November 14, 2018

Connecting The Foodservice Dots

Restaurants of all sizes are constantly on the lookout for new trends and menu ideas. This is an opportunity for food providers to get their products on onto foodservice menus. But what does that mean from a logistics standpoint and how does one go about getting noticed in the first place?

[PODCAST]

TRANSCRIPT:

Jennifer: We have Ric Scicchitano on the podcast today. Ric is a managing partner at Food & Drink Resources who joined the company after numerous years including working his way from Corporate Chef to Executive Vice President of Food & Supply Chain at Corner Bakery and President of Which Wich. He has an insiders understanding of what it takes for restaurant brands of all sizes to create and offer new menu items – from recipe innovation to supply chain management.

Food & Drink Resources works to connect resources – the people, concepts,and companies – in the pursuit of bringing food and beverage innovation to life. The company is on the cutting edge with regards to food trends and are able to help their customers come up with new and fresh ideas for their clientele. You can find out more about Food & Drink Resources by visiting foodanddrinkresources.com.

Jennifer: Ric, thanks so much for joining us today.

Rick: Good morning, Jennifer. Pleasure to speak to you.

Jennifer: Thank you, and I’m excited to talk to you because normally when food entrepreneurs are starting out they focus on selling direct to consumer or selling wholesale to stores, but we’re gonna be talking to you today about selling to restaurants as well, that that is an option and it can be a very lucrative one for food entrepreneurs. So, just to lay the groundwork, can you tell us a little bit about yourself and the company that you work for as well?

Ric: Sure, my name, so, I’m a managing partner with a company called Food and Drink Resources. We are a Denver based culinary agency.

Our organization lives and breathes food every day. And the clients we work with, and the projects and the activities we do are focused on the restaurant space, whether it’s casual dining, food manufacturers, those that supply the restaurants, we’re in hospitality, and even to some extent, are producers, whether you’re a tilapia farmer, you are a grower of green chilies, so pretty much the whole supply chain space, we touch with, interact with, and we try to cobble all of these experiences together, into innovative ideas, solutions, strategies, to those in the food space.

Jennifer: Excellent, so yes, you guys definitely cross a wide breadth. And I wanted to talk to you about, as we were talking about with regards to restaurants, can you tell us a little bit about what menu development process is like for a multi-location restaurant organization, that potentially a food entrepreneur might want to basically sell into? But how does that menu development process work?

Ric: Sure, so, and in general, it’s about the same, in that it starts with a bunch of ideas, to think about the funnel being very wide at the top, and the process is all about whittling down those ideas to the ones that are brighter, that are a bigger opportunity, and eventually, take something to market, that’s in general how everyone wants to go about it.

Start with the funnel wide, narrow it down to things that are gonna make an impact on your business. But therein lies how different brands approach it differently. Some very large sophisticated brands have very long tail on this process, they could be 12, 18, 24 months in the making, those that do it well have the series of items in the pipeline, and they may be working on something this quarter, that they don’t expect to hit their restaurants for another 12 or 18 months, but the good news is, the things that they’re hitting today, they’ve got a head start on this 12, 18 months ago.

So you kind of have a staged process, where there’s a lot momentum and a lot of energy. Some brands are very reactionary, they sit back and look at their menu today, and they realize that the restaurant space is becoming more challenging, because fighting for traffic has been a headway now for a good 10 years, and they’re realizing they’re behind the times and they’re starting to flat foot on a content innovation, look at their pipeline, it’s nonexistent, they look at their culinary teams, and they’re not really up on where the latest trends are.

So, we have to understand first, we have to kind of take stock of the folks we’re gonna work with, and understand where are they in the process, and what level of sophistication do they have? Are we in a sprint, do we have to start today and get something ready, for say, spring? Or late winter this year? Or are we just plugging and playing into an existing system that already has momentum? And we’re just providing our interpretations of different point of view.

But in the end, wherever these great ideas are, everyone has to validate it with the consumer. Brands are notorious for thinking of a great idea, and then when you finally put it in front of the guest, it’s not quite what the guest expects, it didn’t deliver on it. So there’s always a validation process in this, and therein lies the second piece that becomes a variable from some brands.

