Sales among the top 100 foodservice equipment and supplies dealers totaled $9.022 billion in 2016, up 14.85 percent from $7.84 billion in 2015, according to FE&S' 2017 Distribution Giants study. Eighty-one percent of the top 100 dealers reported increased sales. And 14 percent reported a decline in sales.

Looking more closely at the revenue from FE&S' 2017 Distribution Giants study, the large dealers, those with annual revenues of more than $100 million, saw sales increase 50 percent last year. And the number of dealers with more than $100 million in annual revenues has almost doubled in the past 5 years — going from 10 companies in 2011 to 19 companies in 2016. Last year 2 dealers broke the $100 million barrier — QualServ Solutions and KaTom. And at more than $90 million in sales, The Sam Tell Companies seems poised to join the $100 million club next year.

Top Dealers

In 2016, those 19 dealers with more than $100 million in annual revenues accounted for 71 percent of the revenue among the top 100. This represents a 9 percentage point increase compared to 2015 and a 19 percentage point increase compared to 2011. In fact, the top three dealers by sales volume — TriMark USA, Clark Associates and Edward Don & Company — accounted for 36 percent (or $3.26 billion) of the sales generated by the top 100 dealers. This represents a 12 percent increase from 2011.

In terms of dollar growth, TriMark USA led all dealers at $348 million. This was fueled by organic growth as well as the acquisitions of R.W. Smith, which reported revenues of $101 million in 2015, and Adams Burch, which FE&S estimated had sales of $29 million in 2015. (TriMark's figures do not include the acquisition of Hockenbergs, which was announced earlier this year. Hockenbergs reported an $8 million increase in sales for 2016, which brought its total revenue to $194 million, placing the Nebraska dealer eighth among the top 100.) TriMark's dollar growth alone would make it the sixth largest dealership in the country.

In addition, Clark Associates grew by $273 million. All of this appears to be organic as the company did not report any acquisitions in 2016. And the dollar value of Clark's growth alone would make it the seventh largest dealership in the country.

Expect competition among the large dealers to get even more intense moving forward, both in terms of competing for sales and in the mergers and acquisitions arena. Private equity firm Vestar Capital purchased an equity stake in Edward Don & Company to fund the dealer's "future growth with a primary focus on geographic expansion and acquisitions." Edward Don & Company's sales increased by an impressive $58 million in 2016, but the company was still third behind TriMark and Clark Associates in this metric.

Conversely, dealers with less than $20 million in annual revenues represent just 5 percent of the top 100 and those dealers saw their share of sales among the top 100 decline 8 percent in 2016. In fact, dealers with less than $20 million in annual revenues occupy fewer seats among the top 100 dealers compared to 5 years ago. Today this group accounts for 5 percent of the top 100 dealers, compared to 12 percent in 2011.

Most notably, though, mid-sized dealers, those with annual revenues between $20 million and $99 million, now account for only 24 percent of the sales that the top 100 dealers generated in 2016. This represents a 7 percentage point dip from the previous year and a 12 percentage point dip from 2011.

In other words, as the big get bigger, a large number of small to medium-sized dealers are left to fight over a smaller share of the pie.

Market Segment Analysis

Taking a closer look at sales by market segment, the top 100 dealers report 76 percent of their 2016 sales came from commercial foodservice operators, with the other 24 percent coming from noncommercial operators. This represents a slight change from 2015, when the top 100 reported that 74 percent of sales came from commercial operators.

Among sales to commercial operators, the top 100 dealers reported an 8 percent increase in sales to chains. As a result, restaurant chains account for 48 percent of the sales to commercial operators among the top 100 dealers and independents account for 52 percent. In 2015, chains accounted for 40 percent of sales to commercial operators among the top 100 and independents accounted for 60 percent.

This development falls in line with other industry studies. For example, the NPD Group's Spring 2016 Restaurant Recount Census showed that the overall number of restaurants in the U.S. had declined 1 percent. The number of locations run by independent operators declined by 3 percent while the number of chain units remained flat.

Here are several other noteworthy developments from this year's study:

• Buffalo Hotel Supply is now listed as BHS.
• As of Dec. 31, 2016, Instawares officially merged with Supplies on the Fly, which is owned by Sysco. Given that it spent 2016 operating as Instawares, the dealership is listed as such in this year's report.
• Penn Jersey Paper, or PJP as the company is known, reported overall revenues of $164.9 million for 2016, a significant chunk of which can be attributed to paper and disposables and janitorial and sanitation products. The company's sales across other categories, including heavy and light equipment, smallwares, tabletop and furnishings, totaled $20.59 million, which means PJP remains among the top 100 foodservice equipment and supplies dealers in the country and is represented in the study.
• PJP also operates 4 Marketplace stores that generated an additional $35.1 million in revenue in 2016.

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