We love bringing people together, helping our clients expand the reach of their product in order to enhance sales. That’s why we work closely with experts in the food industry. If foodservice is something you’re considering for your brand, then this article will make for a very interesting read. We interviewed Christopher Faulkner at The Food Service Expert and got his advice and top tips for operating within the foodservice industry.
What should any brand consider before approaching the foodservice sector?
In today’s foodservice market it’s becoming increasingly difficult for new brands to get established. The wholesalers don’t have elastic walls to their warehouses and all too often new products have collected dust and ended up being disposed of. So before approaching the foodservice market it’s critical you understand what you are bringing to the table – is your product genuine innovation? is it a product that’s responding to a trend? is it an addition to a category? Or is it a better version of an existing product and finally where does your product sit? You also need to answer the question of what it offers the wholesaler and the caterer. Wholesalers need to make a sensible margin and if you work on 35% you won’t be far wrong, then the caterer needs to make a margin if in the profit sector. The costs of being a caterer are high so often they need to make 60% or more to generate a true profit. Build yourself a model to understand the end to end cost and margins and then ask the question – is my product worth the amount a customer will have to pay for it.
The final consideration relates to the route to market. There are many different ways the wholesalers or contract distributors work and it’s key that you understand the rules and lead times. Some of the larger caterers use contract distribution and the remainder mainly use delivered wholesale and thus the approach is different.
In summary, if you can answer the following questions you are ready to approach the foodservice market:
- Do you understand the sector your product is targeted at and where it works?
- Is it specific to a particular day part?
- Are you clear on the features and benefits of your product?
- Does your product meet any specific guidelines or have any benefits that can be claimed?
- Have you done the necessary market research to understand the customer offer, the menus and its place?
- Pricing – can everyone make the required margin and still sell at an acceptable price?
- Do you understand the route to market and all associated costs?
Is it important to pick an area of foodservice to start with?
The needs of the caterer are very different across the foodservice sector and it is really important not to think that a product fits every sector as very few, if any, do. The requirements from the caterers will differ depending on their customer offer and financial requirements. The differences may be related to cost, portion format and size, nutritionals, cooking method or time. Until you understand how your product matches up to the requirements of the appropriate sector offer you won’t be able to present it correctly. The main sectors in Foodservice are Restaurants, Quick Service Restaurants, Pubs (Note pubs with in excess of 50% of turnover in food are now categorised as restaurants), Hotels, Travel & Leisure, Staff catering (Business & Industry), Healthcare, Education, Services (MoD, Prisons, Ministry of Justice).
An alternative way of looking at Foodservice is to understand the purpose of food. Is food the creator of profit to enable the business to pay its bills and deliver a return to the shareholders – if so these businesses can be referred to as The Profit Sector. However, if the provision of food is considered a requirement and is either free to the consumer or at least at a lower cost, then the food is often seen as cost in the budgets and in these cases the food is referred to as the Cost Sector.
With the changes to the way contact catering is working, the modern contact caterer now operates with a profit sector mentality in many a traditional cost sector operation. You also need to consider who you want to approach, as the growing strength of the regional wholesalers (who can satisfy their customers desire for regional products), is providing a fantastic opportunity for regional suppliers to find a route to market and establish a foodservice business.
What are your top tips for any business looking to grow in the foodservice sector?
Once a producer has secured a listing with a wholesaler that’s only the start. In order to be successful, it is critical to continue to work to generate demand. The wholesalers have very large catalogues and new products are all too often not trained well to the sales teams and are unlikely to be part of the sales teams KPIs. So how can you generate demand in the independent trade?
- Promotions – you need to ensure that as part of your commercial discussions a number of promotions are agreed and spread across the appropriate parts of the year. How the promotions work will depend on the system capability of the wholesalers. You will be expected to fund promotions and where possible this should be negotiated to be applied to sales only. The risk if you drop your price for a period is the depots stock up and then sell cheap stock at full price after the promotion – Great for the wholesalers but not for the producer.
- Ra Ra days – a great way to drive sales is to run a fun day for the sales team linked to the promoted product. Use the time to sample the telesales teams with the product and ensure you have mini competitions across the day and reward the winners. Building a good relationship with telesales will be beneficial too.
I would also suggest trying to gain a short slot at the sales meetings, so you get a chance to meet the field sales teams and introduce them to your product. Try to agree a day out with them to enable you to see some customers face to face and you can assist in the sales of your product.
For national accounts, having gained a listing the key is to work on selling the product to the national account who will only be able to buy it if it’s added to their approved buying list. Sometimes this will require an additional incentive for them in terms of free stock or an additional rebate based on sales to them. The wholesalers national account managers can assist in this area and should be contacted to ascertain how best to approach their customer. It is in both your interests to achieve growth of a new line.
If you would like any assistance with understanding the foodservice market, please get in touch today at firstname.lastname@example.org or call 01480 276555.
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