Some organizations are very sophisticated on how they go to market with their consumer. They’ll do insight work, they’ll do focus groups, taste panels, and they’re really kind of honing in on this, for what the guest is looking for, where small and more nimble, flexible brands will put out in the store, and they’ll do a live market test, right, so my point being in this is, the bigger you are, the more you’re gonna go through this stage getting process of an idea, and validating it before it goes into a market.

The smaller you are, you tend to be a little bit more flexible, nimble, I’ll try it, if it doesn’t sell, I’ll try something else, so it’s kind of a wide span, but in the end, everyone’s looking for that one item that’s gonna turn around, say, “I can’t get this elsewhere, and it’s differentiating.” The other piece that’s really important when it comes to innovation, good brands do it with items that are on brand for them. Somebody that’s in the brunch space or the breakfast space, probably isn’t working on stir fries, right?

So you gotta make sure you stay true to who your brand is, and that’s another piece, as you go through the process, some organizations are very tight on who they are, they know what they wanna be, they know what their guests expect, they know what their food or their beverage platforms should be. While others, sadly, have been through so much leadership change at the top, they don’t know who they are anymore. They’re kind of adrift at sea.

So that’s something else you have to be mindful of, is you’re working with these brands because, are they have a good sense of who they are, or are they still kind of feeling around in the dark on where they wanna go and take their food and beverage direction?

Jennifer: Oh, interesting, I hadn’t thought about that.

Ric: Yeah. So, and if you look, I can give you a couple kind of examples on how we’ve done it, but help me lean into the conversation you wanna have, and I’ll be happy to fill in the blanks with some real world experiences.

Jennifer: Yeah, I always love to hear the real world experiences. You know, I also wanted to ask you about, so creating the menu is one thing, but then, you need the ingredients to go into that item. Especially as you’re bringing it to that point of testing, or you’re saying, okay, we’re gonna roll it out into one or more locations.

And so, how do these larger food service organizations go about finding their ingredients, and then from the standpoint of the folks listening who might be producers of said ingredients, typically in the wholesale world, as you know, you sometimes need to be working with a specific distributor to get into Kroger in this location, do these producers need to know which distributors they need to be with in order to get into these
companies. It’s kind of a multi-faceted question I just asked you.

Ric: Yeah, you said the D word. That is a deal breaker. In the retail side of the business, you mentioned Kroger, or the ilk like that, they do their own distributions, so you really gotta get products at their essential DCs, their re-distribution centers.

Food service is a little more complicated than that. It’s the same drill, in the end, the restauranteur or the brands, need to get access to the product. It’s very easy to send a sample via Fed-Ex to a test kitchen or to a culinary team, and they can work on it.

Then they traditionally hand it off to those in the organization that are responsible for purchasing the supply chain, and this is usually where a lot of great ideas die on the vine, because the suppliers, the producers, haven’t always thought through how am I gonna get this product to the client, to the distribution centers.

And sadly, our reality today, growth brands are just what they are, they’re growth brands, which means they are growing across the country at a rapid pace, and they’re not marching like the army. They’re not conquering Texas and then going to Oklahoma and then up to Missouri and on the Chicago. They’re doing Texas, they’re doing Boston, they’re doing Fort Lauderdale, they’re doing Seattle, they’re doing southern California.

That puts tremendous stress on the supply chain. So what you have is, you have a situation where your units are scattered all over the country, you have a situation where there’s lots of distribution centers, and when a manufacturer or a supplier of the product starts to uncover, wow, what could this potential business be? They might be very competitive on the pricing of the product, but then they figure out, wow, I’ve gotta get this product to all these distribution points around the country, and that’s usually where the deal falls apart.

So, what you need is, the bottom line is, you need a brand that is aggressively interested in this product, because they have to clear these hurdles for you. Couple ways around it is, in the food service industry, lot of folks lean on Dot these days. Dot is a redistribution center, that basically, you ship it into a company called Dot, they redistribute it to your broadline distributor, there’s some nominal fees on there, so if you are smart enough and you have a strategy to go to market, that your product is gonna run through someone like a Dot, you’ve cleared a good chunk of the hurdles.

