Sales among the top 100 foodservice equipment and supplies dealers totaled $11.72 billion in 2021, up from $9.4 billion in 2020, according to the FE&S 2022 Distribution Giants study. In 2021 sales increased for 85% of the dealers within the top 100, compared with 16% last year. That means 15% saw a decline in revenues in 2021, which is an indicator of how much the industry has fluctuated from one year to the next.

One of the biggest challenges facing the industry in 2021 was supply chain issues. Long lead times, shipping delays and price increases seemed to be the norm. “Even though we were aggressive with loading up on inventory, we still could not keep up,” says Jonathan Gustafson, president of Ace Mart Restaurant Supply. “There were whole segments that would pop up out of nowhere. There were definitely lost revenue opportunities. There were times when we could not keep up and it was not us, it was the manufacturer.”

In light of the supply chain challenges, having product to sell and deliver often serves as a key differentiator. “Our having the inventory allowed us to grow at a time when a lot of other companies were at a standstill,” says Tricia Powers Dambrauskas, vice president for B&G Restaurant Supply, a Pittsfield, Mass.-based dealer. “Prior to the pandemic, carrying a lot of inventory was sort of taboo. Over the past year-plus, when manufacturers did not have a lot of product, we did have it. That even helped us get rid of some old inventory.”

The long lead times continue to affect timelines for projects, new store openings and even replacement sales. “If the average brand ships in 30 weeks and the customer needs it in 32 weeks, we will need to make some changes,” says Ben Whitlock, chief operating officer for Mobile Fixture. “We have not seen a manufacturer hit their ship date in a long time. They are missing it by weeks and weeks.”

Pricing Pressures

Continued price increases represent another challenge that’s vexing the supply chain. “When you are opening a restaurant, it’s probably 30% to 40% more than you budgeted and it’s hard to run a business that way,” Gustafson says.

With the combination of higher prices and longer lead times, many dealers report many operators are now more open to trying other brands than was previously the case. Some will even consider trading down to stretch their budgets. Whether these brand shifts will be temporary or long-term is anyone’s guess.

“Most of it will depend on how these newer brands that the customer was not familiar with are performing,” Dambrauskas says. “Will they withstand the tests of time and perform the way their old equipment performed? If not, the operator will go back to their previous brand. And we have had customers who were willing to wait. One was willing to wait nine months for a piece of equipment. So there are still some strong examples of brand loyalty out there.”

Some of it will depend on the type of business, too. “The chains negotiate their equipment list, pricing, etc., and when that manufacturer can’t hit its dates, the operator will go someplace else,” Whitlock says. “The odds of getting their original equipment back in will be a challenge.”

It’s not just the price increases that continue exasperate dealers; it’s the seemingly abrupt nature of these increases that causes additional heartburn during an already challenging period. “Some manufacturers accept orders but can’t tell you when they will ship them and then charge you more later on. That kills a dealer,” says David Curran, president of Curran Taylor. “If we understand our prices up front, we can deal with it. But if they keep changing the prices week to week, that’s impossible to deal with. This does not apply to every manufacturer, but certain ones have circled the wagons and only see their side of it.”

These challenges could lead to bigger changes down the road. “It’s going to force us to have tighter contracts and more attorneys involved. And this is not the kind of discussion we often have in this industry,” says David Ellingson, president of Bargreen Ellingson.

• 2022 Annual Sales (in Billions)

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• 2022 Biggest Movers by dollar amount

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• 2022 biggest movers by percent of sales

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Communication is Key

Given the dynamic nature of the current operating environment, communication among the supply chain as well as the end users has never been more critical. “We are always as direct and transparent as we can be with the customer. But it took our customers a while to understand this was real and that we were not making this up,” Ellingson notes. “We started tracking categories to see which were more volatile than others. We tried to make some sense of the chaos. For most people it was a function of communicating and trying to complete a math problem we can’t solve. It was all about communication.”

Indeed, while nobody wants to have these difficult discussions, how these interactions play out can often be very telling. “It has made us realize immediately who our partners really are, be they vendors, reps, or customers. If we are transparent with them and they are transparent with us, we know where we stand,” Whitlock says. “Let’s call it what it is. This is the biggest seller’s market this industry has ever seen. If you are a seller, you have control of the market. Most factories have compassion for the dealers and our needs. The ones who are making decisions for the long term are the ones that will succeed once this eventually ends. We are going to have to deal with it together.”

As a result, the next couple of years could be formative ones when it comes to the relationships among members of the supply chain. “Historically, this has been a fun industry and we have treated each other well, with respect and dignity. Right now, it does not feel like that,” Ellingson says. “We tell our people to be kind to the suppliers and when a customer is upset, we tell them to listen and do the best to deescalate. Everyone is under a lot of duress right now.”

Adds Curran, “We realize manufacturers are in a tough spot, but things will change over the next year or two and eventually get back to normal. We will remember who treated us well and who didn’t.”

Supply-chain challenges were not the only factor impeding growth, though. “There’s also labor shortages,” Dambrauskas notes. “We can’t hire more salespeople because we don’t have the warehouse and other support people in place. We are now short in every one of our four locations. It’s hard to get someone to even apply. That does seem to be getting a little better. But it’s not just happening to us. It’s happening at the operator level, too.”

So Far, So Good

Despite these operational challenges, some dealers report 2022 is off to a solid start.

“We are opening new accounts and tracking our sales and they continue increase. We attribute that to our inventory,” Gustafson says. “Some of the government and school businesses started to turn on pretty quickly for us. They were spending money on disposables and PPE the past few years. Now they are starting to spend on kitchen renovations, replacing equipment and more. Our local restaurant chains are still growing with us.”

Dealers like B&G’s Dambrauskas point to a variety of operator developments as fueling their continued cautious optimism, including major cities dropping mask and vaccine mandates. Plus, operators have adapted in ways that could make their businesses more robust. “Outdoor dining was virtually nonexistent prior to the pandemic and now it’s become a four-season event,” she says. “Some restaurants have more than doubled their capacity as a result of outdoor dining and that requires more equipment, tabletop items and etc.”

Another reason for optimism among dealers is the potential of new and innovative products factories are rolling out to the market. “Our guys always are getting trained, and we regularly have factories come in to train our people,” Curran says. “It’s nice to go see an operator and have a new solution for them. For years, combi ovens were the new and innovative technology but now even they are even becoming old hat.”

Indeed, despite predicting a challenging 2022, many dealers see brighter days ahead. “If we can hit our 2019 numbers this year then we feel we will have done our jobs,” Whitlock says. “We do feel 2023 will be a growth year for our industry. We just see a lot of action in our industry, from consultants to schools and more.”

Editor’s Notes to the Data

Singer Equipment Co. acquired Kittredge Equipment Co. in March of 2022. Given that Kittredge was an independent company for 2021, its data will be listed separately for this year’s study. In next year’s study, Kittredge’s data will be part of Singer’s results.

Johnson-Lancaster and Associates Inc.’s information also includes the sales data for Restaurant Supply, which it acquired in 2020.

The data for TundraFMP reflects a change in company positioning. Tundra, FMP, KNG and Restaurant Discount Warehouse operate as one business and one brand with a single management team, a single sales team, etc. TundraFMP functions as a dealer selling equipment, supply items, parts, etc., to foodservice operators across a variety of segments and through various means.

In November 2021, PJP became part of Envoy Solutions.