Examining the channel’s relationship with the restaurant industry

Paul Hill takes a look at wholesale’s relationship with the restaurant industry

Worth £57bn, the UK foodservice industry is the fourth-largest employer in the UK, with more than 350,000 different outlet types spread across the country. Plus, when you consider that there are around 64,000 restaurants in comparison to 42,000 convenience stores, the scope of opportunity for the entire wholesale industry is enormous.

Yet, according to statistics from the Federation of Wholesale Distributors (FWD), 54% of the channel’s sales still come from retailers, with 34% coming from foodservice and catering, although this last figure continues to rise. Furthermore, the lines between retail and foodservice are constantly being blurred as convenience stores also become foodservice providers.

The foodservice market is a completely different beast to traditional wholesale, though, with operators fully trusting their wholesaler to be the first port of call for information on allergens, nutritional content, legislative issues, health and safety, and new products. “Sourcing equipment and staff, as well as training their teams, are also areas where they look to their wholesaler for help,” explains James Bielby, chief executive of the FWD. 

Industry expert David Gilroy adds to this, explaining that a lot of foodservice is specific to the outlet type, which wholesalers need to be aware of. “Each outlet type is very different and the challenge is where to pitch the offering. As always, the trick is to be ‘famous’ for something and to start with the customer group and work back,” he says.

Market Research

Birchall Foodservice is a wholesaler that has sent out sales and marketing teams to conduct food study tours of towns and cities in order to understand its customer base. “These tours have opened our eyes to lots of exciting trends. I know it’s obvious, but veganism really is the biggest trend at the moment,” says marketing director Joe Moulton.

Gordon Lauder, managing director of frozen food distributor Central Foods, echoes these thoughts. “There is a big trend for vegan lines. Recently, Mintel revealed that more than half of chefs added vegan options to their food menus in 2018 – up from 31% in 2017 – so it’s well worth stocking frozen, pre-prepared items and ingredients to cater for this trend, in case demand outstrips fresh supply,” he says. “It’s a good idea for wholesalers to offer versatile vegan and vegetarian ingredients that can be used in a range of different dishes.”

It’s not only wholesalers that are required to keep up with this trend. Richard Cooper, senior brand manager at Dr Oetker Professional, says that veganism has stretched to the pizza market. “Fast becoming a key ingredient in vegan dishes, jackfruit has a pulled pork texture and makes a delicious pizza topping with smoky barbecue sauce,” he explains. “Our Vegan Raw Dough Pizza Base is also aimed at restaurants and although it is pre-prepared, it rises in the oven. This means operators can offer freshly-baked pizzas made to order.”

Caribbean foods are also in vogue, with jerk seasoning now a mainstream ingredient, according to Tom Styman-Heighton, development chef at Funnybones Foodservice. “We offer four different varieties including a vegan version, with this trend influencing the market. 

“Innovative vegan and vegetarian dishes and products are appearing on the menus of all the leading foodservice players,” adds Clare Ryal, sector controller for foodservice and wholesale at General Mills. “This trend has also been reflected in drinks menus, with launches of new hot and cold drinks using plant-based and dairy-free milks.”

Ryal also points out that the foodservice delivery market continues to shake up the UK eating out industry, as it outperforms the rest of the sector: “This is driven by a rise in average purchase frequency and spend. Just Eat is maintaining its position as the most regularly-used delivery operator in the UK, with shares rising by 4.4% in 2018.”

Meanwhile, Nick Ash, foodservice channel controller at fine foods distributor RH Amar, believes baby food in restaurants is another massive opportunity that the entire supply chain is finally picking up on. “Ten years ago, if you went into a restaurant, there would be nothing for a baby. The child would just get fed breadsticks. But nowadays, companies such as Ella’s Kitchen are providing products for young children, which is not only another revenue source, but making life much easier for the customer,” he says. “This will only increase their stay at the restaurant and we continue to point this out to the end user, which then feeds back to the wholesalers and buying groups.”

