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Foodservice and the Snowman

Post by Bud Hilton

I recently watched a television show featuring a Snowman. My mind’s eye began to conjure up our foodservice industry in relation to the 3 parts of the Snowman. Go ahead and say it . . . I don’t have a real life!!! Maybe so, but let me tell you more about my vision.

As the Snowman becomes progressively larger from his head to the bottom portion, so does our foodservice industry in number of locations ranging from very large national chain operators such as Sodexo, Aramark, Compass, etc., through the balance of other multi-unit chains and finally down to street business.

Please allow this author the leeway to use the term “approximate” as we examine the information above. Exactness of interpretation of data in these categories would depend on who you push up or down into either of these categories. Studies show that our industry is made up of close to 1 million purchasing locations and if you follow the associated legends, in my graphs, you will see that the large national chains account for somewhere around 7% or so of the locations. Coupled with the remaining chain accounts, this multi-unit grouping makes up a little over one-third of the industry locations and account for almost three quarters of all purchases. This collective group holds power of purchase and thus the leverage to demand special pricing which generally lowers profitability for both manufacturers and distributors serving them.

As we address sales and reach possibilities, we note that the chain group is relatively accessible and offer huge potential with limited sales call activity. Depending on the size of your company, manufacturers service this group with specialized sales personnel ranging from top corporate people, for the large accounts, to national account reps for the remaining multi-units. This group is generally a lower cost to reach and potentially to sell . . . in relation to the “street” business which is serviced by multiple personnel, generally harder to identify, have marginal value versus call expense and require considerable funds and campaigns to reach and maintain connectivity.

Fortunately, spending on street business can be somewhat justified by the continuity and profitability of such business. In many cases, there are certain purchasing agencies that have become specialists in grouping street accounts to form a “near resemblance” to a chain channel of business. These buying entities could be instrumental in aggregating the largest and maybe most profitable group of operators in our industry.

Without a doubt, and from some of these volume and profit metrics we have observed, there is strong reason for a balanced mix of sales in manufacturer portfolios. The trick becomes reaching and measuring these different pieces of business. To learn more about how you can reach and measures your ultimate position in the market place, contact us at sales@answers-sys.com or call 800-225-6127 to arrange for this valuable consultation.

Print | posted on Wednesday, December 23, 2009 9:30 AM