Meals on wheels

The UK foodservice/catering market represents a huge opportunity for wholesalers with a total of 8.5 billion meals served annually generating £33.2bn of sales.

Purchase value of food exceeds £8.7bn, sourced 53% through traditional foodservice operators, 14% via cash and carry, 18% contract delivered and the balance through a wide variety of outlets, including direct from producer or grower to multiple retailers such as Tesco and Asda.

Horizons, which conducts market research into the foodservice and hospitality markets, suggests there are probably more than 5,000 wholesalers servicing catering establishments.

Many within this 5,000 are small, local and specialist businesses, but acquisition and expansion over the past decade has produced three major players. Brakes, 3663 and DBC Foodservice provide nationwide coverage enabling them to pursue national contracts with a one stop shop – embracing fresh, chilled, ambient, non-food, alcohol, impulse and catering equipment. Independent foodservice wholesalers working together in trading groups can also offer wide coverage, but have a more difficult task to win major chain contracts because of the differing product categories, brands and pricing policies offered by individual members.

There is also competition for major contracts from large regional businesses which are strategically placed to provide a one-stop service to substantial areas of the country from a single depot.
All these companies also compete for business from smaller individual catering establishments such as pubs, cafés and restaurants.

Cash and carries, as they increasingly engage in direct deliveries to retail customers, are also maximising transportation by delivering to foodservice customers, and many have extensive catering sections within their depots.
Smaller specialists are also progressing well, particularly in oriental and ethnic foods, delicatessen, bakery, fresh fish, meat and garden produce, and especially when combined with a delivered business to retail stores.

Overall, Horizons is predicting a return to growth in the catering market after a recent downturn in trade, with sales increasing to £37bn by 2007. Peter Backman, managing director of Horizons, says: “The overall eating out-of-home market has moved sideways for the last two or three years.

Within commercial segments, such as restaurants and pubs, the reasons are varied but unite around the theme of not having offered what the customer wants. For the non-commercial sector – catering in the workplace, education, health care etc – the reasons for the lack of growth relate to changes in the customer base, such as workplace downsizing or reduced school rolls, coupled with cost pressures.

“The commercial sector is showing signs of growing again, primarily because operators are once again offering what the customer wants at affordable prices; it is likely that this will continue for the next few years on the basis that operators will build on the small shoots of success that they are already seeing.”

However, Backman says opportunities in the non-commercial sector are bound up with government funding policies and the future is unclear while there is an election in the offing.

Backman also predicts that further consolidation of wholesalers will occur. He says: “The foodservice supply chain has reacted to past changes by consolidating and thereby gaining economies of scale. This process is likely to carry on for some time and will be fuelled by the continuing growth of chain operators who demand ever-wider geographical coverage and enhanced services.” 

Other factors such as concern over obesity, the quality of food being offered to schools and hospitals and growing interest in local sourcing of fresh produce are also likely to reshape a market which currently has strong leanings towards frozen ready meals. The availability of fresh daily deliveries is resulting in the fridge replacing the freezer in many quality kitchens.
The main players

Brakes is the leader in multi-temperature foodservice distribution holding about a 23% share of the foodservice/catering market. Its customer base includes large-scale national caterers who are serviced from its nationwide network of depots providing a one-stop delivery service to major brewery and hotel groups, fast food chains and retail high street operators.

The company has grown through the acquisition of foodservice wholesalers Watson Philip and Cearns Brown (the second and third largest suppliers of groceries to caterers at the time), and through a number of other acquisitions of specialist businesses including M J Seafoods, a fresh fish Features > Business, and Peter’s Foodservice.

The company operates a major foodservice business in France, its launch pad for other European countries.

Brakes chief executive Bill Driscoll says the company intends to be the UK’s leading fresh food supplier to caterers, after investing heavily in a new national distribution centre. With substantial manufacturing facilities of its own, producing recipe dishes, puddings and desserts, one of its strengths lies in product development and innovation, both in own brand and for other foodservice operators. The opening last year of its Food Innovation Centre in Covent Garden is a sign of its intention to lead this market from the front.

3663 has made significant advances in the marketplace since its transformation of the Booker Foodservice business in the late 1990s, and has a wide range of customers including restaurants, pubs, cafés, clubs, schools, hospitals and government departments. The company is made up of specialist teams in multi-temperature, fresh, frozen and chilled, contract distribution and catering equipment. It employs over 5,200 people managing 1.25m sq ft of storage in 39 depots, and its 50,000 customers are serviced by a fleet of 1,000 vehicles providing frozen and multi-temperature deliveries.

Principal customers are organisations who require national coverage and include contract distribution for Compass plc, Pret a Manger, Burger King and the Ministry of Defence.

