Supply Chain

Strategic Changes that are Keeping Food Distributors Alive

If you read the news, you might believe that the shock to the global food supply chain is a death knell for food distribution businesses. After all, how can such a business survive when there is no food to sell?

Even so, the country’s three largest food distribution companies, along with several smaller companies, all found ways to increase business and community outreach through four key business strategies: focusing on customer service, delivering to retail and grocery stores, selling direct to customers, and philanthropy.

Here’s a look at how each of these strategies is paying off for these companies.

Focus on Customer Service

Focusing on customer service at a time when customers are not allowed into stores—or restaurants— seems oxymoronic, but it’s been one of the biggest boons for food distributors since the coronavirus pandemic began.

For example, three of the biggest food distributors in the country recently shifted their customer service philosophy to focus on “value-adding” services.

US Foods recently launched a resource program for small business owners to help them learn to navigate complex matters like the Paycheck Protection Program, boost online and to-go sales, and give them some ideas on how to handle reopening.

Similarly, Sysco and Performance Food Group published a series of articles on different social media and digital marketing strategies restaurants can use to boost sales once they reopen. Other topics include liquidity, employee management, and business strategy.

Delivering to Retail and Grocery Stores

As retail and grocery stores continue rationing certain products due to supply chain disruptions from the coronavirus pandemic, food distributors have stepped in to fill the void and provide products that communities need.

The Food Institute recently reported that US Foods signed 30 new grocery store partnership agreements, with Sysco and Performance Food Group each picking up 25 new partnerships respectively.

“As we all adapt to the COVID-19 pandemic, our company is in a crucial position to keep our country’s food supply chain strong,” George Holm, PFG chairman, president and CEO, said in a press release. “In addition to working with our existing customers, we have formed several new partnerships, brought in new business and shared many of our associates with organizations that are experiencing labor shortages.”

Food distributors are also sharing employees with grocery stores and retail outlets due to labor shortages. PFG reports it has lent over 1000 workers to its partners. US Foods and Sysco also report similar numbers.

Sysco made two key partnerships with C&S Wholesalers in New York and The Kroger Company, both of which have paid dividends. It’s partnership with C&S allows the company to deliver food, cleaning supplies, and labor to over 7,700 independent grocery stores, chain stores, and military markets across the state. Meanwhile, Sysco is lending its employees to Kroger stores across the country to help keep shelves stocked for their customers.

“During these unprecedented times, we are pleased to partner with Kroger, as both of our companies work to respond in an agile manner to meet the rapidly evolving needs of our associates and our communities,” Kevin Hourican, president and chief executive officer of Sysco, said in a press release. “This agreement will benefit many of Sysco’s associates by creating good work opportunities with a respected company, while at the same time helping to alleviate strain in the food supply chain due to a surge in demand at retail stores.”

Selling Direct to Consumers

Slaughterhouses and meat manufacturing plants are not the only businesses at risk of wasting millions of dollars of products. Food distributors are also feeling the heat from the drastic decrease in sales caused by the pandemic

To offload some of the overstock, food distributors of all sizes are opening their doors to the public and offering deep discounts on bulk sized items without the hassle of shopping at a warehouse.

Sysco is currently operating pop-up shops around the country while simultaneously helping restaurants transition to part-time grocery stores to increase revenue.

“With Sysco Pop Up Shop, we are able to help operators fill the gap at the local level and offer additional ‘essential’ products to their guests,” the company wrote on its website.

Smaller distributors like Cheetah, The Chef’s Warehouse, and Shamrock, are offering online shopping experiences that allow customers to purchase what their favorite restaurants sell.

Cheetah recently launched Cheetah At Home, a wholesale ordering platform that allows customers in the Oakland Bay area to order items to pick up. Similarly, The Chef’s Warehouse launched an online home delivery platform for its customers in New York, New England, Mid-Atlantic, Philadelphia tristate, Florida, and Northern California regions.

Generous Giving

While the stock market might not reflect the successes each of these food distributors is seeing, the communities they serve are seeing the real value of their services by way of the generous donations each company is making.

The Cape County Zoo recently received over 17 pallets of fruit and vegetables from Sysco Philadelphia that the distributor was unable to sell to restaurants due to shutdowns associated with coronavirus.

In all, Sysco has donated over 13.5 million meals through its global partners Feeding America in the U.S., Second Harvest in Canada, and FareShare in the U.K. and Ireland.

US Foods recently announced the company has surpassed $10 million in donations of food and supplies to local food banks and charitable organizations across the country. In the metro New York area alone, the company has donated over 25 truckloads of food.

Even though philanthropy doesn’t immediately pay dividends to the food distribution companies, it is a keen marketing strategy. Philanthropy gives businesses an opportunity to gain social capital with communities, which can be used to expand their business base after the pandemic ends.

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Supply Chain
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