Savvy operators will require more in the form of information and training.
Trends such as local sourcing, customer-facing technology and the like continue to command much of the foodservice industry’s attention. And rightfully so, because they refer to the way consumers want to use foodservice. But two or three less glamorous trends could potentially impact the face and shape of the foodservice industry as well.
The influx of private equity into the chain restaurant space and the continuous evolution of non-commercial operators means buyers not only have bigger budgets but also bigger demands from their suppliers. Savvy buyers will keep requiring more in the form of information, training and various other forms of support. If a supplier can’t provide this then the operators will find someone who can.
A second trend worth monitoring is the continued evolution of the dealer community. Somewhat under the radar, we are starting to see small to medium-sized dealers get a little more creative when feeding their growth aspirations. For example, early last month PJP opened its fourth marketplace-style location in Northeastern Philadelphia. This location not only sells commercial foodservice equipment and supplies, it also carries an inventory of groceries, including beer and wine.
Or look at the deal announced between dealers Johnson-Lancaster and Schert Foodservice Equipment. They formed an LLC that will go to market as Lancaster-Schert. The strategic partnership gives Johnson-Lancaster a point of entry to the Illinois and Indiana markets while providing Schert access to the capital it needs to grow. In addition, some dealers now mine data to look for other ways to provide their customers with business intelligence to support their customers’ growth objectives.
Changes like these become more important for individual companies as the dealer and factory communities continue to mature and consolidation becomes more rampant in their respective segments.
Speaking of consolidation, watching how dealers and factories handle the aftermath of a merger or acquisition will become important. When suppliers consolidate, their customers often wonder what’s in it for them, be it anticipation of better pricing, a broader range of products from a single source and/or even seamless coverage. What customers don’t want, though, is a partner that becomes harder to work with. This will send them looking for new suppliers.
Could consolidation spawn new forms of competition or alliances? One could argue it’s already happening with Amazon’s dalliance into the foodservice equipment and supplies industry or Sysco’s acquiring Instawares earlier this year. Could manufacturers look for more ways to sell direct than is already the case? Could manufacturers revisit the notion of acquiring or becoming a dealer? What about international expansion from the dealer community? None of these ideas are as far-fetched as they once might have appeared, and watching to see how the industry evolves should make for a fascinating 2017.
Here’s wishing you and your families a happy and healthy New Year!