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June 3, 2021

Restaurant Supply Chain About to See Significant Shift

Tony Treadway

Restaurant Supply Chain About to See Significant Shift

At The Crossroad To Disruption Junction

I’ve been behind the scenes of several developments over the past year that will significantly impact how food manufacturers get their products on restaurant tables. In the words of one high-ranking official within the traditional supply chain, “The system that we have been using for the past 60 years is about to change.” Let me set the stage on a strategy shift that I’m sharing with Creative Energy foodservice clients.

For 60 years, the process for a food manufacturer to put their food on a restaurant table was to solicit large and small distributors to carry their products at distribution centers across America. Sysco, US Foods, Gordon Foodservice, Performance Food Group employ thousands of workers at multiple distribution warehouses. Each warehouse employed hundreds of distributor service representatives (DSRs) to meet individual restaurant operators to discuss their needs and offer their food manufacturer’s products as a solution.

Because DSRs were encouraged to sell their distributor’s own branded products instead of a food manufacturer’s own brand, manufacturers hired brokers to meet with the same restaurant and non-commercial operators to sell their branded products instead of the distributor’s private label. Then COVID ravaged the restaurant business, closing about 16,000 restaurants forever. Chaos occurred and the seeds of a revolution were sown.

They were replacing a personal relationship with a laptop and a mouse.
That has repercussions.

With restaurants closing their doors, distributors, and brokers laid off tens of thousands of sales representatives. Distributors encouraged restaurant operators to forget about a friendly DSR showing up once or twice a week and replaced them with a laptop and a mouse. It’s a move that spelled a major change in other industries. When banks opted to promote mobile banking. When car dealerships went to selling their cars online. Sure, it’s convenient and easy, but folks in these industries forgot one thing. They were replacing a personal relationship with a laptop and a mouse. That has repercussions. Suddenly consumers were getting a home mortgage from a faceless online bank instead of their local hometown banker. Relationships traded for convenience and efficiency.

The same will happen in foodservice, because sharks are in the water.

Technology is a wonderful thing and companies can now reach operators in newfound ways like never before. Their new, electronic, relationship allows them to instantly view what operators are ordering and menuing allowing a crack in the wall to let food manufacturers peek inside the supply chain. Distributors, who have been reluctant to let their manufacturer clients know which operators were purchasing their products, beware. Now food manufacturers can.

While I can’t discuss in this blog how and where these cracks are occurring, I can say that new technology now can provide direct access to operators who are buying their products, and operators who are buying a competitor’s product and try to steal them away. They can also opt to convert restaurant operators who are currently purchasing distributor brand products and take them too. For the first time, food manufacturers can have access to intel that enables them to rifle target accounts to grow their business efficiently and effectively to grow their market share.

This disruptive era in the foodservice supply chain was bound to happen and the pandemic just opened the door. Food manufacturers have a rare opportunity to leverage new technology partners and build their own sales relationships with operators and slice their supply chain costs. I’m seeing that we are at the crossroad of disruption junction.

Want to know more, let’s talk.