Startup To Scale

88. Foodservice 201: Building a Business in Foodservice.

January 23, 2023 Foodbevy Season 1 Episode 88
88. Foodservice 201: Building a Business in Foodservice.
Startup To Scale
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Startup To Scale
88. Foodservice 201: Building a Business in Foodservice.
Jan 23, 2023 Season 1 Episode 88
Foodbevy

Foodservice is an amazing channel for food and beverage products, but can be incredibly challenging to break into.

I sit down with my friend Matt Cotton, founder of Rooted Food Sales, who helps CPG brands sell into and succeed in Foodservice channels.

We discuss:

  • How to get into your first corporate office
  • The difference between a distributor and an operator
  • What are the job titles to reach out to
  • How to expand once you have a foothold

Foodservice 101: https://www.foodbevy.com/how-foodservice-can-propel-your-brand/

Foodservice Distributor and Operator Landscape: https://www.foodbevy.com/the-foodservice-distributor-and-operator-landscape/

Startup to Scale is a podcast by Foodbevy, an online community to connect emerging food, beverage, and CPG founders to great resources and partners to grow their business. Visit us at Foodbevy.com to learn about becoming a member or an industry partner today.

Show Notes Transcript

Foodservice is an amazing channel for food and beverage products, but can be incredibly challenging to break into.

I sit down with my friend Matt Cotton, founder of Rooted Food Sales, who helps CPG brands sell into and succeed in Foodservice channels.

We discuss:

  • How to get into your first corporate office
  • The difference between a distributor and an operator
  • What are the job titles to reach out to
  • How to expand once you have a foothold

Foodservice 101: https://www.foodbevy.com/how-foodservice-can-propel-your-brand/

Foodservice Distributor and Operator Landscape: https://www.foodbevy.com/the-foodservice-distributor-and-operator-landscape/

Startup to Scale is a podcast by Foodbevy, an online community to connect emerging food, beverage, and CPG founders to great resources and partners to grow their business. Visit us at Foodbevy.com to learn about becoming a member or an industry partner today.

[00:00:00] In today's episode, I want to discuss how to succeed in the Food Service Channel, really at an intermediate level with practical strategies and tactics that you can implement in your business. So if you're new, the food service, I've included links to a food service 1 0 1 article for you to get up to speed.

But really for a base for this conversation, I'm going to focus on C P G products and corporate break rooms, office micro markets, and college campuses. There's a couple other channels out there in this realm, but I think those are gonna be really juicy for us today. So to help me with this conversation, I've invited on my friend Matt Cotton, who is the founder of Rooted Food Sales, and he helps C P G brands sell into and succeed in the food service channel.

Matt, welcome. Thank you, Jordan. It was good to see you. And thank you for having me. So Matt, let's start by kind of doing a quick recap of the different players involved, kind of in [00:01:00] this food service journey, because I know it's a little different from grocery. And so brands kind of have questions on like the difference between distributors, operators, the client, the in like consumers.

Can you kind of break down what that landscape looks like? Mm-hmm. . So as far as channels, our primary focus at Rooted, so which would be the case for most of the brands listening, so college and university Q SR meaning Quick Service Restaurants where Chipotle or Sweet Green or Starbucks would be the real big examples.

You have traditional restaurants cheesecake Factories of the world, and then you have Convenience is a really great channel. Travel and vending, and then I will cut myself off. Those are, those are the big channels and it matters a little bit if you're front of house, meaning like a empanada delivering to a kitchen versus a packaged good, like a chip or a beverage.

Which categories are gonna be more interesting for [00:02:00] you? . And then I think a lot of our listeners are gonna be more on the side of like a package, food or beverage. And which of the channels out of those tend to be most interesting for maybe the brand? Under 5 million in sales? Mm-hmm. College, university, convenience.

And vending travel is interesting, but it's a very costly part. Kendi very costly barrier to enter in food service. So yeah, and then, and then corporate as well. I think I did not mention that in my first go around. So those four, corporate college convenience and vending for packaged goods. . And then one thing that I find is, that is interesting is on the corporate side, cause I tend to get the most questions there.

A lot of founders are confused on like how they enter that channel in terms of like, sometimes they'll hear their name like an operator thrown out like a canteen. . Other times I'll hear the word of like a distributor, like [00:03:00] U N F I or, Vista. So can you kind of talk about like that landscape from like the role of distributors and operators come in the space?

