What Is Foodservice Redistribution? The Ultimate Guide From Honor Foods
Did you know that half of every dollar spent in the food industry is spent on foodservice or eating meals away from home?
Most people eat at restaurants for one of two reasons, convenience or experience.
Most people don’t think about how much work goes into making dining out a convenient option or a fun experience.
Much like how watermelons don’t grow in the back of a grocery store, your favorite menu items don’t magically appear in the restaurant kitchen. Instead, it is a several-step process that involves many people and multiple touchpoints to ensure your favorite menu items aren’t on the 86’d list.
Food redistribution is one of those steps in the supply chain that has gained popularity over the last several years. Food redistributors, like Honor Foods, get products from manufacturers to distributors, who ultimately deliver them to the restaurant’s kitchen, or at least their backdoor.
Let’s hear from Walt Tullis, President of Honor Foods, about what Foodservice Redistribution is.
“When you step back actually and look at the entire food industry, you have food service; then you have retail. What’s interesting and what a lot of people don’t know is that for every dollar a consumer spends in food, half of it is spent in food service or away from home, so it is a fairly significantly sized industry. What we do and where we provide value is we buy full truckload quantities of product from manufacturers, bring it into our locations, and then, in turn, sell to the food service distributors.”
Foodservice redistribution is part of the supply chain that helps store and move food destined for the food service space. Food redistributors buy large quantities of a product from a manufacturer that makes a food product for commercial use, such as McCormick or Philly’s Best. The redistributor will then bring the product into their warehouse in large truckload quantities, where it will be divided into smaller quantities and stored until distributors purchase it. Once a distributor buys a product from a redistributor like Honor Foods, they will sell it to a foodservice company such as a restaurant, school, or hospital.
How Does Foodservice Redistribution Work?
Redistribution by definition is simply getting a product and giving it out a different way.
While the term “redistribution” is not new and can pertain to many scenarios, it was not as commonly known in the food industry supply chain until recent years, though it has been around for a while.
Let’s hear from Joe Adams, VP of Sales and Purchasing, about how the foodservice supply chain works and where food redistribution fits in.
“How the supply chain works, if you picture it, you have a manufacturer who creates product, and then you have a distributor who purchases product, and then ultimately you have where the product is consumed, and that consumption is done by operators. How we support the supply chain is we are in the middle of all that. As the product is made by the manufacturer, we buy from a manufacturer; then we sell to a distributor. If a distributor isn’t capable of buying full trucks loads or isn’t capable of buying it efficiently, we fill in the gap there in the supply chain, and then ultimately, what we are all doing is we are getting the product to the ultimate consumer, which is you and I when we go to restaurants and or our children when they go to school.”
Where Do Foodservice Redistributors Such As Honor Foods Fall In The Supply Chain?
A foodservice redistributor is an extra layer in the supply chain between the manufacturer and the distributor. Their job is to purchase and store large quantities of product, then sell it in smaller quantities as needed to distributors. This allows multiple distributors to purchase small quantities of items from numerous food suppliers in one place at one time.
The foodservice redistributor also serves as an additional supply source if a distributor runs out of product one of their operators’ needs and cannot get the required quantity directly from the manufacturer.
Who Buys From A Foodservice Redistributor?
Redistributors exclusively sell to distributors. By contract, they cannot sell directly to operators such as schools and restaurants. Redistributors sell to all types of distributors, from broadline distributors such as Sysco and PFG to specialized distributors that may focus exclusively on produce or protein to smaller distributors, often called jobbers.
Why Use A Foodservice Redistributor?
A redistributor is often used because of its storage capability, buying power, the capability of stocking large quantities, and the ability to sell in smaller case quantities than you can get from a manufacturer. Distributors can purchase smaller quantities of products from multiple suppliers at once on a frequent basis, reducing the need for distributors to store items and minimizing risk.
What Are The Benefits Of Foodservice Redistribution?
