Dysfunctional Discounts

Once upon a time in a land far, far away, there lived the enchanted Queen of the Foodservice Rebates.  One day, a plan was hatched to reward all of the brave knights of the realm (AKA dealer principals) for swearing their fealty to her - and to the factories that were part of her Buying Group Empire.  If the knights would exclusively (well, most of the time)  be pure of heart and not wander away from these factories for purchase and sale of equipment and supplies, they would, in addition to the plunder that they were accumulating during the year, be paid handsomely (rebated) at year end. They all lived happily ever after.

This, of course, is a fractured fairy tale.  In the E&S business, group purchasing has created a culture that relies almost solely on sheltered income for profits.  We have, in fact, wandered far into the enchanted forest of less than exclusive deals. Back in the mists of time, the various buying groups once touted mutual benefits for producers and distributors alike.  The producers got guaranteed payments in exchange for allegiance to the brand offerings within the construct.  The distributors got limited distribution in exchange for their fiscal prudence.

The enchanted Queen used her charms to convince all of the Cinderella dealers that they could compete at the ball with their larger and better capitalized ugly step-sisters.  This self-fulfilling prophecy came true, much to the dismay of all involved.  Be careful when you wish upon a star – you just might get what you wished for.  Artificially leveling the playing field has spawned many incongruities.

Many believe that if they don’t sell at (or below) cost, that someone else will. Specifications are written based upon BG affiliations which ill-serve the end-user. 

Slaying the E-commerce dragon also became a cause célèbre.  “Fill the moat with MAP (minimum advertised pricing) and MPP (minimum purchase pricing) dictates so that no-one can undercut us” cried the townsfolk. If only they knew what Pogo did: “We have met the enemy and he is us.”

We, in the foodservice equipment and supplies biz live in a fantasy world where demons and ogres are lurking around every corner. The true enemy is not our trading partner; it is a lack of fiscal discipline.  This is the same force that causes countless folks to rely on tax refunds as a forced savings plan – without accruing any interest or benefit!

Most business people would never give an interest free one year loan to anyone.  Yet that is what our dealers and distributors do every day.  They unsustainably sell at or close to net in order to drive volume, hoping that profits will eventually be realized at year-end in the form of a rebate. Unless all conditions are met, the payout is not even guaranteed.  

We’ve all created this situation where sheltered income is the only profits that we see.  Now we all need some magic to solve it together.

·        Factories must not absorb the freight costs on single unit shipments. 

·        Drop shipments from factories should be handled at a different discount rate than stock orders. 

·        Dealers must commit to training their sales staffs to compete on value rather than strictly on price. 

·        Local stock of E&S has to be encouraged. 

·        Prohibit reps and regional managers from facilitating the poaching of business outside of their marketing areas. 

·        MAP and MPP should be strictly enforced where they are in place. 

We can turn the tide on profit erosion, and in turn better serve our ultimate customers.  

The truth is that there are no villains here.  No monsters, no ogres, no wicked queens, just a legendary industry trying to survive and emerge stronger.

Making Succesful Concessions

Is it an impulse or a compulsion that makes you want to eat that soft pretzel? Or is it simply the tangy mustard pumped onto it? Displayed food must look its best when laid out for speed and convenience, even for captive audiences at arenas, stadiums and outdoor entertainment venues.

No matter whether concession fare is pretzels, hot dogs, popcorn or other fun foods, items must be held at the proper temperatures and the point of sale lighting should accentuate rather than detract from them. We’d rather look at the food than see the equipment that is holding it. People eat with their eyes first.

Menu board photos can only go so far to whet customers’ appetites and drive demand. An interesting exception to this exists in subway stations in South Korea. There, whole grocery stores are represented graphically and commuters can shop virtually via QR code readers on their cell phones. Here in the States, however, we prefer a less virtual experience during our grazing rituals.

Specialized equipment, such as roller grills, popcorn makers, cotton candy machines, hot food display cabinets and cup and condiment dispensers, along with its selection and layout, plays a key role in maximizing the limited space available in most concession environments.