Mm-hmm. , so the operator or the end user, right. In, in the, the retail example would be like Whole Foods would be the operator, the con end user. So in food service, that would be Google or LinkedIn. So the person getting them the product, unless they're buying direct, which is rare ish. So the distributor in food service for a package, good.

It could be unfi U N F I, does a lot of food service. It could be vistar then a lot of people think Cisco and US Foods, they're more back of house heavy or package good has gave me more core mark, Vistar, U N F I, to name a few examples. And then you have this doesn't, isn't too much. Then you have management companies.

So the management companies, the big examples would be Aramark Sodexo, compass Canteen that you mentioned is part of Compass. So [00:04:00] they're basically outsource run the operation. So college and university. Hey, we're not gonna manage our own staff and worry about the menu. We're just gonna give it to Aramark for five years.

And then Aramark is working those operations. And that's the same for corporate? Sometimes not always. There's a management company managing the account. Yeah, it definitely can get complicated and you don't always know who's the right person or the right player. Right. And usually not always, but usually if you go to write an email and it's at like cornell edu, you're like, oh, they're a self-op.

A self-op means they're not a management company. And if you go to write an email to Northeastern and it says@compass.edu or at amark, there you go. And if you go to, yeah. And so if you go to a college dining page and it says, meet the team, great. I'd love to you go to the email addresses, you'll know right there and you know, Those with the management companies, it's not completely red tape, but it may, it's more [00:05:00] ideal to reach out to a self op it.

Yeah, no, that totally makes sense. And so let's maybe start off with you know, like the differences in. Like offices and universities. Cause I think there's a couple different type model types within there. So may, let's start with universities because there's like the uni, the convenience store type plays at university, and then there's also like the dining hall kind of plays, right?

So, a dining hall for the most part they do have beverages in there and. For the most part, the dining hall is gonna be more ingredient focused and delivering through Cisco or US foods to a kitchen. So that's more if you're an empanada or a burger and that real price sensitivity. No. There is more price sensitivity there because a students swiping for whatever they're swiping for and they can eat as much as they want.

So if your pro, if your product is super premium, it's gonna be tough to get into that space cuz they could grab 15 of your items and no one [00:06:00] can really stop them on campus. There are. Convenience stores, retail outlets, micro marts with, within a campus, like a large school, like my neck of the woods, UMass Amherst might have 11 to 15 mini convenience stores where they are, they can charge whatever they want.

So yeah, , that's where they're gonna carry different kinds of Beverages and snacks and some food service items as well on campus. And those distributors are gonna be more the package distributors, like I said, UN N f I, Vistar Kehe, maybe core mark Jay Poly as well. And then on the office side there's, you know, it's interesting.

I know, especially pre pandemic and let me know if that's changed now, but there used to be like more like cafes in some of the larger offices. Yep. Some of them have like the micro markets. Can you talk about the different teams? Yeah. That show up there? Totally. So it, they're amazing. You know, some of these larger.

Medium size corporations they want to [00:07:00] attract and then keep amazing talent. And part of that is, you know, you walk into, which I've been to for a sales call, the LinkedIn office in New York. It's amazing. Like the best coffee, the best drinks, really, really good food, all for free. It's, it's incredible. So as far as the package, good.

What's interesting there is it's a free giveaway. So if it's too costly, you know, I won't name them by name, but I've had some interest from some large corporations, and it's just too costly. So, first and foremost, like when you think about a bar, you wanna have like a Halloween size, like, you know, a small bar because it's gonna be a free giveaway.

Rarely are you gonna see a large bar. But yeah. So in the corporations, it's a, it's a free giveaway. The volume can be in. Credible even. Right. It'll never look the same post covid, but the numbers now are still incredibly strong. Yeah. I remember we were selling to Cisco systems, like the hardware tech company, [00:08:00] and they were ordering pallets of T squares and they started off with like half a pallet, the move to one pallet a week later, and then ordered four pallets a month later.

And it was wild. And this was all pre covid, but like, it was wild how, how much volume we were moving there. And people should know, like you can have your 20 colleges you wanna go after and like with some grit and some effort and some scrappiness, you'll get in touch with a handful and you know, potentially sell to a couple corporate is.

