What Exactly is a Food Broker?
What Exactly is a Food Broker?
By Jason DuBose
Owner and Head Content Creator for
RestaurantBarFood.com
This is the first part of a multi-part article on “What Exactly is a Food Broker?”. I started writing this article contemporaneously and looked up and saw that it was already coming in at 15 pages and wasn’t even finished yet. We at RestaurantBarFood.com as always want to provide you an in-depth and comprehensive explanation of all the topics we cover including a Food Broker’s Role in the Food Service Industry. So, I broke it up into multiple parts so it’s a short read for each part of the article.
PART I
When I tell people I am a Food Broker most really have no idea what that means. Usually, people working at the restaurants just know me as the guy that comes by and brings free food for the owner to try. Not really knowing that I am actually bringing food items that hopefully make it on their menu in the near future. I actually create a plan on the samples I bring out around focused items of the Food Manufacture Clients that I represent. So, the Restaurant’s decision makers can try a small portion of the items and not have to buy multiple cases of products to test. I also let them know the best way to prepare each item I bring out and other benefits of the product. That is the simplified version of what a Food Broker does, what follows is the more detailed version.
Now in my case and as the case of many Food Broker Reps, I have an intermediate level of culinary knowledge so I can prepare the products I am showing to the Restaurant to highlight its best attributes so that the Restaurant will hopefully want to buy it from the Distributor I work with. Some Broker Reps are also actual chefs so they would be able take that a step farther and do some real creative menu creations. Both types of people can make great Food Broker Reps.
So, in this article I will explain what a Food Broker does in the Food Service Industry. Where the Food Service Industry is related to Restaurants that serve the Food and Food Manufactures created products that the Restaurants use. Know that Restaurants usually get the products they make their menu items from either a Multi Category Food Distributor or a Specialty Food Distributor. For this article “Distributor” will represent both the Multi Category Food Distributor and Specialty Food Distributor(Seafood, Meat, Dairy, Produce or Disposables). I know that some smaller restaurants get some of their items from places like Restaurant Depot or other fee-based buying clubs. Food Brokerages do not get paid for the products sold through those channels, so I have excluded them from this article.
HERE ARE A FEW SKILLS A FOOD BROKER NEEDS TO BE GOOD AT THE JOB:
v Remembering details from several different types of Food items from multiple Food manufacturing clients as well as how to prepare them.
v Knowing the key details and ways your product is better/different than the competitors. Why would you buy something that is exactly the same and costs exactly the same? You need to give them valid reasons, especially if your product is of a higher quality and is more expensive.
v Comfortable with giving one on one and group product presentations.
v Doing pre-call research on a potential Restaurant Customer. Knowing their menu and possibly checking out social media comments about the Food. It helps build understanding with a restaurant decision maker when you have a working idea of his menu and bring items that actually can easily fit into his current menu applications. I.e. Don’t bring pizza parlor centric items to a high-end steak house.
v Breaking down a Restaurant’s menu quickly and able to figure out what items that you represent that best fit items on their menu. Matching one of your products that can save them time, money or improve Food quality or a combination of these. Also see possible items you represent that their menu is missing. Maybe an appetizer item.
v Quick on your feet, and able to adjust your 15-minute well-rehearsed presentation down to just a couple of minutes. Because Restaurant Owners never have as much time as they think to give you for your visit. Also quick on your feet in case a Restaurant Decision maker asked a question that wasn’t in your script. While you are there at the Restaurant you want to look for any opportunity to discuss a product that wasn’t on the original meeting agenda. A good Broker Rep always scans the kitchen of a restaurant to see what the Restaurant Customer is currently using. So, he knows what he can bring out for a follow up call next time.
v Know how to read people’s body language. So, you know when to speak and when to be quiet and listen. That way you can find what their real pain points are and what item you represent to make it all better.
v Intermediate or advanced culinary skills. Especially you need to know how to properly deep fry or bake something.
To make this less wordy, in this article lets agree that a “Manufacturer” means a Food Manufacturer, “Broker” means a Food Broker and “Distributor” is a Food Service Distributor. “Restaurant” will be the ultimate end point customer buying the products and “Client” will mean Food Manufacture as it relates to who a Food Broker represents. I will also use the acronym DSR for Distributor Sales Rep. This is the Distributor’s street sales force that Brokers work hand in hand with.
Food Manufactures are most likely going to create their products for Retail (Grocery stores, where the public buys it for personal home use). Some will also create products for Food Service (bought to be used in Restaurants, Schools, Hospitals, etc..). Items for schools are their own subcategory with nutritional requirements but for this article we are going to lump them in the Food Service category.
In most cases a majority of the Manufactures that service both industries will have most of their production going to the Retail side. Then a smaller percentage to Food Service geared products focusing on Restaurants. Usually in Food Service they will have items that are packaged in larger package sizes and in full cases instead of smaller individual sales size. Since the Restaurants are using more of it making multiple dishes during the day at a restaurant. Here is a quick example of Retail versus Food Service Package sizes. Grocery Store (Retail) Salad dressing usually comes in say an 8 oz bottle. Food Service Salad Dressing most often comes in a 1-gallon (128 oz) container and there can be 2 or 4-gallon containers per Food Service case.
A SALES FORCE FOR FOOD MANUFACTURES:
On the Food Service side Manufactures try and get their products into these Food Service Distributors that sell to the Restaurants. They also want the owners of the restaurant to know about and want their products. They can have their own sells force try to accomplish that or they can have Food Broker help with that.
The Food Manufacturers can employee their own direct sales Representatives. That are direct full-time employees of the Manufacturer that they pay and provide benefits to just like all the other company’s employees. However, If a Food Service Manufacture doesn’t want to deal with a full-time sales force and the salaries, benefits and related administrative costs they have another option.