Today’s Foodservice Trading Group (TFTG) is a specialist buying group made up of some of Today’s largest foodservice members. Today’s managing director Rod Hunt highlighted the performance of the group at the recent Today’s annual conference in Tenerife, reporting that sales grew by 13% in 2004, to exceed £500m.

Foodservice has an increasingly significant role to play within the wider  Today’s Group both through cash and carries and on a delivered wholesale basis.

Affilliated to TFTG is the Country Range Group. Formed in 1994, the group has grown into Britain’s biggest consortium of independent foodservice distributors to the catering industry. The group comprises 17 member companies serving a customer base of predominantly independent caterers from 21 depots covering mainland UK, the Channel Islands, Northern Ireland and the Irish Republic.

It operates from a central office in Nelson, Lancashire, and provides group purchasing, marketing events and strategic co-ordination. The group offers a Country Range own brand range covering chilled, ambient and frozen and a hygiene professional brand for non foods.

Country Range also publishes a monthly caterers magazine tailored to each member and distributed to customers. It features promotions, recipe ideas, competitions and new product information on branded and Country Range products. 
MD Colin Birchall believes there are great opportunities for local independent foodservice operators. “Success in the independent marketplace is more to do with service and relationships than concepts of ‘we are’ or ‘we have’ the solution for you,” he says.

With a combined foodservice turnover of £350m, Landmark’s foodservice members include DBC foodservice, Blakemore Foodservice, CJ Lang Foodservices and the newly named Henderson Foodservice (formerly TNB/Holmes) in Northern Ireland. These are supported by a number of family owned businesses stretching right across the country from Wick in northern Scotland to Bath in the West Country and Jersey in the Channel Islands.

Landmark also supplies caterers through its cash and carry members, boosting total group catering turnover to around £560m, giving it an estimated 6% market share against Brakes’ 23% and 3663’s 18%.

Martin Hawkes joined the Landmark marketing team last year from Brakes as foodservice controller to spearhead its advance into the foodservice market. He says: “As the delivered percentage of the total foodservice market continues to grow (both organically and as a share of all routes to market), the role of Landmark’s foodservice members becomes increasingly more important in terms of market presence.”

Foodservice customers served by the group are split 40% contracts/national accounts and 60% free trade/independent caterers, with all key areas represented – health, welfare, local authorities, schools, prisons and brewery groups.

Landmark markets the Caterers Kitchen brand which is being relaunched shortly with an expanded range, particularly in frozen foods, and the company is increasing its marketing and promotional activity with a dedicated foodservice package.

Meanwhile, the future direction of Woodward Foodservice, the former Big Food Group subsidiary, is unclear after the takeover of its parent group in February. Woodward claims to be the fastest growing foodservice company but has been making losses, and whether the new owners decide to invest further into it or seek disposal to a competitor remains to be seen.

Profile – Blakemore Foodservice
Blakemore Foodservice, a subsidiary of the Spar distributor AF Blakemore Son, was formed 25 years ago but its move from its parent company’s main Willenhall site to a dedicated 65,000sq.ft purpose-built distribution depot at Wednesbury in 1999 was the turning point in its success. Eight years ago the company employed 44 people and achieved a turnover of £14m. Today it employs 291 people with sales of nearly £60m.

The single depot business offers a one stop shop, covering ambient, chilled, frozen and fresh meat and vegetables to customers across England and Wales with a fleet of 67 multi-temperature vehicles. Core business is local authority contracts, regional brewery groups, hotels and restaurants, leisure centres, nursing homes, hospitals and schools.

Trading and marketing controller Peter Saunders says half the business is still using PLOF ordering systems but a 30-strong telesales team is making around 175,000 calls a year.

Profile – Sutherland Bros, Wick, Caithness
One of the toughest UK terrains to service is the Scottish Highlands. The most successful independent operator is Sutherland Bros of Wick, Scotland’s most northerly wholesaler, which has been servicing caterers in the Highlands and Islands for more than 60 years. With tourism being one of the main industries in the region, its principal customers are pubs, clubs, hotels, restaurants, cafes and takeaways which in season complements its numerous contracts with schools, hospitals and local authorities.

Sutherlands has a fleet of six HGVs, fitted with sleeper cabs to facilitate overnight trips. The longest route is 380 miles. Fuel and drivers’ wages are a significant part of Sutherland’s expenses.
“Foodservice is growing,” says managing director David Sutherland.

“There is a growing tendency to ‘out-of-home’ eating which has helped us expand foodservice and provide a one stop shop to caterers. Sales are 5% up on a year ago. Foodservice accounts for 33% of our total sales and 50% of our volume.”

The company has to hold an extra two weeks stock of most products to allow for erratic lead times caused by bad weather. Sutherland says: “We pride ourselves on our excellent customer service and are always working to improve service levels.”

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