But when all of a sudden, you have a wonderful product to a brand that the the leadership, the CEO, the CMO, the presidents, they love, they’re gonna march down the hall to their supply chain people, and they’re gonna say, “I don’t care how you figure it out, figure it out. We need these products.”

So, you gotta understand, you gotta remove some of the hurdles, but if you can go to market with, hey, don’t worry about it, we took the distribution piece off the radar, it’s not a head wind for you because we’re running it through Dot, or, if you’re lucky enough to already be in a lot of these distribution centers, you’ve cleared probably the biggest reason why a lot of great ideas die.

Jennifer: That’s great to know. Yeah, ’cause as you said, if they love it but they can’t get it …

Ric: It dies, exactly. I’ve seen it happen too many times it’s sad, great ideas die, because you physically can’t get it to the customer. But I have a couple thoughts around that. A lot of folks, people are always searching for, what’s my next piece of business, where can they go after, where should I attack? You know, the national brands, they bring their own challenges, they bring a very sophisticated supply chain team, they’re gonna wring you out on cost, they’re gonna challenge you on distribution. You know, they got a very regimented R&D process, but sometimes, these regional brands, there’s a lot of them out there.

Whether you’re in the southeast or the northwest, a regional brand can have a very big play as well and can probably be more profitable for you. Because they have a concentration of units, they have a limited amount of distribution centers that you’re distributing to, so instead of focusing on someone that’s coast to coast, north and south, they focus on something that’s specific northwest, they’ll focus on somebody that’s from the southeast, and try to land those accounts.

There’s enough of those out thee that you may find out it’s actually a better piece of business. And, those regional brands tend to have a better sense of who they are, and they know the kind of foods they wanna develop, they’re very structured in their process, they’re looking for new ideas, they’re looking for the next ingredient, they’re looking for that next flavor profile.

So, don’t underestimate the regional players, they’re a strong option.

Jennifer: So, with, let’s say, even those regional players, how would you as a producer or manufacturer, get your product in front of them? Is it a matter of going to trade shows, is it a matter of sending samples, on, you know, like recipe ideas, I mean, if somebody’s listening right now and sitting there saying, “I have this amazing product that X,Y,Z brand would love”, how do they get in front of them?

Ric: Yeah, there’s, it’s a stew of ideas without a doubt. So, you know, trade shows, like a fancy food show that’s on the west coast and the east coast, or the Natural Food Show that’s in southern California, those are options, because there’s a lot of food innovators, brand leaders, walking those halls and seeing it, that’s one option.

Places like the NRA (National Restaurant Association) in Chicago could be, but you’re lost in the sea there, you’re probably not gonna get much value out of it. What it really boils down to, is just good old boot leather. Go and find the brand where the regional offices are, try and get a meeting with their, not just their culinary team, but if you can get an audience in front of their marketers, or if by luck, you can get in front of the CEO or the president, ’cause in the end, you wanna get to the decision makers, right?

You know, the supply chain team, they’re always looking for options and resources. But the way the structure works, is they have to kick it up to the decision makers in marketing operations and finance and eventually, the executive team. So, if you can get in touch with a brand, because you’re trying to do two things, you’re trying to get your face in front of them, your foot in the door. But you also wanna hear from them what their need is, because brands and restaurants have so many challenges today, there’s so many pressures and so many things executives are working on, that sometimes, they don’t know what they don’t know until all of a sudden, they may walk into a test kitchen, and they may look down and they may see a product sitting on the table or something, in a saute’ pan or something, on a sheet pan, and they may connect the dot, going, “We have a need for that, right?”

So my point is, you’re trying to find out what each brand’s needs are, because they’re all sitting back trying to innovate. They’re all looking at their menu going, what can I put on my menu that hits a dietary concern, hits a price point, allows them to deliver a product that’s better for you? It enhances a category, the flip side of this is, if you recklessly go into a brand, and say you’re pitching a product, say you’re pitching a pork product, to a vegetarian-based organization. Not a great idea, right?