Yeah, it's, it's a trickier sales process, but way more upside. You know, it's not as obvious. So let's talk a little bit about that, that sales process for a brand who's just entering into into like food service and wants in the corporate, how do they go about doing that? Like, what's that sales strategy look like?

A scrappy. Scrappy. So, you know, we have our connections, but we're getting scrappy and getting after it every day. So I can speak to you firsthand. So it's just googling. It's just Googling Google . It's [00:09:00] Googling like head, you know, food service director at Google, or you know employee head of employee satisfaction.

Sometimes it's odd titles, head of retail, but usually, you know, usually wisdom's. Google search, you can find a handful of people and then it's just sending a message. I mean, I can't even pretty it up that's how it is. And just being prepared that they will most likely ask you if you're in their distribution.

So just getting ready to field that question. My favorite way that I used to get in with t Squares is through my college network. I say I went to the University of Michigan and Illinois and Michigan tows itself as having the most active alumni network in Illinois, the largest. And so I literally just like reach out to all my contacts who are working at corporate office and be like, Hey, do you want to eat T squares for free?

every day, you know, like, yeah. You know, get us, you know, find out who's managing the office, ordering or snack ordering, and we'd love to see you some samples to like share with them and request them in your office and get your coworkers to do it. [00:10:00] Because that's one thing I learned is that the office staff, like really take recommendations from employees very seriously to bring in new product.

And that worked. I love it. That's awesome. And then in the college, university , the dietician is sneaky, very interesting and receptive. So dietician, the director of food service or the executive chef, if you have more of a back of house item, not if you're selling a bag of chips. And then the director of retail.

So if you have a package, good. I would say the director of retail or the registered dietician, if you have some health attributes to. I love that. And then so once you get into maybe your first couple offices , or kind of working with a management company how do you recommend they kinda leverage that new like management company relationship to then grow to other customers beyond that first one?

Mm-hmm. So if it's a management company, whoever kinda brought you in, so if you're working with a management company, You're going [00:11:00] to be paying depends which management company, how they're gonna be turning it off. But you're gonna be paying a percentage. It's a big percentage. , you're gonna be paying seven and, and many brands don't even enter this world, and it's not something that's maybe even recommended early on.

But if you're working with Aramark's Sodexo Compass, you're gonna be paying minimum 10%. And if you're more of a commodity item up to 20, To them. So once you're partnered with them Yeah. Working with the person who kind of brought you in and they have so many different, they have shows and events and different regional people to work with.

I mean, this is almost like 2.0. I feel like even working with the distributor actually might be how to work with the distributor may be more interesting , for this conversation. Yeah. Let's talk about the distributor. Okay. And then there's how to support the operator as well. Yeah. Cause I would say, Getting contracted with the management company.

It's a thing, right? And they don't pioneer for the most part, you're gonna have to be in DOT or several points of distribution. So if you're in. [00:12:00] Cisco or Vistar or whoever it may be. Like, you should not, it doesn't matter what they say during that initial meeting. You know, they say once you're in there, we're gonna sell your products.

No, the vast majority of time they, each rep has, is putting out so many fires, has thousands of SKUs, you know, 30, 40, 50 accounts. So you should not ever count on a distributor rep to sell your product. That's just not how it works. . So the way we do it is really to focus on like the top tier of accounts and distributor reps so that, you know, as Cisco, they have what are called national account reps.

Depending on the Cisco, there could be five all the way up to 15. And they're handling, you know, not the street accounts. They're dealing with the real juicy accounts, the corporate accounts, the, the management accounts, the hospitals, the colleges both manage and self ops, the stadiums, the chain restaurant.

So it's trying to get in front of the quote unquote national account reps. [00:13:00] Those are the reps that can really mu move the needle for you and where you want to kind of get leads from. You know, if you're just starting off and you're in your local Cisco or US Foods, right? That's a big deal and you wanna get like roll up your sleeves even more and you have the time, then you could connect with, you know, Cisco might.

Seven to 12 regions. Districts with a district manager, seven to 11 reps in their district. So like I said, if you wanna roll up your sleeves, you can connect with the districts, do district meetings, get the street reps fired up. But for the most part, in, at least in our world, we're focusing on the national count reps.