Restaurants are also buying a wider variety of stock, according to BB Foodservice customer Stuart Devine, of Ashvale Fish Restaurant in Aberdeen. “BB Foodservice won us over from our previous supplier and we’re buying way more than just the alcohol and soft drinks we started with,” he says.

David Livingstone, head of catering at BB Foodservice, adds: “Our role as a foodservice wholesaler that partners with thousands of customers and thousands of suppliers is more than just our buying power to negotiate the best price. Customers can also tap into the huge amount of knowledge, insight and experience we have in foodservice and we like to partner with them to grow their businesses.”

• Aberdeen depot set for refit as one of 15 flagship BB Foodservice sites

Relationship with operators 

A foodservice wholesaler’s relationship with the restaurant owners and chefs it serves is a vital part of the business. “We like to think we’re a good source of advice and information for our restaurant customers,” explains Moulton. “Not only do we offer menu planning advice, but we also offer menu design and printing services for our customers, helping them develop a more professional-looking brand. We can even arrange for our customers to spend time with our in-house chef.”

Harvest Fine Foods is also heavily involved with its restaurant customers, according to its marketing manager, Helen Hart, who says: “We work closely with our suppliers to share as much information as we can to our end users – this takes the form of samples, product tasting and recipe suggestions, either delivered in-house or in our demo kitchen.”

“We pride ourselves on providing customers with a personal service. This comes from visiting their premises in person, or inviting them to our headquarters to view our facilities and meet the team,” adds Jackie Watt, sales director at Thomsons Foodservice. “Social media has become more prevalent in communicating with customers about new products, recipes and allergen advice, and we actively encourage them to advise us on how we can improve our range.”

As a specialist wholesaler of Tex-Mex and Caribbean foods, Styman-Heighton of Funnybones sees it as his duty to educate. He says: “Our role is not only to supply, but also to educate, guide and suggest new products, trends and tastes to chefs, encouraging them to be adventurous in their choices. But in order to do this, we have to build up a relationship of trust and respect.”

Thomas Ridley Foodservice, meanwhile, has account teams that specialise in particular fields such as restaurants.  Sales director Steve Lyons explains: “We are there to help with regular repeat orders, advise on new menus or how to use some of the new products we may have listed.  

“We have an allergen control system, which enables our customers to see, at a glance, a list of the products purchased from us and the allergens they contain.”

Struggles with NDP

But despite all the opportunity stemming from foodservice, it does come with a multitude of challenges. “One of the biggest tests is persuading operators to sign off NPD ideas,” says Lauder. “By the time they are on board, the trend has sometimes been and gone, and they’ve missed the boat. Trends can change quickly in the food sector and it’s best to be ahead of the crowd.”

Product ranges need to reflect the changing consumer trends,” adds Val Kirillovs, research and insight director at HIM and MCA Insight. “If the wholesale channel doesn’t keep up with the consumer trends, restaurant operators will be forced to seek out alternative product sourcing models.”

Meanwhile, Niall Deveney, marketing executive at Dunns Food and Drinks, says it is a challenge in getting proper insight into trends. “Once we know, we then need to find out how to adapt to them and implement the necessary changes,” he says.

Allergen and nutritional information are also high on everyone’s agenda, particularly after last year’s issues with Pret a Manger. “We have a technical team that works on this,” explains Ash. “Buyers are more aware of it than ever before, and it is now just as important to have a product clearly labelled as it is to get a good deal.”

Technology platform Erudus is currently the only valuable resource for this type of information, but wholesalers are not legally required to use it. However, the FWD is continuing to push the government for one and it is only a matter of time before the wheels are put in motion.

This is an example of a longer-term objective from the foodservice wholesale industry to not only be a reliable supplier, but also a trusted advisor and provider of information to operators.

Market share of total UK foodservice wholesale industry