06: Sales
Foodservice
When we think about getting products to customers, retail and e-commerce often steal the spotlight. But there’s another channel that’s equally potent for scaling your brand: foodservice. Whether it’s restaurants, cafeterias, hotels, or corporate dining, foodservice offers a massive opportunity to introduce your products to a broader audience. But like every channel, it comes with its own set of challenges and nuances that need to be understood for success.
What is Foodservice?
Foodservice is the industry that prepares and serves food outside of the home. It includes a wide range of establishments such as:
- Restaurants: From fast food to fine dining.
- Corporate: In-office break rooms and dining options.
- Hotels: Markets, restaurants, and event catering.
- Schools and Universities: Markets, Cafeterias and meal programs.
- Hospitals: Patient meals and food courts.
- Event Venues: Catering for large gatherings and conferences.
- Vending Machines and Micromarkets: Convenient, on-the-go snack and meal solutions often found in offices, gyms, and public places.
- Sports Stadiums: Concession stands offering food and beverages during games and events.
Foodservice is my second favorite channel as it allows for you to reach people at the point of consumption. TeaSquares were designed to help people stay focused and alert, with office workers being a primary customer base. What better way to reach are customers than at work when they are experiencing the product first hand.
We started with getting our product into the office breakrooms at tech companies like Braintree through a friend who worked there. They actually bought dozens of our products every single week, and offered them as free snacks to the entire office. The best part is that we only need to sell to one “buyer” to generate consistent sales. This led to more office sales, with our largest customer purchasing a pallet of TeaSquares a week for their large corporate campus.
Why Foodservice Can Propel Your Brand
Here’s why foodservice is worth considering:
- High Volume Sales: Restaurants and cafeterias often buy in bulk, leading to significant sales volumes for brands that make it onto the menu.
- Brand Exposure: Imagine your product being featured on the menu of a popular restaurant chain. It’s a chance for hundreds or thousands of people to try your product in a setting where taste and experience are paramount.
- Trial and Word-of-Mouth: Foodservice allows consumers to try your product without making a direct purchase. A positive dining experience can lead to brand loyalty and increased sales in retail or online.
- Diversified Revenue Streams: Relying on retail alone can be risky. Foodservice adds another revenue stream, helping to stabilize your business during retail lulls.
Getting Started with Foodservice
So how do you break into the foodservice channel? Here are some steps to get you started:
- Identify Your Target Operators:
- Just like in retail, it’s crucial to identify where your product fits. Are you a premium ingredient that belongs in fine dining, or are you a value product perfect for quick-service restaurants? Understanding your target market within foodservice will guide your approach.
- Partner with the Right Distributor:
- Working with a foodservice distributor is often essential for scaling in this channel. Start by targeting regional distributors who can give your product the attention it needs. Once you’ve established a track record, you can aim to partner with larger, national distributors.
- Develop a Foodservice-Specific Offering:
- Foodservice operators often look for different packaging sizes or formulations than what you might offer in retail. Consider bulk packaging, or offering products in formats that are easier for kitchens to use, such as pre-sliced, diced, or pre-mixed ingredients.
- Create a Strong Pitch:
- Your pitch to foodservice operators or distributors should emphasize how your product solves a problem or enhances the dining experience. Focus on factors like taste, consistency, and cost-efficiency. Data on consumer demand and market trends can also strengthen your case.
- Support with Samples:
- Foodservice operators rely heavily on taste tests. Be prepared to send generous samples and even prepare a few suggested recipes or serving ideas that show how your product can shine in their menu.
- Attend Industry Events:
Events like the National Restaurant Association Show or ECRM’s Foodservice sessions are great opportunities to connect with potential buyers and distributors. These events allow you to network, pitch your products, and gain insights into what’s trending in the industry.
Front of House vs. Back of House Foodservice
When selling to the foodservice industry, it’s essential to understand the different roles your product can play within the operations of foodservice establishments. The two main areas where your product could be used are the front of house and back of house. Each presents unique opportunities for CPG brands, depending on the type of product you offer.
Front of House Foodservice
The front of house is where customers interact directly with your product. It’s all about convenience, accessibility, and visibility. Here’s where your CPG product can shine:
- Markets and Breakrooms:
- Many corporate offices, universities, and large facilities now have micro-markets or breakrooms stocked with grab-and-go options. These locations are perfect for products like snacks, beverages, or pre-packaged meals. Employees and students appreciate the convenience of having quality food options readily available, and your product benefits from being positioned as a healthy or indulgent option during the day.
