Sales among the top 100 foodservice equipment and supplies dealers totaled $9.4 billion in 2020, down 14.37% from 2019’s total of $10.92 billion, according to the FE&S 2021 Distribution Giants study. In 2020 sales increased for only 16% of the dealers within the top 100, compared with 70% last year. That means 84% saw a decline in revenues in 2020, which should come as a surprise to nobody. This represents the first time since 2008 that total sales among the top 100 foodservice equipment and supplies dealers declined.

During the past year, the struggles of restaurant and foodservice operators have been well documented. But the business environment has been equally challenging for the supply chain that supports these operators, as the data points above illustrate. While the industry had endured other challenging times, such as the aftermath of 9/11 and the economic downturn of 2008-2009, it was clear the economic hardships brought forth by COVID-19 would be different right from the start.

“September 11 was an awful time in our industry, and it shut down travel, but it did not shut down dining altogether,” says Steve Don, CEO and president of Edward Don & Company, a foodservice equipment and supplies dealer based in Woodridge, Ill. “This was the first time that government mandated a shutdown of dining rooms across America, and it happened instantly. It was the suddenness of what happened and the bottom-line impact.”

As if the initial shock of seeing so many dining rooms close was not enough, the industry continued to muddle through wave after wave of uncertainty about what would come next. “If I had to put it into one word, it would be fear. In January and February, we wondered if this would hit us like they thought it would,” recalls Patricia Bible, president of KaTom Restaurant Supply, a dealership based in Kodak, Tenn. “We were getting mixed messages from the media and the government. Then April and May were worse than we thought. Everyone was living in fear for so long. It did not matter if it was the dealer, the end user or even the customer — there was a lot of fear.”

If operators’ businesses ground to a halt, it was only natural for the same thing to happen in the supply chain. “Many projects that we started pricing in the late fourth quarter of 2019 and in the first quarter of 2020 were stopped. The financials were not there,” says Kamran Amiri, vice president at Kamran and Company, a dealership based in Santa Barbara, Calif. “In general, the volume of work from the beginning of March until the end of 2020 was substantially reduced for the whole industry, and we were part of those issues.”

And it was more than new project work that took a hit. “It certainly slowed growth, and it slowed everyday replacement ordering because nobody was going to spend money on anything they did not have to,” says Mark Rossi, CEO and founder of Avanti Restaurant Solutions, a Costa Mesa, Calif.-based dealer. “Some of the chains did climb out of it quickly, though.”

Despite the ongoing challenges, the industry started to show some signs of life toward the summer of 2020. Dealers with a solid e-commerce infrastructure, such as KaTom and Clark Associates, a dealership based in Lancaster, Pa., seemed to fare well during 2020. “We were really happy with all aspects of our business,” says Gene Clark, CEO of Clark Associates, which ascended to the top spot of FE&S’ Giants list this year. “The contract side of our business was challenged somewhat because those customers pulled those projects off the street. The other aspects of our business had their best years ever. We met a lot of new customers last year.”

One key to weathering an economic tsunami like the one that accompanied COVID-19 is diversification. “In 2008, we lost some big jobs due to the financial crisis. What helped us weather that storm was diversification. We were able to continue working on prison jobs, military bases and other projects. This experience helped us,” notes Amiri. This time around, his company had two large casino projects that kept moving during the pandemic, which helped offset slowing business conditions in other segments.

Some dealers had to adapt, while others relied more heavily on the fundamentals that drove their businesses prior to the pandemic. “That’s the thing — we really didn’t have to adapt. Our WebstaurantStore (e-commerce) and The Restaurant Store (cash and carry) businesses did what they did,” Clark says. In the cash and carry aspect of the business, for example, The Restaurant Store was providing customers with curbside delivery prior to the pandemic, so this was nothing new. “There were some product shifts due to customer demand, but we were really fortunate to be positioned that way,” he says.

In Avanti’s case, adapting means understanding how to work with customers and project teams remotely. “We were set for the pandemic in that we already did work all over the nation remotely and already understood last-mile logistics,” Rossi says. “It just reminded us you had to be tight on your processes and procedures.”

The Year Ahead

When the calendar rolled over to 2021 from 2020, many in the industry felt this would be the start of better times. Then the country got a rude awakening due to the political unrest in the nation’s capital and some severe February weather that had as much as 70% of the country under snow at one point. Since then, though, the industry has seen signs of life as vaccine rollouts began to gain some momentum and various states and municipalities began loosening dining restrictions.

“We see gradual week over week improvement,” Don notes. “There’s definitely a correlation between dining room capacity and our business. The states that are open are doing better, and the ones that are just opening are a little behind the curve. We are not there yet, but it’s nice to see the week over week improvements.”

And this sense of progress has instilled a greater sense of optimism in some dealers. “The first seven days of March have been so over the top — more than we thought or could have imagined. That allowed us to see if it’s this way in March, it will be ongoing,” Bible says. “There’s also a lot of pent-up demand for people wanting to get out and enjoy their lives again. A lot of the stale concepts have gone by the wayside, and that leaves a lot of room for new concepts. I think the next five years are going to be incredible from an E&S perspective.”

*FE&S estimate **Revised 2019 sales number H = Heavy Equipment L = Light Equipment SW = Smallwares T = Tabletop P/D = Paper and Disposables J = Jan/San F = Furnishings

Editor’s Notes to the Data

Boelter: The Wisconsin-based dealer updated its three-year revenue numbers to reflect the sale of Boelter Brands in August 2020 to Logo Brands. The restated sales data excludes Boelter Brands revenues. Boelter Brands sold primarily drinkware products, namely glassware, tumblers and mugs with licensed sports logos.

L&M: For the second consecutive year, L&M posted significant growth. The company attributes this growth to increased sales of personal protective equipment during the pandemic.

Johnson-Lancaster and Associates: Johnson-Lancaster and Associates has acquired Classic Restaurant Supply. Starting next year, Classic Restaurant Supply’s data will be part of the Johnson-Lancaster entry in this study.

Penn Jersey Paper: Penn Jersey Paper reported overall revenues of $183.7 million for 2020, a significant chunk of which can be attributed to paper, disposables, janitorial and sanitation products. The company’s sales across other categories, including heavy and light equipment, smallwares, tabletop and furnishings, totaled $20.3 million.