Sysco US Foods Merger Stalled. Sued by FTC.

FTC and 10 states sue to prevent Sysco US Foods Merger…

Those of us in the foodservice industry were originally surprised by the announced acquisition of US Foods by Sysco, however as the year progressed many assumed it was a “done deal.”   Not so, says the Federal Trade Commission.    Sysco’s promised divesture of 11 distribution facilities to Performance Food Group, as reported earlier in the month, apparently did not alleviate concerns that Sysco would control 75% of broad-line distribution resulting in increased pricing.  Sysco argues that due to many localized distribution options, they would only handle 30% of the foodservice distribution volume and efficiencies would be improved resulting in lower pricing.   This author does not have a crystal ball regarding pricing to operators, however manufacturers would certainly feel the pressure from a stronger Sysco with limited other national distribution options.   Stay Tuned.

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Benefits of a Coalition Marketing Approach

“The coalition model gives customers a clear value proposition-a far broader range of reward options while significantly increasing the rate at which they earn those rewards.” Bruce Kerr, Colloquy Contributing Editor

If you’re interested in a thoughtful take about the benefits of coalition marketing check out this article entitled “Everything Old is New Again”  by Bruce Kerr, Colloquy Contributing Editor. In this post, Bruce points out several advantages to a coalition approach versus other programs.

• more compelling customer value proposition
• better customer data to leverage ROI
• proven to deliver cost effective results

If you’re truly interested in differentiating yourself from competition and more deeply engaging customers, then maybe the time is right to consider a coalition approach to your marketing strategy.

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Restaurant Industry Today & Tomorrow

As we look ahead to 2012, most industry observers believe that we will have to scratch and claw to achieve growth. Let’s make a resolution to change one thing we are doing in our business today, then set a measurable goal against it!

The restaurant industry continues to struggle in the face of the lagging economy, rising commodity prices, and reduced consumer confidence.  However, according to the National Restaurant Association, the industry is on target to record sales of $604 billion in 2011, a 3.6 percent increase compared to 2010’s revenue levels, though still below 2005-2006 levels. In contrast, Chicago-based market research firm Technomic projects the industry will realize a 0.6 percent decline in sales for 2011 (see previous post).

Technomic conducted a study of 500 consumers with many indicating a continued lack of confidence in financial recovery and an intention to limit or reduce restaurant spending in 2012.   So, as we look ahead to 2012, most industry observers believe that we will have to scratch and claw to achieve growth.  It remains a “take share” environment across the industry – foodservice taking from retail -distributors taking from other distributors, sales agencies taking from other agencies, manufacturers taking from manufacturers, and restaurants taking from restaurants.   Consolidation will continue.   Cost cutting without investment in more efficient technology will hinder results.  Those who continue to do “business as usual” will likely struggle and lose share.

Whatever your place in the foodservice market, if you are not the low-cost leader or a true innovator, then understanding the needs and wants of your customer base and adjusting accordingly will help you win.  Foodservice Rewards offers operators a way to get more when they purchase brands.  The program offers manufacturers an extremely efficient way to know their operator customers – not just the big ones.  Next year, Foodservice Rewards will be celebrating our 10th anniversary of delivering measurable results for our sponsors.  Many in our industry tend to hang on to “old ways” of doing things when we know they are neither effective nor measurable, but rather they keep us “busy”.    As we look to 2012, let’s all make a resolution to try something new and set a measurable goal against it!


What to expect in 2012?

The Foodservice market is projected to be flat. It’s a “steal share” environment for marketers, but Foodservice Rewards can help you differentiate…

Technomic recently published the 2011/2012 Foodservice Industry Projections.  As you might expect, foodservice industry “real growth” is projected to remain anemic. Nominal growth appears to be driven by menu price inflation.

So what does this mean to foodservice manufacturers who need to grow? 

At a recent IFMA Forecast and Outlook Seminar, Technomic presented two key ideas to compete in the current environment –  share growth and competitive differentiation.

How can Foodservice Rewards help?

Use Foodservice Rewards to differentiate from competition.  In aggregate, Foodservice Rewards members redeem about 400,000 codes per week. Members look for the yellow Foodservice Rewards label and would like to earn points on additional products (click link to our social community to read what members say… New Products in Foodservice Rewards). Foodservice Rewards provides a way to differentiate from competitors that aren’t part of the program, especially distributor label products.

