The credit crunch is having a mixed effect on the foodservice market. On the one hand McDonald’s is selling two million more meals per month and on the other Starbucks will close 600 stores in the US alone and has announced the first loss since it began trading.
It’s clear already that while the numbers of meals eaten out of home continues to increase the value of the foodservice market is pretty static. This indicates that like the retail market consumers are seeking greater value than ever before.
For suppliers, this more than ever is the time to ensure they make the right strategic choices. From a retail point of view the pressure is off a little. Most suppliers have been able to pass on raw material and fuel costs through increased prices and the retailers are happy with a moderate level of inflation to keep the growth engine ticking over gently.
Thus foodservice may not be seen by suppliers as the strategic choice it once was. Indeed over the last couple of years many suppliers have been actively reducing the numbers of people they have focused on foodservice.
However, from a supplier point of view the way to maintain a strong business in difficult times is to excel at the basics by ensuring your products are distributed where they should be, are well displayed, and competitively priced and positioned where the consumer will see them. A simple approach well executed.
This is where foodservice is at its best and its worst. On the one hand, with over 300,000 foodservice units in the UK the potential for distribution ‘front of house’ is six times greater than the c-store sector. Over half of those outlets are independently managed but getting your product into those outlets can be prohibitively expensive.
In the past the choices to suppliers have been limited to relying on the wholesaler or unit manager to get your product distributed. But the wholesaler’s representative cannot really help you as they typically carry more than 10,000 products and so they concentrate on selling the wholesaler’s offer of service and reliability.
Similarly the unit manager may well be trying to get out 150 breakfasts or lunches and so making sure the confectionery, snack or drinks offer is stocked and properly priced is the least of their worries.
Invariably neither wholesaler representative nor unit manager has the retail skills necessary to spot or take advantage of additional display space, simple merchandising principles or consumer behaviour opportunities
Reach, a world class leader in sales and channel marketing solutions based in Woking, has developed an interesting model for ensuring ‘front of house’ distribution and availability at an affordable price. Using contact strategies with a mix of personal contact, telesales, direct and e-marketing it has been able to generate impressive increased sales of over 30% in test market situations. Its expertise in maximising return in retail stores can be put to maximum effect in foodservice.
The foodservice market lags behind the retail sector considerably with regard to the use of third party sales and channel marketing support but the opportunities to make a difference to both top and bottom line are impressive, costs can be kept under tight control and effectiveness becomes measurable, a rare thing in the foodservice market.
Steve Pepperell and Andrew Bailey have both held senior positions in multinational suppliers and smaller companies in the foodservice and retail sectors. Pepperell is strategic director foodservice of Reach and they are both partners in ‘How To Solutions’ and act as consultants and trainers to a range of businesses. You can find out more by looking at their website [http://www.howtosolutions.co.uk] emailing them at firstname.lastname@example.org or email@example.com or telephone them on 07802 641813