Cold brew, decaf, single origin or guest roasts.
• Online sales, catering or events.

You should also check the term. A 12-month exclusivity arrangement is very different from a 5-year arrangement, especially if there are minimum purchase commitments.

If the supplier is lending or subsidising equipment, make sure the agreement explains who owns it, who maintains it, what happens if it breaks and whether you must pay an exit amount if the agreement ends early.

Exclusivity should usually come with performance standards. If the supplier can't deliver on time, maintain quality or keep prices within the agreed review process, you may need the right to buy from someone else or end the arrangement.

Also watch for restraints that stop you selling your business, changing your menu or opening another venue. These clauses need to be carefully drafted so they protect the supplier's genuine interests without tying your hands too tightly.

Key Takeaways

• A written cafe supplier agreement helps you manage delivery times, quality, pricing, recalls and remedies before problems arise.
• Your key terms should cover ordering, delivery windows, product standards, payment, price changes, minimum orders and termination rights.
• Food and packaging suppliers should meet the Australia New Zealand Food Standards Code, relevant food laws and any agreed product specifications.
• Late or defective supply clauses should give you practical remedies, such as replacement stock, credits, refunds or recovery of reasonable emergency costs.
• Price increases, minimum orders and exclusivity can be reasonable, but they need limits, notice periods and exit rights that suit your cafe.
• Standard form supplier contracts can raise Australian Consumer Law issues, especially where terms are one-sided and your business is small.

If you'd like help with your cafe supplier agreements, coffee supply terms, food recall clauses or exclusivity arrangements, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.