Panini presses have made the leap “across the pond,” along with gyro machines, orange juice squeezers, cappuccino makers and gelato cases, adding an ethnic flair to even the tiniest of service points.

Hot fudge pumps can push out that tantalizing hot chocolaty goo through heated spouts; cup dispensers can speed service at busy stations. Heated merchandising cabinets, designed to keep foods warm, moist and appealing throughout service periods, help to cut down on waste and drive sales. Grills, fryers, equipment stands, soft serve machines and re-thermalizers all function to speed up the service of concession stands’ tasty treats to waiting (hopefully not too long) fans, concert goers and fair attendees. Napkin, straw and PC organizers function to keep counters neat and clean (able). Although the business opportunities are typically short and/or seasonal, concession stand snack bars can be a lucrative endeavor for owners and operators, and provide convenient pit stops for consumers.

With the possible exception of parkland venues, healthful and sustainable meal options have not been the norm at these grab ‘n go venues. However, salad bar selections, cup and/or frozen yogurt, soups and stews can often all be easily added to the offerings to please today’s more discriminating consumers. Savvy operators will also look to offer whole grain products to satisfy their more health-conscious customers.

Foodservice operators have come to expect big profits from small concession stands. Foodservice equipment and supplies professionals should work to create a seasonal bump in their sales when such stands open up each year.

Appeared in TSRMag

Joe Ferri

Posted by Joe Ferri on February 12, 2012 at 8:00am

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MORE POWER, MORE POWER

In our “supersize me” culture, the natural inclination to more-is-better ill-serves us in commercial kitchen equipment purchasing choices. When it comes to gas cooking appliances, btu’s and recovery figures are akin to the horsepower and torque numbers in automobile selection. You need both, and more of each is generally more better, if your volume requirements dictate it.

Years ago, I was asked to cost justify food service equipment’s value based on a cost per pound of the appliance. This was as invalid a measure of its worth as is a simple measure of the btu load is.

The rest of the story is that with modern equipment, engineers have been able of late to squeeze more efficiencies out of every btu input. This is important because it requires less fuel to cook the same the amount of food, and where’s there’s greater fuel efficiency, there’s also lower flue temperatures and the resultant lower air handling (hood and HVAC) requirements. These combined, of course, will contribute to a greener footprint and lower overall costs, and greater throughput in the kitchen with less real estate and asset usage.

Many of the latest technological advances rely on simple recirculation of the products of combustion, re-firing them and/or using heat exchangers to maximize the potential energy contained within. This is something that Ben Franklin was attempting to popularize with his famous Franklin Stove. Other innovations contributing to productivity gains in commercial appliances center on technology. Better and more accurate controls with narrower differentials (the band of temperature between cycle on and cycle off) keep the equipment closer to the cooking temperature setting. In addition, the latest models will have lower “burner on” times, even at lower btu’s! Having the appliance at-the-ready equates to faster recoveries and more production capacity for fuel (and fuel dollars) spent.

Energy Star designations can be a good place to begin understanding the efficiency of commercial food service equipment. In many instances, rebate dollars from local utilities are available to more than offset the slightly higher initial cost of energy efficient units.

Like most areas in life, this is a pay me now or pay me later scenario. The total cost of ownership should always be considered, and right now the equation is happily slanted towards better-producing equipment and away from commodity (read “cheap”) purchases. Don’t let btu input be your only judge of appliance capacity.

As Founding Father and stove engineer Ben Franklin said: “The bitterness of poor quality remains long after the sweetness of low price is forgotten”.

Disconnections

Have you ever noticed that technology can sometimes impede progress?  I recall back in the 80’s, when banks were first implementing their electronic marvels, that the queues seemed to be getting longer and moving slower. 

In foodservice we’ve computerized our equipment, added e-commerce, reservations on-line, IPad wine lists,  installed turbo-cookers, combi’s, and blast chillers, POS, and dupe printers, and we are still having the same old problems of getting the food out, at temperature, in a timely fashion.  What gives?