Yeah, I think that's so strong. Cause the one thing that I've seen happen is similar with when you're selling the grocery, you might pitch to a five different retailers and if they have five different distributors that they work with, it's gonna be a pain to manage like low, the mid volume at five different distributors.

But if you can bucket between like the management companies and the distributors who kind of service account, you can start moving better volume. And if you're moving more volume with a couple [00:14:00] people, then you'll definitely get more notoriety and more kind of say to expand. Yeah. As far as how to support the operator, it's definitely less so than retail.

It's certainly not set in and forget it. With a college, university, once you're in there, they'll, you know, to offer up demoing at an event, whether it's kickoff, a fall semester. , you know, like I personally, you know, we have a bunch of items in Boston University. They have this massive event at the beginning of each semester.

And yeah, and , I'll go and do that with our, brands that are in there. So yeah, it's offering up, whether it's during a lunch period or an event that they have going on, just to come in, share about the local, if that's the case, or fund attributes of the brand, give away some free product, get the students fired up.

So that's something that's important to offer. You could also offer up any signage that you have that will help with turn and, just make people aware of the new product or the cool attributes of the product. And then like if you're in a Q [00:15:00] S R, like a coffee shop or a salad bowl type place.

It's tough. It, for the most part, if I'm being honest, it's really tough to support. I mean, I could, you know, I could force a couple examples, but for the most part, it's them, it's them working. You know, you go in there, give, give away some free shirts, say hello to the staff to make sure they're familiar with the product.

So it's not, you know, that's an okay route to go. Have you had any success or tried doing like demo type events or like meet the founder events with corporate offices? Yes. Well, so Rooted started March 12th, 2020. So corporate offices have just like been little challenging, like six, seven months.

But yes, overall for sure. And it's just, it's the same. It's going in during a lunch period and you're doing that like to get some of employees fired up and you're just doing that to just. Work their relationship. Right. The staff, you're saying hello to them, you're giving [00:16:00] them samples and it's just, you're getting everyone excited for a day and like that momentum quickly fades, but like, you did your thing and, and people are aware it's there and it's great.

And, you know, even if you can offer coupons to the employees as well and just getting 'em real jazzed up about the. Yeah. Cause that's one thing that I found is that like, some of those corporate accounts can be, as you mentioned, like very juicing, very lucrative. But a lot of times you don't have like the clearest visibility on what's happening.

Like you can kind of see your orders, but it's not like a grocery store where you can see like sales volume or usage volume really. And you know, just as a, a site like we are selling T squares at Braintree's office, it was owned by. And they had like two floors and we were able to do like a s we asked permission, we did a survey of the Braintree employees.

And it turns out like. 60% of their employees had never even like heard of ts squares and knew their end because they were only stopped in one of the O one of the cafeterias and there were like five in the office. [00:17:00] And so unless they like tracked to that cafeteria and happened to try it, like they had no idea existed.

And so in terms of like. Penetration is like, wow, if only you know, we could increase the number of people who even knew about us there. Then hopefully we could increase our, our consumption volume and our sales volume from that. And so there's like all these opportunities that we didn't really know existed until we actually like asked and they let us do a survey and we were able to like meet a couple of employees and things like that.

But it was so eye-opening. That's awesome. The you know, so that was like a fun example. We were able to like, get in. So yeah, I think there's tons of opportunity there. Have you seen, I guess what's the state of the kind of corporate ordering and buying environment now? Or you seeing like offices buying more?

Is the volume like 50%? Like of what you kind of think it is? Yeah. What does it look like? Yeah, I think 50 to 60% of pre covid would be the number. would be the rains that comes to mind. But yeah, it's it's, it's [00:18:00] back. It will, it will, like I said, it will never be the same, but it's still a ridiculously awesome channel.

Cuz the volume, right? It's just these big corporations trying to make Yeah, the volume's amazing. And you know, I'm sure many of your brands are, and U N F I. Unified is the distributor to a ton of incredible corporate accounts. Yeah. When. Like we were ts squares.

We got the advice from one of our mentors Elliot Beacon to launch in like things like Unify Rocklin and Marino Valley that serves like a lot of the Google accounts in the Silicone Valley accounts. And that was huge for us. Just to be able to get in there and generate leads. And I don't know if they still do this, but Unify used to publish a list of like all their sales reps and their email addresses.

