Leverage diversity: Selling your product to independent restaurants
Canadian independent restaurants purchase $8.4 billion in goods annually, approximately a quarter of total food service industry purchases. Half of total food service industry purchases are made by chain restaurants, while the remaining 25% of purchases are made by businesses such as caterers, hotels, institutions or transportation.
Accessing the opportunity to sell food and beverage products to independent restaurants takes a slightly different approach than selling to other food service segments, such as chain restaurants.
When creating your sales strategy, consider the size and number of potential independent restaurant clients. The average independent restaurant generates approximately 30% less sales than its average chain counterpart. Further, a sale of your food product to an independent represents one or two establishments, compared to an average of 15 establishments per chain.
Here are three ways to tap into independent markets:
Where independent clients lack in size, they make up for with diversity and quantity. There are approximately 37,700 independent restaurant operators in Canada, ranging from simple coffee shops to ultra-fine dining. Would-be food processors in this market can leverage this diversity to find matches for their products and build their market presence.
Selling to many smaller clients requires broader-reaching marketing strategies than selling to fewer, larger clients, for example if you were selling to chain restaurants. Opportunities for potential buyers to see, taste and sample your product are the best way to highlight key features and differentiators.
Independent operators are generally more agile than chain operators.
Personalized approaches like calling a restaurant and speaking with the owner, manager or chef can work, depending on your scale. This can, however, be challenging or costly to do one potential client at a time.
To make the biggest marketing impact with the least number of resources, try these ideas:
Grab attention: Tradeshows, industry media showcases or advertising, and social media campaigns that draw an audience to you may be effective ways to reach your opportunity en masse.
Test-run your product: Since independent operators are generally more agile than chain operators, they can add a special or modify their menu immediately. Speak to them about doing a test run of your product. Or consider offering coupons for first orders or free samples to reduce the risk barriers for potential new clients. Getting clients to try the product is vital.
Even if the trial run does not result in a permanent menu placement, you can get valuable feedback to help fine-tune your offering. Follow up and keep the conversation going.
Focus your product offering: Chances are your product will not be a fit for every restaurant. You can, however, design products to address common needs and expand your potential market.
Don’t try to be all things to all people. At the same time, don’t forget that distributors, the most common distribution channel for restaurants, require a minimum volume to carry your product. Each product variation or case format is a separate stock-keeping unit, commonly known as an SKU, with its own minimum volume. In general, developing a few products that are relevant to many customers may be an easier path than developing several niche products.
Develop a tandem product/market research strategy: To manage the variables mentioned above, develop product specifications and a marketing strategy in tandem. Identify the types of restaurants most likely to benefit from your product and focus your research on understanding their needs and challenges. Consider how you would meet their challenges and what you can offer different from the current market offerings. Build those solutions into your product and messaging that help illustrate the demand and relevance of your product.
The fragmentation of the independent restaurant segment may make proving market demand to distributors more challenging than a single large contract. Unlike large chain sales, sales to independents are likely on an as-needed basis without contractual agreements around minimum purchase volumes.
Independent restaurant operators are unlikely to switch distributors to gain access to a sole product. As the processor and supplier, you must work to generate sufficient sales volume through the clients’ distributors. That means you need to generate and document the interest in your products, preferably breaking out that demand by distributor.
Independent restaurants are a significant sales opportunity worth chasing for most food and beverage processors. With a wide range of restaurant concepts and operators, processors more easily find matches for products. Your sales path – who to speak to and how to approach them – is often more straightforward than with chain restaurants. While the diversity of opportunities offered by independent restaurants requires broader research and marketing, once developed, it forms a stable foundation that tends to be resilient.
Article by: Andrew Waddington, Principal, fsSTRATEGY Inc.