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Foodservice Equipment and Supplies Dealers Prepare for New Normal

Much has been made about how stay-at-home orders continue to impact restaurants and other foodservice operators, and rightfully so. But foodservice operators are not the only ones trying to come to grips with what the new normal will mean for the industry.

Foodservice equipment and supplies dealers continue to look for answers about what the future holds for their companies. And the answer may be as diverse as the many businesses that comprise the dealer community.

Speed and flexibility represent two traits some dealers continue to leverage as they prepare their businesses for what comes next. “Our culture has always been built on adaptability,” says Gene Clark, CEO of Clark Associates, a Lancaster, Pa.-based dealer. “When you have something like this where you are working in the office on Friday and the world is a different place by Monday, that adaptability is key. We were able to move quickly, make decisions and have everyone buy in. You are doing things that are not fun, but we’ve gotten through it.”

Other dealers acted quickly, too. “The moment the National Basketball Association shut down and the governor shut down the restaurants in Ohio, we hit the brakes,” says Jameel Burkett, president of Burkett Restaurant Equipment & Supplies, a Toledo, Ohio-based dealer. “We stayed together as a team and came together to develop what’s like a wartime mentality. Every step of the way is a battle. And if you win that first battle you can move on to the next one. And we approached the business that way every single day. It was definitely survival mode. Based on that we decided what we are going to do and how we will position our company to remain relevant to our customers. Our team has evolved so much. I am so proud of them and their passion and energy.”

For some dealers, reacting meant managing payroll in the form of furloughs and layoffs, cutting back on expenses and trimming discretionary spending. Some applied for and received funding from the Payroll Protection Plan and were able to bring some people back to work.

The steps Clark Associates took included reducing hours in distribution centers for a period and provided 10 days of paid time off for every employee to use at their discretion. “They may have children that they need to watch because schools were closed or elderly parents they needed to care for,” Clark says. “We just did not want them to have to worry about work.”

Like Clark and Burkett, and many other dealers for that matter, the business model for Rapids Wholesale Equipment, a Marion, Iowa-based company, includes multiple channels, such as e-commerce, call centers for its catalog business, a contract-design segment and a service component. “All of those areas are playing out differently. Fortunately for us, we are diversified,” says Joe Schmitt, Rapids’ president. “If we don’t see some traffic in our stores and our website it will be tough. The service business has been difficult because restaurants are not open.”

Prior to the economy’s sharp downward turn due to stay-at-home mandates aimed at slowing the spread of COVID-19, Rapids’ contract-design backlog was bigger than last year, according to Schmitt, and it extended through 2021. “It’s still good, and I am hopeful it will carry the load for us,” he adds. “It really depends on the type of the project. The institutional type of projects are still rolling. None of the senior living groups we work with have hit pause. Some of the bigger restaurant projects from companies with multiple locations got put on hold, but we believe they will get back online relatively soon. The one-off restaurant projects have really stopped, and I think that’s because nobody knows what foodservice will look like in three months. And quite frankly, those smaller operators need every square foot for seating otherwise the cash flow does not work for them.”

In the case of Rapids, roughly two thirds of the company’s staff continues to work from home, according to Schmitt. Rapids staff that work in accounting and the warehouse, for example, continue to come to the company’s facilities. “We are not asking people to come in just to come in. Our managers know what they should expect from our team,” he says. “They are checking in with them multiple times a day and we are having regular company meetings on Friday afternoons. We started that about a month ago because we got feedback our employees missed being around one another. It’s been kind of fun. You see people in their home settings.”

Internal communication has become more critical for dealers, too. Burkett’s company, for example, holds daily leadership and sales meetings, with the latter focusing on three questions: What happened yesterday? What are you doing today? And, What can we help you with? “Through this we were able to get the pulse of our salespeople and see what they are seeing,” he says. “We know it’s going to be tough to get out of this, but we feel well positioned. I thought at first it would be a bullwhip recovery but that does not seem to be the case anymore. In the meantime, we continue to build trust with the community, our customers and beyond.”

