Operators prefer using primary distributorsOperators prefer using primary distributors

Caroline Perkins

Eight in 10 foodservice operators purchase more than half of their products from a single distributor, saying that maintaining a primary distributor relationship is a better business strategy than buying from several vendors, according to a new study.


Conducted by Campbell Surveys, a Washington, D.C.-based firm specializing in distribution-channel research, and sponsored by Nation’s Restaurant News, the study examined the relationships between foodservice operators and distributors. 


The goal of the research was twofold: to identify what services are important to operators in their distributor relationships and to explore how their existing distributors are performing on these key factors.


The survey was conducted online and completed by 600 foodservice operators in all segments that are served by broadline distributors.


The factors that motivate operators to maintain a primary relationship, not surprisingly, center on business success — in other words, the ability to compete profitably and keep their operations working smoothly. 


As would be expected in this tough economy, pricing is the most important influencer in choosing a primary distributor. The next three factors could come under the heading of “TLC.” Operators value distributors that provide better service, make their lives easier and are invested in their business success. 


Once established, primary relationships, for the most part, remain stable. Two-thirds of operator respondents said they have had relationships that lasted more than five years.



Primary doesn’t mean only


While 80 percent of operators use a primary distributor, they also may do business with several more. It is common for an operator to utilize a smaller, secondary distributor as backup. A primary distributor may deliver a large order once or twice a week, but operators often rely on a secondary distributor to deliver smaller orders more frequently. In addition, specialty distributors may be engaged for items such as seafood, produce or cleaning supplies.


The practice of consolidating purchases with a single broadline distributor has been encouraged by such national distributors as Sysco or US Foods and large regional distributors like Ben E. Keith or Gordon Food Service. That has occurred for several reasons, the study found. The sky-high cost of fuel has meant that distributors must take a strategic approach to delivery. The bigger the orders delivered to fewer stops, the more economical the
process. 


In addition, there is the cost of supplying value-added services like solutions-selling and business reviews. Distributors focus these services on loyal customers rather than operators that might only purchase a few small orders from them. As a result, the primary distributor relationship has become good business for distributors as well as operators.


Food cost is top of mind


Once the survey identified the decision-related factors in selecting and working with a primary distributor, operators were asked how well their distributors are performing in a number of areas. 


Food costs are top of mind with operators, in line with pricing being the primary reason they select a distributor in the first place. Nine out of 10 operators said they receive better pricing from their primary distributors. So, primary distributors are successful at satisfying this requirement for consistent and fair pricing.


The study also found that primary distributors perform well when it comes to fulfilling orders. Most important to operators is the consistent delivery of quality and safe food products, followed by the need for on-time delivery of the correct orders. In fact, operators cite the latter factor as being a potential deal-breaker in their primary relationship. If they can’t get what they need in a timely fashion, respondents said they would change their primary distributor. 


Online ordering and tracking also is a service that distributors perform well, the study said. Most broadline distributors have sophisticated ordering systems, leaving distributor sales representatives, or DSRs, freer to offer other value-added services. In fact, a good relationship with their DSR was cited by eight out of 10 operators as a key area supplied well by their primary distributors. 


DSRs are critical 


The connecting element in the relationship between an operator and a distributor is the DSR. While pricing is set at distributor headquarters, other decisions occur face-to-face and are delivered by DSRs or drivers. Sixty percent of operators said they want to meet with their DSRs at least once a week, if not more. Drivers are in operations even more frequently, interfacing at every delivery. DSRs and drivers are the familiar faces of distributors in their customers’ operations. 


Distributor management generally encourages DSRs to spend most of their time and energy with customers for whom they are primary distributors. Many services that DSRs provide revolve around ordering, such as ensuring that pricing and orders are correct or providing information in advance of food costs. Eighty-four percent of operators cite the availability of their DSRs as being an important factor when there are problems or issues that must be resolved. An example of that is providing help with menu profitability. Six in 10 operators say DSRs assist them in improving their food costs.


Follow-through from DSRs as well as care for and understanding of an operator’s business are important to restaurateurs. Operators believe that DSRs are partners in their business and therefore concerned with the success of the business. 


Multiple distributors


The study found that 60 percent of those operators who do not use a primary distributor say they prefer to use multiple vendors so they can shop for the best price, a practice called “spread sheeting.” 


Close to half of the 20 percent who do not use a primary distributor also say they can get a wider selection of products and products that are better quality and fresher from specialty distributors.


About the survey: Respondents were operators that are purchasing decision-makers or decision-influencers. Forty-seven percent of respondents purchase for a single location. Of the remainder, who purchased for more than one unit, 25 percent purchased for more than 10 units. Respondents covered a range of segments, with casual, family and upscale-casual operations represented the most frequently. Fewer responses came from on-site operations.