Foodservice Equipment Reports

Things I Learned On A Golf Cart

It’s amazing what one can learn by spending four hours on a golf cart with a dealer, a rep or a manufacturer. There was a lot of learning going on last week at the eighth annual Nonprofessional Foodservice Equipment Ryder Cup outing—dubbed the Rosati Cup the past two years to honor Ron Rosati, who helped create and still fosters it. We held it again at the Old Waverly Golf Club in West Point, Miss.

Old Waverly is the home course of our good friend Bill Wolfe of Hotel & Restaurant Supply, who was on hand along with his partner Jerry Greene and colleague Jim Moran. The attendees included 30 dealers, reps, buying group executives, operators, parts distributors and manufacturers, and one media guy, who is the worst golfer of the bunch. A former media guy, my old competitor and good friend Niles Crum, coordinates the outing.

For the record, the results were even more lopsided than the outcome of the real Ryder Cup, which was held the weekend before our Cup. The Clemson Tigers team, led by Jeff Rhodenbaugh of NexGen, put a whupping on the Ohio State Buckeyes team, captained by Henny Penny’s Steve Cobb. It wasn’t even close. I know, as I was on OSU, and helped contribute to the debacle, losing my singles match the final day 5 & 4. But a good time was had by all.

In addition to the discussions on the course and at the cocktail parties, dinners and pingpong tournament, we also spend an afternoon together focusing on the future. I present an overview of the current FER E&S market forecast, but it’s a lot more than just me talking. It becomes a lively, interactive discussion of the challenges and issues facing the market and its various players.  Here is a synopsis of some of what was discussed:

  • Most everyone reported that the current E&S market is relatively strong, with chains and other commercial operators continuing to buy and the noncommercial markets finally beginning to recover.




  • But the upbeat assessment of the market is tempered by the reality that many operators continue to grow slowly, with consumer spending growth intermittent and operators under pressure from rising food and labor costs.




  • There is almost universal acknowledgement that the foodservice market in the U.S. is mature and that this has changed the key drivers of E&S sales to replacement and renovation. This has created a new set of challenges.




  • The growth of Internet sales, not just by Internet-oriented dealers, but by nearly everyone, is part of this new market reality. A key aspect of this new way to market is pricing transparency. As one participant said, it has the effect of driving all pricing to the bottom.




  • But the Internet is only part of the race to the bottom. Chains, ever more dominant in the U.S. market, and big institutional clients, nearly always demand the absolutely lowest costs possible. Both the Internet and multiunit factors nationalize the market; everyone competes with everyone else. Since dealers can’t make money on margins for the goods and services they provide, as they did in the days before buying and merchandising groups, they become totally dependent on back-end money from manufacturers.




  • Everyone, including many of the dealers involved, bemoans this business model. But the realities of the market probably suggest this model is here to stay at least in the short-term.


As one dealer put it to me, “If operators and manufacturers want us to provide the services they need, they have to let us make money somehow.” It was a very cogent point, and one of the best insights of the week in Mississippi.

Cheers,



Robin Ashton

Publisher 





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