The other option is they can pay a Food Broker. Which is a company that will not only Represent their products on a sales call but also several other non-competitive Manufactures products. So, a Food Broker gets paid by several different Food Manufacturers that are ideally not directly in competition with each other for those Food items. That way the cost of these services are distributed over several different companies. Manufacturers have the freedom of not having a vast amount of their working capital tied up in a direct sales force all over the country. Plus, they can go in a different direction without having to fire a large portion of their staff. They can switch Brokers relatively easily if they feel they are not getting the best representation. Using a Food Broker at least gives them options over the traditional direct sales force model. In some cases, though, a Manufacturer might decide to switch back to having their own dedicated sales force.
A Food Manufacturer that uses a Food Broker doesn’t have to employee its own full-time street-level sales force across the country in all the different key area markets. They pay the Broker a brokerage fee. This can be a base admin fee plus an additional brokage commission anywhere from 1 to 5% on all the business the Food Manufacture gets from the Food Distributors that the Broker is working with to get the Food Manufacturer’s products sold to restaurants. So, using a Broker, a Manufacturer splits the cost of a dedicated sales force with other Manufacturers. A Broker will go into a sales call to a restaurant and can show one Manufactures items but in most cases, they will show items for several different Manufactures they Represent.
On the same call to a restaurant, a Broker Rep. could show medium precooked chicken wings from one client and an upper tier refrigerated ranch dressing from another. Then maybe a beer battered waffle fry from a third different Client that the Broker represents. So, the Broker not only showed the Restaurant the item of focus but also all the complimentary items that he represents.
The Broker is going to break down the larger Food Service sized cases and bring enough product to accurately show the product. A broker might sometimes drop off full cases but that is in a lot of ways just lazy unless you are doing it for a large chain that is going to show it to a large number of decision makers. Either way the restaurant didn’t have to buy 3 different cases of products that they didn’t even know they might want. Three full cases takes up a lot of the Restaurants limited storage space. Especially if it’s not an item already on the menu so it’s probably just going to eventually get thrown out.
The Food Broker took the time to break these Manufacturer Client items out and put them together to show the Restaurant items they might not even know existed. Giving the items a better chance of getting an actual review by the Restaurant and possible purchase. The Restaurant now has a more complete idea of ways he can quickly use these products for a new menu item. Or improving an existing item on their menu.
BROKERS INTERFACEING WITH FOOD DISTRIBUTORS:
One of the services that the Broker does for the Manufacturer is work with the different Food Distributors in the market to get the Manufacturer’s various products in stock to be sold be the Distributors Sales Representatives that call on the different Restaurants in the area. The Broker will have dedicated people that spend most of their time dealing with that Distributor. Brokers will usually have someone locally and someone nationally to interface with that Distributor. Broker Companies probably will have other employees that only deal with each of the other major Distributors in the market. So, one Broker Rep just works with say Sysco and another Broker Rep for the same Broker Company specializes in working with just US Foods. Food Distributors like that kind of separation between what they are doing and what their competitors are doing. Having a Broker with separate dedicated Distributor Account Reps helps foster these relationships.
Getting a Manufacture’s product into a specific Distributor takes time. Time to set up and perform a formal product cutting to convince the Distributor that they need that product in the first place. Moreover, to determine the Restaurant they sell to will even want to buy it. Distributors have limited area in their warehouse for dry items, for refrigerated items and for frozen items. So, they want to believe that the items they allow to be stocked will be something that their Restaurant Customers will buy.
Part of that process for an item is Distributors will need to work out stocking fees and also what their landed cost to their warehouse from the Manufacture will be. Then with the product and landed costs the Distributor can have an idea what they can mark the item up as their price to the Restaurant. Depending on that price they have to determine if a restaurant will still be interested in buying it at that calculated price. At this time, the Distributor might also see if the Manufacturer will participate in a Distributor marketing program. Basically, this is where the Manufacturer pays for their product to be highlighted to the Distributors Sales Reps as a preferred product to sell. Because the Distributors sometimes might have 30,000 items they sell. This tells the Sales Reps which ones are the ones the Distributors want them to focus on.
In many cases the Distributor will already have multiple versions of the same items from several different Manufactures. Say it is Bar-B-Que Sauces in several different flavor profiles, some very similar to each other. In some situations, even trying to be a direct knock-off of one of the other more popular national retail products. In other cases, the Distributors might have a special deal in place with one Manufacturer and not really want any other similar items from other Manufacturers. Either way the Distributor might not be looking for any more brands of Bar-B -Que sauce.
Since the Broker Distributor Account Manager works with the Distributor and with multiple Clients, he spends more time with the Distributors and has more contact with them. Which usually means a better working relationship with the Category Purchasing person for the Food Distributor. So, this relationship could help get the Brokers Client’s product stocked into a Distributor that normally wouldn’t think about stocking it.
If you look at the Manufacture Direct Sales Force model. Then a Manufacturer probably only has a few items available for Food Service. The Manufacture direct Representative might only see the Distributor once a quarter or when he needs to get a new item in. The Distributor also knows this same person from the Manufacturer who works with all his competition in the market trying to get these same items in their Distribution system also. So, unless the Manufacturer is a household name and with deep pockets for the Distributor’s marketing programs. The Food Distributor is only going to give them so much time and might not have a very close relationship with them. So, getting new items into distribution is going to be a lot harder for the Direct Manufacture Representation sales model.
That it for the first part of the article, I hope it has been insightful so far.
Look for Part II of the Article next week!!!
Their Crew of workers include “Flippy Lite”, “Flippy
2”, “Sippy” and currently under development for Chipotle’s Mexican Grill-“Chippy”
Sippy is Miso’s Robotic answer
to the Barista and with a lot less attitude.