- Vending Machines and Micromarkets:
- Vending machines and micromarkets have evolved from offering just sodas and chips to providing a wide range of healthy and gourmet options. Products like protein bars, bottled smoothies, or even fresh salads can thrive here. The key is to offer something that satisfies immediate cravings while fitting within a busy, on-the-go lifestyle.
- Grab-and-Go Items at Fast Casual Restaurants:
- Fast casual restaurants often offer a selection of grab-and-go items like salads, sandwiches, and snacks. This is a great opportunity for CPG products that are portable, have a long shelf life, and can easily be picked up by customers looking for a quick meal or snack. Examples include bottled beverages, snack packs, or single-serve desserts.
Why Front of House Works for CPG Products:
- Visibility: Your product is directly in front of the consumer, making it easier to build brand recognition.
- Convenience: Consumers in these settings are looking for quick, easy solutions, which aligns well with many CPG products.
- Impulse Purchases: Front of house locations are ideal for driving impulse purchases, especially if your product is well-positioned and eye-catching.
Back of House Foodservice
The back of house is where the magic happens in the kitchen, and it’s where your product could become an essential ingredient in a restaurant’s dishes. This area is ideal for CPG brands that produce bulk ingredients or specialized products that add flavor, nutrition, or convenience to food preparation.
- Ingredients for Cooking:
- If your CPG product is an ingredient like sauces, oils, spices, or even pre-prepped vegetables, it can be an invaluable asset to chefs and kitchen staff. These products must deliver consistent quality and flavor, as they are often integrated into various dishes across a menu. Think about products like bulk spices, pre-marinated proteins, or high-quality cooking oils.
- Bulk Items:
- Restaurants and other foodservice operators often require ingredients in large quantities. If your brand offers bulk versions of your retail products, you can provide chefs with the quantities they need to prepare meals efficiently. This could include items like grains, flour, or specialty condiments.
- Pre-Prepped Ingredients:
- Pre-prepped ingredients save time and labor in the kitchen, which is crucial for fast-paced environments. If your CPG product can reduce prep time without compromising on quality, it’s a win for foodservice operators. Examples include pre-sliced vegetables, ready-to-use sauces, or frozen dough.
Why Back of House Works for Ingredients:
- Consistency: Foodservice operators need reliable, consistent products that perform the same way every time.
- Volume: Selling in bulk to the back of house can lead to significant sales volumes, especially if your product becomes a staple in multiple dishes.
- Partnerships: Establishing your brand as a go-to ingredient in kitchens can lead to long-term partnerships with restaurants and foodservice operators.
The Foodservice Distributor and Operator Landscape
Now that you understand where your product may perform best, let’s talk about how to get it there.
- Foodservice Distributors: These companies act as middlemen between manufacturers (like your brand) and foodservice operators (like restaurants). Some of the big names in this space include Sysco, US Foods, and Gordon Food Service. Distributors handle the logistics of getting your products to the end user, but they also play a gatekeeping role. Securing distribution with a major player can open doors to thousands of foodservice accounts.
- Foodservice Operators: These are the establishments that actually serve the food. They can range from national chains to independent restaurants. Operators make decisions based on a variety of factors including taste, cost, consistency, and supply reliability. Understanding what these operators value will help you tailor your pitch and products.
The Challenges of Foodservice
While foodservice offers significant advantages, it’s not without its challenges:
- Mixed Margins: Front of House CPG products often have better margin opportunities while Back of House foodservice items come at a lower margin than retail. Be prepared to negotiate and find a pricing model that works for both parties.
- Demand Consistency: Restaurants and cafeterias expect consistent supply. Any hiccup in your production or distribution can lead to lost business. Reliable logistics and inventory management are crucial.
- Long Lead time: Foodservice operators aren’t typically innovative and time to pitch and get into accounts can take months if not years.
Final Thoughts
Selling to foodservice can be a powerful way to grow your CPG brand, but it requires a different approach than retail. By understanding the landscape, targeting the right operators, and crafting a compelling pitch, you can tap into this lucrative channel. Whether you’re serving up bulk ingredients to restaurants or providing specialty items for cafes, foodservice offers a path to scale that’s worth exploring.
Just remember, like any sales channel, foodservice takes time and persistence. But with the right strategy, your product could become a staple on menus across the country.