Tailor Made Distribution Believes Inclusion in Growing Segment Means More Relevancy

NEW YORK – Executives of Tailor Made Distribution, since the multi-unit distributor group’s inception some 18 months ago, have been occupied not only with building an efficiently functioning structure but also with spreading the message about including broadliners and suppliers in the segment’s fast-growing revenues.

 

Convinced that multi-unit sales constitute more than 50% of the opportunities in foodservice, industry veteran Daniel Wynn, president and ceo of the Cumming, GA-based group that was formed on the initiative of F.A.B. (Frosty Acres Brands), Inc., has been emphasizing to broadliners and suppliers that they are on the verge of unintentionally limiting their growth by abandoning multi-unit operators of all sizes to the very large and corporate distributorships.

“This is a survival mechanism that independents need to recognize. We’re not out so much to compete with the other groups as we are to make sure that the playing field is level for independent distributors when it comes to the largest piece of business that’s out there, which is the multi-unit arena,” Wynn said in a recent interview with ID.

F.A.B. revealed its intention to form such a group, staffed by a separate team, at its member conference in August 2006. Earlier this year the name Tailor Made Distribution was chosen for the for-profit company, owned by the distributor members with F.A.B. holding a preferred stock position as a venture capital investor. There were nine founding member-distributorships.

Wynn said until October of this year, he and the staff devoted their energies to building the structure of the company rather than focusing on mobilizing new members. He said he is pleased with the group’s rapid growth, which he termed “ahead of schedule.”

Two distributors have since come into the fold, increasing the total count to 11. The complete tally includes:

· Merchants Foodservice, Hattiesburg, MI (ID Top 50)

· C.D. Hartnett, Weatherford, Texas

· Kast Distributors, Carney’s Point, NJ

· Affiliated Food Service, Amarillo, Texas (ID Top 50)

· Pocono Produce, Stroudsburg, PA (ID Top 50)

· Stanz Foodservice, South Bend, IN (ID Top 50)

· Glover-Auten Foods, Columbus, GA (ID Top 50)

· Institutional Wholesale Co., Inc., Cookeville, TN

· Sutherland’s Foodservice, Forest Park, GA

· J Kings Food Service Professionals, Holtsville, NY (ID Top 50)

· Kastner Food Service, Rochester, NY

In addition to members, which are stockholders, the group, like the other distributor multi-unit groups, has attracted an abundance of affiliates that are interested in working with it on accounts that make sense for them.

Returning to his mission statement, Wynn pointed out that if independent distributors do not have a vehicle – whether its Multi-Unit Group, Multi-Unit Alliance, Distribution Market Advantage or Tailor Made Distribution – with which they can tap into chain sales, “they’re going to give over unintentionally the entire multi-unit market to national corporate distributors like Sysco and U.S. Foodservice in terms of regional and emerging chains, and to MBM, PFG Custom and Sygma in terms of the big established chains.”

Wynn persisted with this theme at a meeting earlier this month that was designed to attract supplier support. He told the 56 participants from 43 manufacturers that the viability of this relationship also benefits their businesses.

“The meeting went well and the participants were receptive. Of the companies present, we expect as many as 25-30 to get on board with our program and work with us in the coming year,” Wynn said.

Obviously, without supplier support, independent distributors will not have the resources with which to secure multi-unit sales. Furthermore, Wynn said, without revenues from this increasingly important market segment, distributors will lose their competitive edge in hiring and retaining skilled managers.

“If you have a $200 million distribution center, you don’t have to have two operations managers. You need just one. You can pay a little more to get a better manager,” Wynn explained. “If independent distributors finally don’t have that kind of volume, they won’t be able to hire the best people, they won’t get the best cost of money, their inbound cost of goods won’t be as competitive, and their lease rates on equipment won’t as good.”

The reason Tailor Made Distribution is actively targeting regional and emerging chains, Wynn said, is that they tend to be smaller companies that can make immediate decisions compared with larger chains that take longer to reach decisions.

“Emerging and regional chains are also the same type of operators that aren’t treated well by the corporate distributors,” he said.

Looking down the road, Wynn believes that independent distributors’ ability to survive solely on the basis of street business is quickly evaporating. While the major metropolitan areas will remain hotbeds of street opportunities for independent distributors for the next five to 10 years, the same does not exist in the rural area, where the population density is sparse and chains are plentiful. Consequently, beyond urban locations, independent distributors are traveling farther to fulfill fewer drops, he noted.

“Corporate and even large distributorships are getter bigger pursuing multi-unit business because they understand the economics of the trade. We want independent distributors to take the multi-unit business that is profitable for them. We also want them to understand what makes it profitable for them because it’s not all about margins, it’s also about return on investment and pre-tax income,” he said.

Recently Tailor Made Distribution unveiled its first website, which, while it’s still a work in progress, is full of useful benchmarking information, which will assist members and customers verify escalator clauses in the group’s contracts with accounts.

Equipped with a mission statement, members, suppliers and a useful website, Tailor Made Distribution is ready to pursue servicing multi-unit customers, Wynn said.