There’s a disconnect between the kitchen and the front of the house.  There’s a disconnect between the E&S specialist and the chef.  With all of the sundry modern means of communications available, we do little real communicating.

Good business (AKA “selling”) is simply finding out what somebody wants and helping them to get it.  Whether you’re a waitron or a DSR it’s all the same process, and it is noble.  In foodservice, and in the greater sphere of the hospitality industry, we are all engaged in satisfying our client’s needs.  That is why there’s no such term as “standard” in what we do.  We can no more shoe-horn a flight-type dishmachine into a luncheonette than can you expect to get chateaubriand at a bowling alley. 

Listening to our patrons is only the beginning; hearing what the other person is actually saying is the often neglected critical component.  Countless hours spent networking will be wasted if we haven’t fostered relationships with the folks that we’ve met.  People buy from people, as the sales adage goes.  We must embrace technology, but not for technology’s sake. 

Who among us hasn’t worked a tradeshow with attendees and vendors avoiding eye-contact?  Have you noticed any service staff hiding from and ignoring dining patrons?  Are you aware of any suppliers that assume that they know what you need before asking any questions and listening to the answers?  We can’t afford to hide behind our computer terminals, emailing and texting all day long.

Connecting with our clients, co-workers and suppliers is paramount.  Technology can greatly assist in (or hinder) the effort.  SocMed sites keep us in touch with those that are important to us.  POS systems can quickly communicate patron’s desires. Smart phones can rolodex everyone you’ve ever encountered.  The real challenge then is to create a meaningful dialogue with the folks that matter most in our lives. 

The restaurentrepreneur who reconnects the various players will reap the rewards.  The supplier who constantly learns from his clients will have his efforts pay dividends.

Connecting with people is what good hospitality is all about. Occasionally disconnecting from our electronic devices might be a good place to start.

The Days of Easy Money

The days of easy money are over (except – at the moment - for bankers) and I’m truly happy about it.
It’s really hard to appreciate anything that comes easily, and this ain’t an exception. That’s why credit tightening should have the effect of inspiring us to do great deeds.
As a contrarian, I’ve always viewed myself as somewhat out of synch with the pack. This time I’ll be leading the charge as a fan of the college of hard knocks.
I’m done with my grieving. The old economy is dead. Long live the new reality!
Yeah, it’s just harder to make a buck these days. We know that. So what? Grandma used to say “Hard work never killed anyone.” Think of the generations that built this great country with meager resources. They were spurred on by only the promise of opportunity, not the guarantee of results.
I’m happy to see the elimination of some of those guarantees. Can it inspire us to achieve greatness? I shudder to think of the alternative.
As we collectively awake from a three year long debt-induced slumber, let’s take stock of what we still have and not necessarily what we’ve lost.
To paraphrase Churchill, we’ve got the worst system in the world, except for all of the others.
No, I’m done with the grief over the loss of easy money. I’ve got my sleeves rolled up, my work clothes on, and I’m gonna build something that will last. Care to join me?

What the Hell Do I Know?

What the Hell Do I Know?

After 5 plus decades on this planet, and over 75,000 hours in the foodservice equipment Industry, I find myself wondering “What the hell do I know, anyway?”

I’m not talking about factoids, like the optimal commercial kitchen width (17’), or where the best square pizza in the area can be had (formerly Gloria’s Pizza in Flushing, now Spumoni Gardens in Coney Island).  Nor do I mean the proper height for installing wall backing, the proper size of a grease trap, or how many seats can be squeezed into a given dining room.

No, I am talking wisdom here.  These days, the “why” of what we do is more important to me than the “what”.  It’s an existential question at its most basic. 

The manufacturer’s rep is an enigma to all especially to him or herself.

Who are we?  Educators, salespeople, marketers, financiers, brokers, answer-men? 