Food redistribution has many benefits, including inventory management, lower cost, accessibility, and just-in-time inventory.
For distributors, some of the benefits are:
Reduces Inbound Deliveries:
Instead of having 100 different food suppliers bring products to your warehouse, or worse, having drivers pick them up from 100 different food suppliers, you can go to one warehouse and get all the different products you need for your food service providers.
Erases Minimums:
Instead of buying products your food service centers aren’t interested in just to meet the purchase minimums from food suppliers, you can “cherry pick” and only buy what you need when needed.
Less Storage:
Distributors don’t need to worry about holding large qualities of products for long periods. This makes their turn rate much quicker, reducing food waste due to expiration dates. In addition, because a food redistributor works with multiple distributors, they can turn more products much faster.
Enables smaller distributors to enter the foodservice industry:
By removing the need to purchase and store large quantities of products at the distribution level, it reduces the barrier to entry. This means lower pricing for food service companies due to more competition.
Another Product Source:
For larger broadline distributors, foodservice redistribution can offer another place to purchase products when they are low on quantity to meet the demands of their operators.
Cash Flow Positive:
By not tying up large sums of money on products sitting in storage, distributors can maintain a better cash flow.
Adjust your inventory levels to the world:
By not storing more products than you need as a distributor, you can adjust your inventory levels to changes in the market, world events, etc.
Just-in-Time Inventory:
Using a foodservice redistributor allows distributors to have “just in time” inventory for deliveries without stocking large amounts of product. Just-in-time inventory is exactly what it sounds like. You get the inventory just in time to deliver to a food service company.
Let’s hear from Joe Adams about the importance of being cash flow positive, adjusting inventory levels, and the increased need for just-in-time inventory.
In addition to being beneficial for distributors, foodservice redistribution benefits food suppliers. By selling products to redistributors, food suppliers can sell large quantities of products while getting the product into the hands of more food service providers in smaller amounts.
How Does A Food Redistributor Get The Product, And What Products Do They Carry?
Foodservice redistributors purchase large quantities of products directly from food suppliers such as Perdue, Beyond Meats, and Agrosuper. In addition, they typically carry an extensive range of products from several different food suppliers. For example, Honor Foods has over 300 brand-name food suppliers and carries over 3,000 in-stock items. View the complete Honor Foods product catalog.
How Does Technology Enhance The Foodservice Redistribution Industry?
At Honor Foods, our proprietary technology helps us forecast and buy products. This allows us to ensure we have the right products in the right quantities for our food distribution Partners. It also allows us to provide products if other sources are unavailable. By allowing us to predict market and buying trends, we can provide our foodservice distribution Partners with enough products to keep up with the influx and changing demands of food service companies.
How Do I Partner With A Foodservice Redistributor?
Whether you are a foodservice supplier or a food distributor, we want to Partner with you.
Working with a foodservice redistribution company like Honor Foods can level the playing field for smaller distributors and provide excellent value in terms of cash flow and inventory management for broadline distributors. Food redistribution is a valuable part of the supply chain and is pivotal in getting products from food suppliers to food service providers. Learn more about how Honor Foods can Partner with food suppliers and food distributors to help ensure the ingredients for your favorite dish stay stocked in the kitchen and off the 86’d list.
Honor Foods, a Burris Logistics Company, was founded in 1949 as a redistributor of center-of-the-plate foods. Since then, Honor Foods has grown into the Mid-Atlantic region’s premier provider of frozen, refrigerated, dry, and dairy products, representing more than 300 brand-name food suppliers and carrying more than 3,000 in-stock items. Honor Foods brands R.W. Zant and Sunny Morning provide additional beef and dairy expertise on the West Coast and in the southeast. In addition, our exclusive house brands — Colony Lane and Valley Fresh, have a well-earned reputation for top quality and value at competitive prices.
Great products and prices are just part of the Honor Foods value-add. We pride ourselves in having a Team of dedicated professionals who manage each partnership. Our commitment to your business needs is what makes us unique.
