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MAKING THE SALE: PURCHASING OPPORTUNITIES
Purchasing fresh produce for retail foodservice happens in one of three ways: through the produce department, through foodservice suppliers directly or via a combi- nation of the two. Which route is taken, says Phil Lempert, president and chief execu- tive officer of Consumer Insight, in Santa Monica, CA, and founder and editor of The Supermarket Guru, “depends on the culture of the supermarket chain. Some, such as Hy-Vee are collaborative, while others are more silo-oriented.”
At Hy-Vee, all bulk produce is ordered and delivered to the stores through the chain’s produce warehouse, explains Brooke Barnes, vice president of restaurant devel- opment. The 245-store West Des Moines, IA-headquartered chain, known for its signa- ture in-house restaurant, the Market Grille, which made its debut in 2012, extended the concept with its self-serve Market Grille Express, opened last year. “On many occa- sions, our Hy-Vee Market Grille chefs and cooks can be found scouring the produce department for the needs of the restau- rant for that particular day, or for a featured Chef’s Special. Currently, we order more than 40 different produce items to execute our menu.”
One of the newest Market Grille menu items is the Baja Fish Tacos, made with fresh pineapple, red pepper, mangos and jicama, that wouldn’t be the same with canned or frozen options, according to Barnes.
On the foodservice front, Rick Feighery, vice president of sales for Procacci Brothers Sales Corp. in Philadelphia, says, “we sell into retail produce departments directly and to foodservice distributors who then sell into the supermarket delis. It’s a different set of buyers.”
There are advantages for retail foodser- vice to buy though a foodservice distributor.
For one, “local foodservice distributors operate with smaller delivery vehicles and therefore are used for smaller order sizes,” says Kelly Jacob, vice president of retail and emerging channels at Pro*Act in Monterey, CA. “They offer foodservice packs, specialty items and cuts specific to what cooks/ chefs need. By the nature of their restaurant customers, foodservice distributors are used on short notice for orders and have inven- tories constantly turning for fresh herbs and unusual ingredients that the main grocery warehouse may not be able to keep on hand the same way since they have to buy in larger quantities to make truckload orders.”
Yet, says Gina Nucci, director of corpo-
rate marketing for Salinas, CA-based Mann Packing, “there are opportunities for produce companies to sell directly into commissaries supplying the deli or directly into the deli. To do this often means making two calls at head- quarters rather than one. In the end, though, it increases sales and consumption.”
Tanya Mason, vice president of marketing for foodservice at Taylor Farms in Salinas, agrees and adds, “We provide consumers with healthy, flavorful fresh foods through a variety of channels, including: restaurants, grocery stores and the newly evolving groc- erant category. Continuing to grow in popu- larity are ready-to-eat and takeout meal kits as consumers are constantly on the go. The need to provide families with healthy options is critical where time is valuable and conve- nience is key. Consumers want fresh, healthy options whether it be dining out, picking up or cooking at home.”
Another company that sells to many sources including retail, foodservice, produce specialty houses, wholesalers and more is Grimmway Farms in Bakersfield, CA. “As a result, for example, our rainbow carrots, which started out as a trend in foodser- vice, are now in retail produce departments. Overall, we’re seeing triple digit growth on rainbow carrots,” says Lisa McNeece, vice president of foodservice and industrial sales.
There are pros and cons to each of these purchasing methods. For one, the downside of the prepared foods department buying its fruits and vegetables through the produce department is a potential short end of the stick for foodservice, says Jacquelyn Chi, associate director for programs and special products under strategic initiatives at the Culi- nary Institute of America at Copia, in Napa, CA. “Your needs are secondary to another department. What works for them and you may not be the same. Produce may care about
the outside appearance of its produce, while chefs are not as concerned because it will be chopped, sliced and diced in recipes. Also, prepared foods departments usually require larger pack sizes than do retail. What does work best is collaboration and working syner- gistically.”
Indeed, a ‘hybrid’ approach is what works well at Gelson’s Markets, according to Paul Kneeland, senior director of produce and foodservice for the 27-store chain based in Encino, CA. “We do have a produce buyer for foodservice, and The Kitchen will also buy separately from a foodservice company. Additionally, there’s a great flexibility between departments. For example, produce scans out their waste each morning and gives this to The Kitchen or Liquiteria (the retail- er’s cold-pressed juice bar). Produce gets credited for this product, and The Kitchen or Liquiteria gets it for no charge, and then converts it into gross profit in items like smoothies. This helps to control shrink. On the other hand, if The Kitchen orders more bell peppers, say, than it needs, [personnel] can take the peppers over to produce, where the staff there will build a display and sign the product as an in-store special.”
The biggest challenge for most retail chains is the idea of control, says Pro*Act’s Jacob. “Most retailers have been programmed to ‘eliminate the middleman’ because they believe it is an added cost versus the idea of being cost-effective through efficiency. The idea of new ways to source unique specialty, ethnic and local items through a consolidated direct-store- delivery (DSD) program is foreign to them, while the young Millennials working at Amazon, meal-kit companies and up-and- coming restaurant concepts are open to how they can make existing infrastructures work for them.” pb
22 / APRIL 2018 / PRODUCE BUSINESS