So, or a brand that is heavy into the Muslim population, that doesn’t eat pork, so you gotta do your homework, and know who you’re calling on, and you gotta kind of have a sense of not just going there and having breakfast the day before and looking at the menu, but really understanding what kind of foods they service, and look at the customer base, because sometimes, you can walk into a meeting in this test kitchen or in this board room, you’re presenting, and you can connect a dot that they haven’t connected.

And that’s really what it’s about, it’s about identifying and connecting the dot and knowing the brand. You know, it’s kind of like the analogy of the iPhone. You didn’t know you needed an iPhone until you put it in your hand, right?

Jennifer: Yep

Ric: Or when Henry Ford asked consumers what they wanted, they said, a faster horse, they didn’t know they wanted a car. So sometimes, you have to kind of connect that dot through the brands, “Hey you’re so busy, you have so much noise going on in your head, I’ve got a short circuit, I got a culinary hack here that you should consider.”

And then, last case is, you need to know their operations, you need to know what their background is. If you are selling something that needs a deep fryer, but there’s no deep fryers in their restaurants, you look kind of silly pitching it, right? So just knowing if you’re out there knocking on doors and going and visiting brands, and do I have a product that actually works for their kitchen [inaudible 00:14:32].

Last point. Sadly, today’s labor force is not as culinarily skilled as it was in the past, like when I was going through the whole iteration of the process. It’s all about today, simple to execute, easy to execute, less ingredients, easy to train to a high school kid or young college kid that has lot of high turnover. You can’t be out there selling products that has a lot of complexity to it. That have a lot of components to it.

So, if you can short circuit something on the simplicity side, kudos to you, you get a lot of bonus points to your presentation.

Jennifer: Thank you. That’s one of those, like it’s an obvious observation, but one I hadn’t thought of. That’s a really good point and as you said, that’s a big problem solver for those brands.

Ric: That’s right, yeah.

And you also have to think about, you gotta have a good sense, whether you’re talking to a regional player or national player, you gotta have a good sense of what sells on their menu but you also gotta know what sells, what consumers buy, and I’m being very general here. Beef and chicken sells like crazy, right? And salmon sells decently but boy if you start going down the path of the third or the fourth seafood or you start going down the path of the third or fourth or fifth protein, you’re not talking high percentages shots for brands, you’re not presenting something to them that they think moves the menu.

I’m using proteins as an example but produce can be the same way, so certain organizations tend to realize if I’m out there pitching something, I gotta kinda lean into something that has some decent broad appeal. I have to know what it is. I can’t be out there selling something very strange because there’s not a lot of risk takers out there when it comes to innovating. Especially on a national scale, right?

A local operator can take all the risks they want. They can put something on the menu that might be crazy on Monday. If it doesn’t sell by Friday, they got something on there by next Monday. But the bigger the size of the chain, the less likely they are, the more risk-adverse they are, so they’re gonna want us to know things that have a higher percentage of[inaudible 00:16:35] familiarity to it, but you’re trying to show, here’s why yours is different; it has a twist on top of it.

Jennifer: How has the movement towards more local foods, and I’ll kind of use the word local in, captions here because local can mean within 50 miles, with in 1,000 miles. But how has that movement from a culinary standpoint as a whole, impacted larger restaurants or larger chains? Are they able to answer that call if they have multiple locations? Is that just something that they don’t worry themselves about? And their consumer base isn’t necessarily worried about?

Ric: Well, it’s aspirational, no doubt. The bigger you are, the harder local is. In the winter up in Maine, so you’re not getting local tomatoes. So, the regional change, usually they’re born out of a regional place. They probably have already adapted to regional cuisine and regional ingredients. So, for brands like that it’s probably more achievable and closer to their heart.