Armed with an arcane knowledge base (I can say “I don’t understand Mandarin” IN Mandarin!), I travel around “preaching the gospel” of the factories that I happen to represent at the moment.  Still, I find it difficult to articulate my business purpose. My Dad went to his grave never fully understanding what exactly it was that his only son did for a living.

As a rep, we are often maligned by our partners in the industry which we serve.  A dealer that I worked for once called reps “coupon clippers”. The factory “pukes” (AKA Sales Manglers) call us “rep-tiles”!  The popular misconception of a rep being a glad-handling golf course regular might sometimes be well-founded.  Unfortunately for me, I don’t even know how to play.

What value then do we add to the supply channel?  As an officer of MAFSI, Manufacturers’ Agents to the Foodservice Industry, I am keenly aware of the extensive list of services that we provide - we’ve got several white papers on that subject alone.  But what does it all boil down to? 

Our compensation is based on territory sales, but that’s a poor barometer of our worth. We aren’t paid to make anything, fix anything, finance, deliver, or track anything.  We’re paid to market.  But we’re not marketing agents.

What I do know, is my territory & many of the people in it.  And that’s something that even Willie Loman would be proud of.

Unlike Willie Loman, though, I have been fortunate to actually live the American Dream.  Our foodservice industry is life-sustaining and vibrant.  I know that it still gets my blood pumping, gets me up early every day, and keeps me going ‘til late. 

What the hell do I know?  I know that my life is good because of my life-long association with the foodservice equipment and supplies industry!

www.pecinkaferri.com

How Are You Going To Use It?

The rack of meals was still frozen in the center when it was pulled out of the oven after heating for 40 minutes.

The school foodservice director had that frustrated look on her face. “This oven doesn’t work any better that the old one,” she barked.

Having already been to too many of these autumn start-up/demonstrations this month, the rep sighed. “Did you slack off [defrost] the product before trying to heat it up?” he asked.

“We don’t have enough refrigerator space for that!”

Why is it that we in foodservice are so prone to question the equipment and not the preparation process? I am often reminded of Einstein’s much quoted axiom “Insanity: doing the same thing over and over again and expecting different results.”

More times than not, professionals in the E&S distribution channel quickly offer a low-ball price when an operator queries us about a product. However, we rarely ask the most important question: “How are you going to use it?”

If we first understand an operator’s production system, we become so much better at providing a solution instead of just a product. This, in turn, can mean better results for the end-user, a lasting good impression and, probably, more opportunities to do business.

Recently, I was called in to trouble shoot a recurring problem with a bain marie heater. We’d been told that it wasn’t “hot enough” (whatever that means). After eliminating several design issues, I discovered that the operator’s expectations were not in synch with the equipment specs. They were overfilling the units by 10-fold and expecting a heat-up time of one-quarter of the spec. As they say on the radio talk-shows, “Do the math!” Needless to say, a simple re-education solved the problem.

In-service demonstrations are vital to an operator’s success, but scant attention is paid to training the trainers. Most startups are performed by manufacturers’ representatives, yet I am unaware of any formal programs of instruction on how to do a proper demo. The how and why of using foodservice equipment should be established early on in the implementation process.

A disconnect between features and benefits causes a disproportionate number of nuisance service calls.

Did the operator know that the food pans needed to be removed daily from his pizza table or that the ice cream couldn’t be stored overnight in the cafeteria counter? Did the in-service explain this? Did the specifier make provisions for condensate drainage on the refrigeration? Was a drain for the pasta cooker considered?

Unfulfilled expectations, combined with ignorance of the equipment’s capabilities, are a recipe for headaches on all of our parts. With foodservice equipment’s increasing sophistication, attention must be paid to the very basic notions of selection and operation. Equipment suppliers must put themselves in an operator’s shoes and understand what it is that needs to be accomplished by the hardware before jumping in with a ‘value engineered’ appliance.

We can and should make it work better than the last one.

joe@pecinkaferri.com                                                                                       www.pecinkaferri.com