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A food service distributor functions as an intermediary between food manufacturers and the food service operator (usually a chef, food service director, food and beverage manager, and independent food preparation businesses operator owners.) Food service distributors procure pallets and bulk inventory quantities that are broken down to case and sometimes unit quantities for the foodservice operator. Most foodservice operators purchase from a range of local, speciality, and broadline foodservice distributors on a daily or weekly basis.
Often a food manufacturer may hire a food service brokerage company to represent the manufacturer in a local market. The broker helps the food manufacturer market its products through the foodservice distribution system, which ranges from getting items stocked at the distributor to working with operators to purchase items from the distributor.
A broadline distributor services a wide variety of accounts with a wide variety of products, while a system distributor stocks a narrow array of products for specific customers, such as restaurant chains.
Food service distribution companies can range in size from a one-truck operation to larger corporations. There are many independent broadline foodservice distribution companies that service chain and multi-unit restaurants based on master distribution agreements with national food service groups. These groups provide distributor members procurement capabilities rival the purchasing power of largest distributors. These distributor groups also provide distributor members group private label brands as well as marketing and quality assurance services.
In the US, the industry is highly fragmented, with Sysco capturing 17% of the market, US Foods with about 9%, PFG with 5%, and Gold Star Foods playing a large part as well. The rest are spread across a host of smaller, regional players.
An emerging trend in the foodservice distribution business is redistribution.
Smaller distributors were forced to purchase in less than truckload (LTL) quantities, putting them at a significant logistical disadvantage to the larger distributors.
In the food redistribution model, a redistributor will purchase in truckload quantities from many food manufacturers and warehouse the products. Individual distributors can then purchase multiple manufacturers' products from the redistributor and fill up an entire truck to save on shipping costs. The largest food redistributor in the U.S. is Dot Foods, followed by Sysco.
- Sysco Investor Day presentation, December 2010 http://files.shareholder.com/downloads/SYY/1124004662x0x425013/e7a21c77-2b2e-4cf6-b6c0-9b059aa02865/Investor_Day_2010_FInal_8-K.pdf
- Sysco Corporation
- Gordon Food Service
- G&C Food Distributors
- Ben E. Keith Company
- Viele & Sons Foodservice Distribution
- Heinz Food Service
- Australian Foodservice Distribution
- The International Foodservice Distribution Association Web site
- American Restaurant Association
- The association for Foodservice Distributor Representatives
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