But, when you’re operating coast to coast, north to south, the reality is the local play is a desire more aspirational as it is reality. Sadly, some of the bigger brands, I’m not even in my opinion, that they’re consumers are expecting them to be local. They like it, but a national chain, if somebody’s really into local, they’re probably going to their local pub, their local restaurant, their local stores and they’re visiting local community.

It’s like me, I’m a mountain biker, I use my local bike shop, right?

Jennifer: Mm-hmm (affirmative).

Ric: I don’t use the big guys. It could be something to where they don’t expect that on a larger scale brands, they talk about it. Everybody would like to get there. There’s some cool things people are doing where they’re buying these old shipping containers and they’re growing some of their produce in their local markets in these shipping containers because things that can grow in 21 days or 28 days, like lettuces and herbs and things, you can do that locally right? You can get credit for doing things like that.

So, you might find some local plays and I’ll just go off on a few more ideas, you know, one way that full service restaurants can get a local play is to jump on the craft, beer momentum right? Local craft beers, local spirits things like that. So there’s a play that might not be on the core or the center of the plate menu items, which you can play it off in the bar. Things like local hot sauces can play because there’s a lot of folks doing that.

But, it’s more of a desire and it’s harder for the bigger brands and it’s not as wide spread as I think folks might have expected it to be five or six years ago when this trend was starting to get a lot of press and PR.

Jennifer: Mm-hmm (affirmative). One question I do get asked from food producers and food manufacturers, smaller food manufacturers, so if I do, lets say have a, and we’re talking usually more regional brand, pick up my product, can I expect any marketing effect from that? Are they gonna say that they’re using X, Y, Z grain in their breakfast or in their brunch pancakes?

Do you see that happening? Or is it strictly a benefit, it’s a sales benefit that they are using their product and that your marketing needs to be outside of that?

Ric: Yeah, sure it happens and it happens if there’s value to the brand if the supplier or the manufacturer has equity in that brand. You see it with ice cream companies, again, you see it with some of maybe the local craft beers like I mentioned and they’ll put their names on the menu. Usually when you wanna brand, or it says that you’re gonna be on my menu, you’re gonna start with [inaudible 00:20:12] you’re gonna pay me to do that.

Jennifer: Okay.

Ric: Its a revenue generator for them. Very rarely, I guess it could if you got one really compelling brand, I’m guessing, if you had one brand that is just like, I gotta have it in a local area, maybe a local cheese producer, that this restaurant says, “I gotta have this brand of cheese because everybody in this county or this state eats this cheese.” They may put on the menu free because they want their consumer to know about it.
Ric: But, generally it’s a money play. Generally they want you to stroke a check and give it to them. But you gotta have equity in it, they’re not gonna put any just generic brand up there. So, if you got a brand that has some great integrity, it’s got the right sustainability message, it’s got the right, or animal husbandry when it comes to protein producers, things like that.

Yeah, I can see brands doing that. Especially on a regional local level. Go back to the chain, you know an east coast brand has very little play on the west coast, right? Unless it’s some national brand that’s got the jazz. But those are rare. It’s another way it helps, even if you a menu of 40 items and 100 ingredients. If only 5 or 6 of them are locally sourced, and you get to celebrate that, do it. Why not? Your guests are gonna give you credit for it. They’re not gonna think less because of it.

Jennifer: That’s absolutely true, yeah. For these smaller food producers, and you’ve mentioned a couple tips already in terms of good old fashioned shoe leather and networking and just working your way in to make a solid sales pitch to them and understanding their problem. Do you have any other tips for them as they consider working with, be it a regional or potentially even working up to a larger national brand?

Ric: Yeah, so to repeat just a few, make sure you know what the brand is, right? So you’re not in there selling something you look silly doing. I say it because I’ve seen it happen in my career. People walk in and I’m like, “You’re presenting something that makes no sense for my brand.”

The second point, is you really gotta find what their needs are. You gotta know what they’re working on. If a brand is working on, you know, lunch items and you’re in there selling a dessert. They’re gonna be like, “Well okay, I’ll look at your product, I’ll put it in the freezer and I’ll get back to you later.”

