Previously, dealers generally pursued smaller design projects, typically independent restaurants that seat 40 customers or fewer. Recently, though, many consultants feel dealers seeking out design business are pursuing bigger-ticket projects. "Dealers will go after anything they can get. They feel like with the design-build projects they can team up with the construction manager to provide the design and the equipment," Reitano says. "In the past, they might have stuck to the projects that the consultants might not want. But if that's the only place you are seeing them today, you are not looking very hard."
With budgets and margins becoming tighter, dealers' increased presence in the design world represents a new form of competition that consultants must address. "Everyone is concerned about how much money they have to spend and if they see the consultant as a line-item expense, they might consider going with the dealer's designer," says Jim Petersen, president and director of design at C.i.i. Food Service Design, who also serves as chairman of the board of trustees for FCSI-The Americas. "But I don't know that they market themselves for this work the way consultants do. They don't position themselves as being objective about the process or the equipment they are specifying. It is just a different approach that has its pluses and minuses."
Collins is even more direct in contrasting the differences between dealer-designers and independent designers. "The designer works for the dealer, who works for a buying group or two. They are going to spec in what's best for the dealer and not necessarily what's best for the operator. And that's the distinct difference between an independent FCSI design consultant and a dealer designer."
Even if a consultant wins a piece of business, that does not mean they are done competing with the dealers. "In some cases, the relationship [between the consultant and dealer] can become adversarial as the kitchen equipment contractors look to make changes because they have cut the job so thin," Reitano says.
Further, the increased competition has placed a greater emphasis on price and the subsequent margin erosion that can accompany it. "We certainly did not do ourselves any favors by allowing the market to drive our fees," Brady says. "We absolutely embrace competition, but when your industry breaks down into a mindset of 'I will take it at any price,' that short-term fix may work for a few companies but it will not help the entire industry. So we had to pass on a few jobs and cut expenses. Now things are starting to come back, but the client's expectation is that you can work at that lower fee forever and maintain that level of quality. You can't, and some clients understand that."
The net result is that some consulting firms have become more thoughtful in their go-to-market approach. "Our business model has not really changed. But the market that we serve has been affected by the downturn in the economy, and there is more competition for the business we pursue," Egnor says. "So as a businessman, I've had to adjust the margin and fees we put into a project."
Slowly, it seems, some operators and architects are starting to understand the limitations of always going with the lowest-price option. "Lo and behold, some architects are starting to realize that going with the lowest cost did not save them as much in the long run because of the compromise in quality," says Brady. "There is no industry with 40 percent net profit, and if that's the case it won't last for long as new competitors enter the market. But if someone is trying to drive a $200,000 project to $80,000, nobody wins, because the project will be awful. And eventually they find out that the kitchen does not work, and then they have to spend money to fix it."
Change for the Better?
For a variety of reasons, those foodservice operators and architects that are in a position to use design consultants seem to want to leverage their expertise in new ways compared to before.
"I think the consultants' role has become more complicated because they need to know more now than ever before. They need to know about green or LEED items, sustainability, waste management and more," Posternak says. "Those are the kinds of things consultants are dealing with now that they were not five or ten years ago. Just like any of us in foodservice, we need to show our clients how we can help them make or save money, how to be safe and how to be healthy. But I think the number-one value of a consultant is that they are completely independent of suppliers and manufacturers. They have to be an advocate for the client. It's been that way since day one, and no dealer or rep can say that."