And so, We had, I like went to that list and emailed all the reps who managed like their food service accounts. I was like, Hey, can I help you get more sales to your [00:19:00] customers? Like, you know, if you're willing to like, introduce us to some of, you know, oh, let me know who some of your best customers are.

Like, I will help sell product in for you to help get you commission, you know? Yeah. On their behalf. And for some it worked, for some it didn't. But that was a really great avenue too. Yeah. That list, that list exists with some effort and maybe some working in a little bit for Cisco P F G unfi, that exists, that list.

Yeah. I'll have to get the update one. Cause I think mine's from pre Covid. Yeah. But yeah, I love all this stuff and you know, I think it's also interesting. So can, what else can you kind of, did we not talk about from like the food service side that Yeah. Yeah. So French talk about, so the thing that comes, the thing that just pops in my mind right now.

putting aside the person who's wants to do the, you know, pick up the single unit coffee shop and drive them, you know, product every Tuesday, but the people who don't wanna spin their wheels, right? So the, it's like, what do you want that's gonna be enough to force distribution. [00:20:00] And you know, when you talk about, when we talk about qsr, so salad bowl, coffee shops, burgers bought, you know, the buy the book minimum for distributor.

Least five cases a week per skew. So if you're going after that coffee shop, of course not Jane's single juice shop or coffee shop, Jane, who has like six or seven Cuz you have to move five or six. And then once again I'm sharing all this just so you know. Spin your wheels cuz and once you get interest, , it's finding out, they're like, oh, are you in our local Cisco?

And the answer is no. So you, but you wanna make them feel comfortable about moving forward. No, but I know, I know with interest we can get in your local Cisco, can I work it? You know, can do you mind sharing your distributor rep name and I'll figure out distribution and we'll get, we'll get you product.

And then it's making them comfortable to share the distributor route. Getting their commitment for, you know, you're selling 'em two SKUs, 10 10, 12 cases a week. Bringing that interest to the distributor rep. Hey, James Juice [00:21:00] shop wants it all locations. Gonna do 12 cases a week, then that email will mean something where chain Jane's three unit, you're just gonna, you're just going to waste your energy and time.

And then college is, you know, for back of house it's. It's probably any school for retail. The volume smaller on the packaged item, it'd be a larger school, 15, 20, 20,000, but sometimes it will just force the conversation with the distributor instead of forcing distribution. And then that has its own positivity and momentum.

are there any set, like buying or pitching periods for, for the different groups? I'm assuming like college and university might have a different schedule for like, when it's best to pitch. Yeah, yeah. Good, good question. So there are better times. So, but if you're an ingredient, once again, you're an empanada or you know, and you have to make your way onto a menu, it's more sensitive, you know?

Because once it started, this semester starts, you know, they've made up their menu. Retail is less so you can kind of always find your way onto shelves. [00:22:00] But yeah, the, the best time would be March through mid-July for the fall semester, and then letting first semester get underway and then, Call it mid late September to to mid-November.

So if they say yes, you have that several, several weeks to work it with the distributor and get that distribution in place. I love it. So I think what's fun for me is that food service can have a lot of new players, especially for brands who are typ you used to doing like grocery or or online. And so it's important to like really have a clear strategy of how you wanna work it, otherwise you can easily get lost

And I love that you guys go so in-depth on this. Yeah. And then just to give a plug for food service, you know, and you should know as well, we don't have to, probably enough time, we won't get into the financials now, but like food service. C store is more similar to grocery, but traditional food service, corporate college, university, qsr.

What we're talking about now is super clean business, like through the distributor to the operator. Super [00:23:00] clean, healthy business. So it's like we're retail. You can grow your door count, but have to pay for it a lot. You know, more often than not in food service, you're making money off case. Case one. Yeah, once you're in, you're kind of in no chargebacks, no slotting fees, no promotions.

Yes, I love it. Yes. Yep. Well, Matt, I love this conversation and thanks for joining today. What's the best way for people to get in touch with you or Rued? Yeah. Thank you very much. So I'm pretty active on LinkedIn. So Rooted so Matt Cotton just check me out on LinkedIn, we have a bunch of events including a rooted round table.

Well, it will, well it's in a couple days, so this will air after that. But we're gonna do a monthly rooted round table, so connect with me on LinkedIn or rooted food sales.com. Perfect. Love it. Thanks so much for being on today. Thank you, Jordan.