So, you gotta strike when the fire’s hot, which is why you have to have a lot of visits, you may need to go in on a regular basis. All of a sudden nine months from now, hey now that brand’s working on a dessert because I remember, you were in there. So, trying to understand what is priority to them, it’s not just needs and what are they currently working on. What’s on their roadmap. Understand that so you can fill in the blanks. Don’t overwhelm them. Go in there with your one or two best items.

When you do a big presentation of 8, 10, 12 items, I got news for you. After the second one, they’re checked out. It’s like a YouTube video. You got two or three minutes and after that it gets less and less entertaining. Make sure the folks that are in there presenting love presenting. You want somebody who’s never been afraid of a microphone or a camera, so to speak. Some folks come in and they’re not very comfortable with the product, not very comfortable with presenting it, they’re not very comfortable with interacting with the audience.

Again, on the restaurant side, you’re dealing with culinarians, you’re dealing with chefs, with varying levels of skill, right? Some very talented, some less experienced, then you got the marketers walking in very buttoned up, very sophisticated, very metric driven. Then you got kind of the dynamic leaders of presidents and CEOs and things like that, that could be sitting there trying to find, “Hey I like that person, I like their personality, I want to work with them.”

It’s 51% product and 49% you know, the person across the table, “Hey I wanna work with them because I think they know me, I’m getting to know them, and I wanna do business with them.” It’s a relationship game at the end of the day. That’s what it boils down to. You can have the greatest product but if your sales person, or you, as the founder, turn them off, they’re not gonna call you back up.

It takes persistence. One shot’s not gonna do it. You gotta set your prospect list up and just continue to follow up with them on a regular basis. Having experiences in their restaurants or their operations saying, “I had this and I’ve got a point of view” sharing your experience with their brand helps. It shows you’re engaged but it boils down to at the end of the day, they’re selling food, and you’re trying to put something in front of them that they can look at and go, “Yes! You’ve just connected the dot for me. I need this and here’s why I need this.” That’s the bottom line.

Jennifer: Yeah, as you were talking I was thinking it’s so interesting that despite all of the technology that’s out there these days and certainly technology does help in many respects, it’s so often though, it comes down to those basics of relationships, and networking, and following up and all of the quote, so called, old school sales methods, that’s still what’s working.

Ric: That’s why almost every time, it’s hard to penetrate some of the bigger brands because they’ve got a group of folks that are kind of set in their ways, they’ve got a group of folks who already have their relationships set up and sometimes somebody may be doing business with a manufacturer for 20 years. They’ve done nothing to lose the business, so why am I gonna trade with somebody else? So, it is about a relationship game, you need to be there because when all of a sudden they’re incumbent supplier falls off the rails and a supply issue, they gotta recall, they go out of business or something, or they lose focus, you wanna be the one that says, “Hey I’ve been in there enough, I know I gotta shot” when the opportunity opens up.

It is about relationships, that’s 51% of the game right there.
Jennifer: Well, Ric thank you so much.

Ric: Sure.

Jennifer: You’ve given me a lot to think about today and I’m hopeful for the folks who are listening too, have A, realized that food service, especially if you’re speaking more on a regional level, can be a really lucrative, strong, sales opportunity for them. But that it’s gonna take that old fashioned, just hitting the pavement to get that ball moving.

Ric: Yeah, well let me give you one other thing for folks to think about. You know, food service is one approach, but retail is also another big prize. Sometimes you gotta go target the manufacturers. If you’re dealing with folks in the grain side of the business, or just anything agricultural, coming out of the ground, a lot of times you’re gonna have to hand that off or get that to a manufacturer or supplier of what we call a value add product, right?

Jennifer: Mm-hmm (affirmative).

Ric: It’s already blended with whatever the ingredients are. So you’re other play is going after the manufacturers and partnering with them. So you can give them a value of the product as well. It’s not just some service buyer, you may have to kick this, or combine this, or come up with a composed menu item that you bring to market with the manufacturer.

Jennifer: Oh, that’s a great idea. Well, Ric, thank you so much. I really appreciate your time.

Ric: Thank you, Jennifer. Pleasure talking to you.

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