Supply Chain Insight: Foodservice Opportunities 

Denise Purcell
According to companies across the supply chain, signs point to specialty foodservice as an undertapped opportunity. Specialty food makers who were interviewed as part of SFA's latest State of the Specialty Food Industry research, recognize the importance and potential of the channel as a means of eventually driving total revenue by as much as 50 percent. But many have yet to prioritize the foodservice channel. Reasons they cited include challenges brought about by foodservice’s fragmentation, which requires complex logistics and multiple partners, and a lack of good data to support strategy in foodservice.

Makers, distributors, and foodservice operators note that getting their products into outlets like restaurants drives consumers to buy them again at retail. They also advise other makers to be prepared to offer customized products, including to retailers who may already be selling the product but want to carry foodservice-ready versions at in-store cafes.

Here is some of what they had to say:

 “We are successful in foodservice because we are branded. Our model has been similar to Niman Ranch in this way. Our relationships with Michelin-starred restaurants reinforce our brand quality in the foodservice space as well. Restaurants buy highly specialized products. They don’t buy every week, and they certainly don’t buy in high volume. [While sales in foodservice aren’t huge], our strategy around foodservice is more about collaboration, innovation, and branding.”
founder and CEO, plant-based food brand

 “We partner primarily with restaurants but there are cases where we’ve partnered with grocery stores and other food retailers that sell prepared foods to consumers. With the changing food landscape, consumers are requiring more from how they plan out their three-a-day meal periods. The marketplace is asking for healthier, more convenient options that they can either order directly from a restaurant or that they can prepare/semi-prepare themselves. This shift opens the doors for companies like ours to change the narrative around prepared foods.”
director of operations, food delivery platform

“Foodservice is a slow start, but once you get the flywheel moving, it can throw off a lot of cash. But understand that it’s going to be a 1-2–year slog to really rev up in the channel. Foodservice isn’t going to solve [a brand’s] revenue issues immediately; it takes time. You must invest in packaging, samples, going to the right industry shows and events, and most likely pay a broker or consultant a retainer to pioneer your product.”
founder of a foodservice consultancy for the specialty food industry

“It’s a huge opportunity, especially when you think of foodservice as it relates to the retailer. They’re all getting into the game. Retailers like Whole Foods have stores that are designating 25 percent of space to restaurants. [Retailers] are demanding better, cleaner, higher-end product in their prepared food counters, so that they can compete with the restaurant down the road. When you see what’s [being promoted in foodservice distributor] catalogs, they’re launching more and more [items] that would fall into the specialty realm every year. Broadline foodservice distributors are implementing strategies around natural and organic for foodservice customers.”
vp of vendor relations, specialty food distributor 

 “[Foodservice] is a big opportunity for us. It’s so important, because not only does it provide seasonal stability for our traditionally seasonal line, it creates trial, or getting product into mouths, which ultimately leads customers to retailers.”
co-founder and CEO, condiment company

“The foodservice opportunity [is large, considering that] 51 percent of food and beverage is consumed away from home, but foodservice is very complicated. There are a lot of layers: distributors, manufacturers, brokers, group purchasing organizations, contract management companies, chains, and independents. It’s a great mystery, because it’s impossible to get data. You may receive shipment data from distributors you’re working with and you might have access to some operator data because of trade spend, but you won’t have visibility into the whole picture."
founder of a foodservice consultancy for the specialty food industry

SFA members can purchase the 188-page State of the Specialty Food Industry Full Report and 5-Year Category Tracking and Forecasts here at a discounted member price to learn more.
Posted by Denise Purcell on Oct 21, 2019 11:00 AM America/New_York