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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.) The distributor purchases, stores, sells, and delivers those products, providing food service operators with access to items from a wide variety of manufacturers. Food service distributors procure pallets and bulk inventory quantities that are broken down to case and sometimes unit quantities for the food service operator. Most food service operators purchase from a range of local, specialty, and broadline food service distributors on a daily or weekly basis.
Often a food manufacturer may hire a food brokerage company to represent the manufacturer in a local market. The broker helps the food manufacturer market its products through the food service distribution system, which ranges from getting items stocked at the distributor to working with operators to purchase items from the distributor. At the same time, distributor sales teams work to market products directly to operator customers.
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. A broadline distributor may carry up to 15,000 different items for purchase and operate sophisticated warehouse and transportation operations.
A small food service distributor is often referred to as a "wagon-jobber". These wagon-jobbers will purchase food in bulk and deliver small quantities to independent retail stores keeping their shelves stocked. Independent distributors and jobbers service the independent convenience store market, bodegas and niche grocery stores where the larger distributors can't service. While these distributors are unorganized, networks of independent distributors and wagon jobbers have emerged to give these jobbers the ability to identify trends in the market.
To understand the scale of the food service business, it is estimated by food industry research firm Techno mics that approximately 225 million meals are eaten away from home each day in the U.S. This includes both restaurant and non-commercial eating places. The International Foodservice Distributors Association estimates that food service distributors in the U.S., as a daily average, deliver approximately 25 million cases of food and other products.
An anticipated surge popular for protein in developing markets, particularly pork in China, would make open doors for organizations to develop in center generation and supporting commercial ventures, for example, rearing, creature well being testing, food, and immunizations. For instance, meat and other domesticated animals creation in Argentina and Brazil is relied upon to become emphatically to take care of worldwide demand.
Food service distribution companies can range in size from a one-truck operation to larger corporations. There are many independent broadline food service 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.
Redistribution- Food Service/Grocery
In the food redistribution model, a redistributor will purchase in truckload quantities from many food manufacturers and warehouse these products for its customers. Individual distributors (typically smaller in size and service area) can then purchase items across multiple manufacturers' on one easy to place order from the redistributor. Benefits to the Distributor include: Expansion of Product Line, Reduced inventory carrying costs, Purchasing at prices that enables them to compete with the largest distributors, and Reduction in out-of-stocks. The largest, established food redistributor in the U.S. is Dot Foods, followed by Sultana Distribution Services inc. who specializes in Confectionery & Snack redistribution. Several smaller regional companies have come along through the years, however most lack the expansive product line and reach of distribution to be considered relevant. Additionally, most often than not these smaller companies compete with their own wholesale customers by directly selling the end-user.
The redistribution model, affords smaller distributors who are unable to purchase direct truckloads an opportunity to purchase from a non-competitor in less than truckload (LTL) quantities, giving them the ability to compete against larger distributors in their territory. Typically it is the smaller distributor that services the independent non-chain retail outlets often overlooked by the larger distributors.
- "Pursuing the global opportunity in food and agribusiness". McKinsey & Company. Retrieved 2016-03-17.
- 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