For Burkett’s company, communication and information-sharing with customers became more critical than usual, too. “Every time we were on a webcast, whether it was with the Ohio Restaurant Association or the local politicians or anything else, for that matter, we would post and share everything we learned with our customers and the community,” he says. “And from there we started to figure out how to help customers.”

Expanding Segments

The Burkett team also got to thinking about how the foodservice industry might change as a result of the pandemic and started to share information that supported those initiatives. “You could see pop-up kitchens happening, storage and packaging needs changing,” Burkett says. “As we started to learn more about sanitation, we grew into that area, too. And every couple of days we started adding new products. Our core business is still foodservice but by expanding into this, our customer base has expanded significantly to other segments.”

Clark’s cash and carry locations serve Pennsylvania, Maryland and Delaware. Uniformly in those states, restaurant dining rooms are closed with many operators offering only takeout or drive-thru service. “Some restaurants already known for takeout are doing well and, in some cases, thriving,” Clark says. “One customer is doing more business than they did before. They’ve only been open a year and a half, but they are having some of their best weeks.”

Like operators that offer curbside pickup to meet government mandates to slow the spread of COVID-19, Clark Associates took a similar approach with its cash and carry stores. “We used our express pickup feature. Customers place their orders online and we load them into our cars when they get to us,” Clark says. “And now some customers don’t want to go into the stores because they are afraid of the virus. We had that operating before this and it’s built perfectly for this situation.”

While easier said than done, some dealers continue to follow through on their strategic priorities, despite the pandemic, to keep their businesses ready for the recovery. To that end, prior to the pandemic, Clark Associates had planned to hold small, leadership development meetings and followed through with this. “We decided that we were not going to let what happened derail our strategic priorities,” Clark says. “Technology has allowed us to execute on those strategies, which are just as important as they were eight weeks ago.”

All three of the dealers that spoke with FE&S for this story see positive developments among their customer bases.

“In the last week or so we have seen positive improvement,” Clark says. “The more things were locked down we were thinking it was going to be a longer road to recovery. Within the past week or two, we’ve seen a bounce back.”

In addition to their traditional customer bases, the pandemic has introduced dealers to some new clients, at least temporarily. “There’s all sorts of people who never thought they’d need to buy foodservice gloves and plexiglass shields,” Clark says. “When I looked at our numbers, we were seeing healthy recovery across all categories. And we’ve seen an influx of new customers finding us. So, there’s some peripheral people we’re doing business with. We shy away from the consumers, though.”

Burkett’s experience has been a similar one. “It was really tough early on because the world just stopped but things are getting better,” he says. “The transactions are up, and the activity is consistent in the replacement business. People are buying smallwares and other things but nobody really opening new stores.”

Along those lines, Rapids reports seeing increased interest in hand sanitizer and gloves, likely for home use, with an occasional order for a reach-in refrigerator sprinkled in for good measure. “We’ve seen those numbers come back – not to February or levels in normal times, though. But the last two weeks we are up 30% over the prior 4 weeks. Almost overnight, activity stopped, and it stayed that way for four or five weeks. So, we are almost back to some of our February numbers, and that’s typically a slow time for us. The good news is we see some bounce back.”

Despite the momentary optimism, dealers remain realistic about what lies ahead for them and their customers as they try to keep pace with the ever-shifting landscape. “We have to watch the governor every day and watch the news all the time,” Burkett says. “I think it’s going to be a really slow process. And considering that Facebook has cancelled all its internal corporate group events through June of 2021 lends credence to that.”

In planning for the future, Burkett and his team continue to heed the advice his brother-in-law provided. He told Burkett: “The business you are today may not be what you are tomorrow. What will the market be June 1? You have to start making every decision looking at your business that way.” And that’s Burkett and his team have done.

There’s no doubt technology will play an important role for the foodservice community in the future – dealers included. ““This is the kind of an event that you would never think of in all of your business-planning scenarios,” Clark says. “The fact that we have been able to continue without skipping a beat is what the technology has done for us.”

Schmitt does a good job articulating a sentiment that most in the foodservice industry likely share. “People will feel a little bit of optimism and hope, at least for a small window. I just don’t want to take any steps backward.”