Leverage Foodservice Rewards redemption data to profile “best customers” and grow share through targeted acquisition. Foodservice Rewards Sponsors gain visibility to operator purchasing behavior via code redemptions that are reported weekly. Sponsors have insight to the recency, frequency, and monetary value of purchases by operator –the building blocks of customer valuation. With this approach, Sponsors can profile their “best customers” and target more “like customers” from the thousands of Foodservice Rewards members that haven’t yet redeemed from them –and are likely buying from a competitor.

Time for a new approach?  Maybe it’s time review new ideas to drive growth during challenging times.

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The THREE P’s of a Successful Foodservice Product Intro

Using Foodservice Rewards to reach the independent operator directly, will help build awareness and requests to the DSR for your new products…

When listening to the webinar entitled “The Three P’s of a successful Foodservice Product Intro”  from AFDR, I was reminded how difficult it is to rely on the DSR to drive new products for a manufacturer.  There are thousands of products available, but only 950 annually drive 80% of a typical DSR’s volume.  The webinar offered the following 3-P’s to  help DSR’s successfully sell your new products (see chart).

The speakers suggest that neither a foodservice broker nor manfacturer representative can possibly visit the 450,000 or so independent operators that drive sales on the “street”.   That is why sponsors of Foodservice Rewards can use our communication tools including the bi-weekly enewsletter to build awareness at the independent operator so they request the new products from their DSR!

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Brand Shopping is Tough on Distributor Sites

Just 25 percent of restaurant operators who order online through distributor website “always” or “often” search by brand, with many operators complaining that sites make it difficult to locate the specific brands they want.

Foodservice operators have difficulty finding and placing orders for specific brands on distributor Web sites, according to a new report by Datassential.  Titled “How Operators Buy,” the study found just 25 percent of restaurant operators who order online “always” or “often” search by brand, with many operators complaining that sites make it difficult to locate the specific brands they want. This opens the door to preferred brands being ignored when it matters most – at the time of purchase, according to the report.

Another hurdle for manufacturers is brand inconsistency on distributor ordering sites, according to Datassential. The company advises that the industry needs to work towards uniform presentation of brand names and product descriptions on these sites.  If abbreviations are used, they should be done in a way that is intuitive, easy to remember and aggressively promoted.

As GS1 standards move us toward consistent presentation of our products, manufacturers can get a head-start by partnering with Profile or other recognized methods of standardization.


Large Broadliners Improve, but Independent Operators decline

Signs of foodservice industry recovery, but reduced customer traffic went on too long for many independents…

According to ID Report, the nation’s 50 largest broadline distributors collectively broke the $100 billion mark in 2010, growing sales 5 percent over sales reported the previous year and performing well compared to foodservice as a whole in 2010 up only .7%.   The report goes on to state that none of the top 10 distributors were the largest gainers.

Related, NPD published their latest Spring Recount (April 2010 – March 2011) which showed that US units declined by 2% with 8,650 unit losses coming from independent restaurants.  The same report indicated that spending at restaurants grew by 2% in the year ending May 2011 though traffic counts were stable.


Elevating your Game from Trade Spend to Trade Investment

This fascinating report is a speedy introduction to the major issues facing manufacturers in the Trade Promotion arena…

Join the Trade Investment era. This fascinating report from our colleague at Market Intelligence is required reading for everyone in foodservice from Brand Managers looking for perspective on distribution to Sales Managers hoping to move negotiations from “transactional” to “strategic” – improving the distributor/manufacturer relationship:

Elevating Your Game from Trade Spend to Trade Investment.

Jim can be reached at

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2011 What’s Hot! Chef Trends and CRM

Positive indicators and trends for the foodservice industry! The first step in growing your business is understanding your customers and their needs…

The big news this week was the announcement of the best restaurant industry performance index in three years.    With consumer spending up in foodservice, chefs are poised to take advantage of what they see as the “Hot Culinary Trends” for 2011.   Understanding industry trends is important for suppliers, yet the critical element to increasing revenue and profits through CRM is being customer-focused versus product-focused.  Foodservice Rewards provides ongoing communication to and information about individual “street” operators, offering foodservice suppliers an extremely effective CRM tool!


Foodservice 2020 – A Look to the Future

The Hale Group white paper, Foodservice 2020, highlights the importance of customer knowledge and information sharing…

How will the Foodservice Industry progress from the current mature state? The Hale Group’s white paper, entitled Foodservice 2020: Global, Consolidated and Structured, argues that customer knowlege and information sharing will be among the keys to future success.

Foodservice Rewards sponsors are among the best equipped to understand who their end-user customers are today and going forward.


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