Foodservice Equipment Reports

SPECIAL REPORT: Introducing FER’s Top Dealers

Look around you. From the largest multiunit operations to the individual unit level, nearly every operator in foodservice needs and uses the services of equipment and supplies dealers and distributors. But how do you assess the scale and offerings of individual distributors to determine whose capabilities match your needs?

To help provide such information, Foodservice Equipment Reports undertook a major new research project into the leading E&S dealers serving the U.S. market. We call it our Top Dealer Report.

No easy project, to be sure. With a readership of such huge purchasing power, the temptation for dealers to “fudge” numbers might be an issue. Further complicating the process: Most dealers in the U.S. market, and even quite a few of the giant broadline distributors, are privately held. Most, if not all, hesitate to share their volumes. Many simply won’t, as these listings make clear.

And anyway, we already have a comprehensive, fully linked, electronic database of dealers and distributors as part of our “Services Guide” at fermag.com. Isn’t that useful enough?

Maybe not.  The persistence of the requests from operators and dealers finally overcame our reluctance. The main thing was to be sure the numbers were real.

Third-Party Verification, Carrots And Sticks

With the help and advice of several leading dealers, we decided we needed a verification process. Dealers would have to provide a letter or signature from a certified public accountant or other independent accountant verifying the information. CPAs ethically cannot sign off on something that’s not true. We later learned this same verification methodology is used by magazines such as Inc. for their own rankings and listings.

Still, the main question remained. Why would a dealer give us numbers, let alone verify them? What kinds of carrots could we offer? And would we need some non-lethal sticks?

The carrots seemed obvious. Those verifying would be identified as such, providing them with a means of independent verification of their size and scope. And this verification would be within the context of FER, a neutral, credible third-party information source by multiunit operators, consultants and others in the market. Another carrot: Dealers that verified their data would also get a detailed listing of services offered—more exposure in front of the largest buyers and specifiers of E&S in the world.

The stick, or maybe the absence of carrot, would be that dealers that didn’t report wouldn’t get listed. If a really big dealership (defined as an estimated $20 million or more) didn’t report, we’d estimate volume to account for the presence of a big dealership in an alphabetical listing, but the dealership would not be ranked. And dealers that reported but did not verify did not get their services listed.

With these variables, our rankings and listings are not intended to be comprehensive, though we are reasonably certain we have listed in some way the vast majority of dealers capable of serving a multiunit operator.

Measures Of Scale, Scope--Not Performance

So, 31 brave dealers provided us with verified numbers from Edward Don & Co. at more than $550 million to Crest Foodservice Equipment at just under $10 million. These 31 dealers are ranked in our first listing.

The numbers include the following, as we detailed it on the survey form: “Include revenues from all product sales, including equipment, durable supplies, tabletop, paper and other disposables, janitorial/sanitation chemicals and products, service and design fees, and fabrication purchased or produced for distribution resale.”

We also asked for sales from both 2010 and ’09. But this is important: You can’t consider the changes year-to-year as a measure of performance. Anyone who has been in this business very long knows that a host of factors affect dealer volume in any given year. Departments can be added or shuttered. Services can come and go. One big customer can have a great year or a not so great one.

Chain-oriented dealers can have a major roll-out one year and not the next, or suddenly have a customer go into high unit-growth mode, then shut it down just as quickly. Bid-oriented dealers can have a big sport stadium or convention center job one year and see their volume swing by $15 million or more from year to year. The health of the local market is also a factor. Many dealers in areas hard-hit by the housing bust, such as California, Arizona, Nevada and Florida, have seen their volumes plummet in the past couple years.

What Companies Are Not Included

Not all companies that provide distribution services to multiunit operators are included in these listings. We don’t include companies with more than 50% of their volume from paper, disposables or jan/san chemicals, other than the few large broadline distributors we list. We apologize to those companies with such product mixes that responded to our survey.

And then there is the fine line between manufacturer and dealer. A good case in point is Franke Foodservice Systems. Franke provides many of the same services as the leading companies ranked here. The company distributes equipment and supplies for chain customers worldwide. But after a long conversation with Greg Richards, v.p.-business development for Franke Foodservice, we decided the company is primarily a manufacturer, not a dealer. It designs and fabricates OEM equipment for its clients. It actually designs and has manufactured smallwares and other supply items. And while it has a varied client base, it also has one very large customer. It is no accident that Tom Campion, president of Franke Foodservice Systems, is an officer of the North American Association of Food Equipment Manufacturers, not the Foodservice Equipment Distributors Association. A number of other companies are not included here for similar reasons.

A Work In Progress

This Top Dealer Report project is a work in progress. This year, 31 dealers verified, a substantial and successful start, and we hope more dealers will do so next year. Many that did not verify this year told us they will participate next year.

And of course the main thing: We hope our operator and consultant readers find this a helpful, reliable guide to potential dealer partners.

To see the full set of dealer data, click here. This link will take you to a Research page that includes a link to a pdf of the full story with data table.

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