Foodservice Distributors: If You Eat Out, You Know Us

Millions of meals are eaten away from home each day in America. Foodservice distributors help make it possible.

by Caroline Perkins and Chris Caldwell

Every day, some 276 million meals are consumed away from home in the U.S. alone. That could be a son or daughter grabbing lunch with a friend at college, a business dinner with a client at a steakhouse, or a sub on the go with some teammates after a soccer game. It also includes a meal at a hospital, a care facility, or a military base. That meal away from home is the “foodservice industry” and represents 47 percent of food dollars spent daily in America.
Behind the scenes of most professional kitchens is a foodservice distributor. These companies buy, store, sell, and deliver tens of thousands of products — from fresh produce, meats, and seafood to grocery products like canned tomatoes and rice. That same distributor also helps restaurant operators with other needs like beverage programs, paper supplies, and sanitation products. Those outside of the industry may never think about it, but foodservice distributors are an essential part of what makes eating out possible.

This largely behind the scenes industry includes more than 15,000 companies operating warehouses and transportation fleets. A typical broadline foodservice distributor may serve anywhere from 1,000 to 6,000 accounts from a single distribution center and offer their customers more than 10,000 items to meet specific operator needs. In 2014, estimated distributor annual sales in North America exceeded $235 billion.

Modern foodservice distributor operations include multiple temperature zones to protect product during storage and selection. The above photo shows a dry goods area in a foodservice distributor warehouse. Product is normally received during the morning to early afternoon timeframe. Order selection then takes place in the afternoon and evening, trailers are loaded systematically by stop, and drivers depart for deliveries to customers as early as 3:00 a.m. The cycle then starts over, normally six days a week.

The Evolution of a Specialized Industry
Founded by entrepreneurs who plied their trade from small stores and warehouses as far back as the mid-1800s, a pioneering spirit still exists in the third, fourth, and even fifth generation of family-owned businesses that make up a large portion of the foodservice distribution industry.

The evolution of the foodservice distribution industry is directly linked to the growth of the restaurant industry. Following World War II, a typical food distributor served any market need — from a small local grocery store to hotels. One of the growth drivers in foodservice was The National School Lunch Act, passed in 1946, which began providing a mass market for “institutional” products. Because of that, the distribution role within foodservice was at first known as “institutional distribution.”

Through the 1950s and 1960s, the industry continued to expand. The International Foodservice Distributors Association, was formed to address the needs within this growing supply channel.* Distributor purchasing groups were formed and non-food products such as equipment and supplies were added to distributors’ product lines. The fast-food industry was born and Americans were spending more and more of their food dollar away from home.

By 1955, as restaurants proliferated and consumers ate out more frequently, foodservice distribution began emerging as a separate business from retail grocery distribution. At that time, only 25 percent of an average family’s food dollar was spent on “food away from home.” Today, that share is 47 percent.

As distribution grew through the 1980s, warehouse efficiency became a key element in competitive success. Operations and transportation today are supported by highly sophisticated technology. Examples include voice picking of products in the warehouse, computerized routing of transportation fleets, and monitoring systems for multi-temperature warehouses and tractor-trailers that assure safety and quality of foods.

Above right is a temperature controlled dock that adjoins refrigerated space that can include five to six temperature zones. These zones accommodate products from ice cream (-20 degrees Fahrenheit) to humidity and temperature controlled rooms for ripening bananas and tomatoes. Above left is a view down an aisle in freezer space, which is approximately a football field deep. Foodservice distributors operate multi-temp trailers to protect product integrity on the way to the customers.

In the 1990s, added focus came to other areas of the business, including sales and marketing. Along with being an important conduit for new product information, distributors created a number of value-added services for operator customers from menu planning and food-safety programs to trend and market information and business analysis. Foodservice Distributors have become, in many cases, a true partner to their customers in helping them profitably meet consumer needs.

The foodservice industry touches the lives of every consumer and foodservice distributors are critical partners in making “food away from home” possible. Whether you’re enjoying pasta with your family at a favorite “Mom & Pop” Italian restaurant, grabbing a quick lunch at a national chain, enjoying Black Angus beef during a business dinner at a premium steakhouse, or dining at a resort while on vacation, the enjoyable meal away from home was made possible, in part, by a foodservice distributor.

A Snapshot of Today’s Foodservice Distribution Industry
(source for distributor metrics: Technomic, Inc.)

Annual Distribution Industry Sales (U.S. 2014): $240 billion

Customer Segments Served:
• Limited service restaurants
• Full service restaurants
• Bars and taverns
• Retail hosts (supermarkets, c-stores)
• Travel and leisure (recreation, lodging, airlines)
• Business and industry
• Education
• Healthcare
• Other (military, corrections, vending)

* The “Institutional Food Distributors of America” began as part of the U.S. Wholesale Grocers Association. In 1969, that association merged with the National American Wholesale Grocers Association, and IFDA (renamed International Foodservice Distributors Association) retained its separate identity as well as a distinct Board of Directors. When a decision was made by wholesale grocer members to merge with another retail association in 2002, IFDA’s Board of Directors made the decision to establish IFDA as a freestanding trade organization, which took place on January 1, 2003. The group is located in the Washington, D.C. region and provides research, education, industry forums, and government relations.