For many food manufacturers, the food service channel is becoming increasingly important. As growth with the multiple grocers becomes harder to generate, out of home eating provides exciting opportunities for suppliers.
Signium recently interviewed a number of leading executives from across the food service industry (some of whom had successfully transitioned from branded manufacturing) and identified the following key competencies:
Traditional branded food manufacturing is a business to consumer (B2C) business model. Food service is business-business-consumer (B2B2C) and requires a much stronger customer focus. It’s less about brand or product and much more about end-end solutions for the customer. In this environment there is less of a role for traditional marketing and more of an emphasis on relationship-building skills.
“Passion makes the difference. People working in Foodservice came to it most of the time by accident but stay there because the client relationships they are able to build are much more solid than those in Retail.”
“Being able to talk about products (rather than Brands) is essential – the users are chefs, cooks, professional caterers, etc., and the only thing that interests them is the performance of the product.”
The P&L structure is different in food service with gross margins often much lower than in retail. There is money to be made but a more flexible approach to commercial negotiations is required and a longer-term view of return on investment. Many businesses separate foodservice from the rest of the business and have a different set of KPIs to control and measure this area.
Being solutions-oriented and flexible in approach also requires a creative mindset. The best suppliers are proactive in approaching customers with innovative solutions, not just trying to sell what the factory is currently producing.
“To succeed you need to have entrepreneurial spirit, the ability to change things, develop solutions, (not just repeating things). FS is a very open industry where you build your network over time. People are more open minded – it is about striking deals and collaborating with your competitor, who becomes your partner for this deal.”
The digital revolution, as in many other industries, is heavily impacting the world of food service. From the way people order and consume food to managing temporary staffing needs. The modern day food service executive needs to understand how to exploit these trends to the benefit of his customers.
Ability to work cross-functionally
To deliver the service levels demanded by food service customers, suppliers need to have a customer culture where everyone in the business works together to satisfy the customer demands. Executives who understand how to work across the organization from NPD and Manufacturing to Finance and Sales are the ones who succeed.
“Foodservice is a great way to develop a career especially in roles combining sales and marketing, which are competencies in high demand. The main challenge is that in internal talent management Retail always get the priority and therefore keeps the best talent. It is difficult for Foodservice to attract top talent away from Retail”
A final thought from one of our interviewees:
“Foodservice has all the right “ingredients” to attract top talent if presented well. If a company is serious about Foodservice, this could also become a proving ground for talented individuals – agile in their work, innovative, service oriented and at the forefront of food trends, for the mutual benefit of Retail.”