Does Size Matter?

In the foodservice equipment and supplies industry, evolution continues to take different forms. And at no time was that more evident than during the month of June.

For example, 5 foodservice equipment and supplies dealers were acquired during the 30-day period. From all indications, the merger and acquisition activity will keep going through the end of the year, at least. Rumors continue to abound about which dealers might be for sale and who will remain in acquisition mode. The presence of private equity is nothing new for the foodservice equipment and supplies industry but it seems as if investors are showing renewed interest in this segment.

The June frenzy seems similar to the uproar the dealer community experienced a few years ago when its beloved buying groups went through significant realignment. Dealers jumped from their existing groups to form several new ones with the promise of larger back-end deals. As the big got bigger and consolidated their power, the remaining dealers, many small to mid-sized companies, scrambled to form new buying group alliances that would solidify their positions. It wouldn’t be surprising to see something similar happen between companies instead of buying groups this time.

Any time the big get bigger, lots of people are left wondering whether the end is near for the small guy. For example, as companies like Home Depot and Lowe’s extended their reach, it became fashionable to predict the end for the local, independently owned and operated hardware store. And yet today Ace and True Value hardware combine to have more than 8,700 locations in their networks. And, in many instances, they remain an important part of the communities they serve.

Size does have its advantages, but the moral of the story is the foodservice equipment industry, much like its hardware cousins, continues to have a place for the smaller company, so long as it can deliver value on the customers’ terms.

That concept was on full display in June when I visited Globe Equipment Company, a dealer based in Bridgeport, Conn. Globe had just taken the wraps off a brand new showroom and revamped warehouse space. Judging by the enthusiasm showed by customers, manufacturers and reps attending Globe’s grand re-opening festivities, these changes appear to strengthen the dealer’s position for the next 25 years or more by creating an environment that enables the company to work more closely and collaboratively with its customers and supply chain partners.

In other words, no matter how big a company gets, its success remains forever tied to customers’ ability to access product and information while leveraging the capabilities of an attentive sales staff. Follow that recipe and success will follow, no matter how big the company.

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