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FE&SEditorial Archives2005 — August — Feature Story

Hitting the Mark with Chain Sales
Everyone wants to work with chain operators, but the demands they place on dealers and their need for value-added services can make them some of the most difficult clients to serve. The key, as always, is partnering on a company-to-company and person-to-person level.

In the dealer community, chain restaurants are unquestionably the single most sought-after operator segment. The prospect of landing one account that generates multiple sales year after year has led dealers to build or restructure their entire operation around securing these clients.

At the most basic level, chains represent volume to dealers, but their value extends well beyond that. Chains also promise actual growth in a time when the top line for many E&S distributors is otherwise rising very slowly, if at all.

If a dealer partners with an emerging chain just as it begins to take off, the net result can translate into years of rapidly and significantly increasing revenues based on that one relationship. In fact, two-thirds of the dealers participating in FE&S’ 2005 Distribution Giants Survey described chain accounts as essential to their long-term health.

Establishing and maintaining relationships with chain restaurants, however, is no easy task. With significant pricing pressures, demanding value-added service requirements and the omnipresent risk of poaching, chains can be among the most difficult clients to serve.

With these challenges and benefits in mind, FE&S spoke with three very different dealers — a smaller full-service operation that works with several regional chains, a dealer known primarily for its design/build work, and an industry giant with an expansive menu of services — about the principles, difficulties and tricks to serving chain restaurants.

Getting in the Door
One of the first challenges for dealers servicing chain accounts is getting the operation to accept them as a vendor. The level of difficulty varies from chain-to-chain. Often, the bigger the chain, the more difficult the task becomes.

Anybody can ship a ramekin on time and do it fairly cost effectively.
—Cathy O’Shia

Kansas City, Mo.-based QualServ derives 75% to 80% of its revenue from chains, according to Cathy O’Shia, the dealer’s national sales manager. The dealer works with giants such as Burger King and Applebee’s, as well as multiple emerging regional chains.

Prospecting the larger accounts takes an abundant supply of patience and persistence, O’Shia says. When attempting to establish a relationship with such operators, simply finding the name of the right person to talk to can take several months, if not more. A dealership that does not have the resources or the culture to deal with such a situation, then, would be best served to look to smaller operations that are less bureaucratic in nature.

After identifying the proper individual and setting up a meeting, chain restaurants tend to ask dealers to provide some fairly standard information. Typical subject matter for an initial meeting includes references, proposals and the operator’s quote process. A new wrinkle, O’Shia notes, involves bidding an already complete restaurant. This allows the chain to compare pricing among existing and prospective vendors.

If the operator wishes to go forward, they often assign the dealer one restaurant as a test case, during which they will closely monitor the performance of their new vendor. This provides dealers with the first chance to prove that they can be not only a vendor, but also a true partner. Dealer principals, then, should consider putting their first-string team on such projects in order to ensure that the process goes as smoothly as possible.

Of course, not every relationship with chain restaurants starts with such a formal bid and trial process. Most chains begin as independent restaurants and grow from there. Many dealers who service these chains were fortunate enough to do business with them as independents and to grow with these operators as their number of locations expanded.

To retain such business, though, dealers continually have to take the pulse of these customers and prove their worth as the chain grows.

Economy Restaurant Equipment & Supply Co. is a San Diego-based dealer with approximately $7 million in sales and 20 employees. Chains, primarily regional operations, account for about 20% of the dealer’s revenue.

The dealer’s relationships with many of these chains started when they were single-unit operators. The dealings between Economy and these customers were often informal compared to chain work.

With time, and more and more work from these operations, my team becomes better.
—John Pipinos

As these operations expanded, however, their business processes became more sophisticated, as did their own project managers who oversee work in the field, notes John Pipinos, Economy’s chief operating officer.

These individuals, who tend to be more businesslike than independent operators, can force a dealer’s team to follow suit. Economy’s staff know they must be timely with their follow-through, keep their appointments to the minute, and stay on schedule no matter what the situation.

“They keep us on our toes,” Pipinos says. “These guys expect us to operate on a different level. With time, and more and more work from these operations, my team becomes better. They become more serious about what they’re doing. It raises the bar, working with these types of outfits.”

Scheduling, Services and Logistics
Once a dealer lands a chain account, keeping them satisfied becomes the main goal. While it would be nice if there was a “silver bullet,” one or two single things a dealer can do to retain these clients, in reality, serving chain restaurants well is accomplished through meticulous attention to detail, constantly striving to improve one’s processes and a willingness to exceed normal business practices when the situation calls for it.

On new builds, one of the first orders of business for dealers, then, is making sure they properly schedule their work. Obviously, this benefits the customer but it also protects the dealer’s margins by eliminating unneeded efforts.

Economy schedules its jobsite work up to a month in advance. Afterwards, it remains in regular contact with the chain’s project manager, general contractor and others on the site to make sure the dates are still feasible. When the time to work at a site actually nears, adds Pipinos, trucks are often loaded the night before so they can roll at 6:30 a.m. the next day, thereby ensuring that they arrive at the location on time.

But being ready to work on a jobsite is only part of the equation. Dealers should also make sure that a jobsite is ready for them. Best Restaurant Equipment & Design, based in Columbus, Ohio, leverages its chain experience to provide a scheduling guide for all parties involved in a new construction.

We provide the customer and the jobsite crew with our version of the schedule, based on experience.
— Jim Hanson

“When permitted, we provide the customer and the jobsite crew with our version of the schedule, based on experience,” says Jim Hanson, president of Best. “We use this to tell if the jobsite is really ready. You hate to show up to a jobsite with trucks and a crew and find out that everything is three weeks behind. It makes everyone look bad and it costs everyone money.”

Of course, not all chain work revolves around new builds. Dealers can also make or break their reputations when fulfilling replenishment orders.

Many dealers that work with chain accounts frequently keep ordered items in stock. Though it adds to the overhead of their businesses, many dealer principals believe the ability to provide immediate service is worth the cost.

Since this is such a common practice, dealers should do more to meet clients’ re-supply needs. For example, as a value-added service to some of its larger chain clients, QualServ will print and distribute to individual units specialized order sheets and catalogs containing only goods approved by the chain, thereby simplifying the work of the company’s managers in the field.

In the case of Best, the dealer focuses heavily on the logistics of a replenishment order from the operator’s standpoint, Hanson says. “There’s more to it than cutting a PO. For instance, when we are shipping a new fryer to a restaurant, we have to make sure we know what accessories are needed, if they have a home for the old fryer or if they want it disposed of, if they are going to install it or if we are going to arrange that and so forth. There’s a lot to this, and it needs to be done right with as little disruption to the operation as possible.”

Making themselves easy to do business with should, in fact, be a principle for dealers working with chain operators. Doing something as simple as making the right people easily accessible can help smooth out relations with chains. To accomplish this, QualServ has established dedicated call-in numbers for its larger chain customers that allow these operators to contact their salesperson or customer service representative directly.

At Economy when a chain operator calls with a request or problem, the dealer’s entire staff understand that customer’s importance to the overall business, and they all do whatever is necessary to meet that operator’s needs.

“Everyone here knows these guys are a priority,” Pipinos states. “If someone calls in, these guys know that their calls are prioritized immediately. We also know who the easy customers are and who need a little more hand-holding.”

Skill Sets Matter
Not surprisingly, one of the most significant steps dealers can take toward serving chain customers involves their associates. Many dealerships, both large and small, employ individuals with specialized skills that they can bring to bear on their chain accounts. QualServ, for instance, employs engineers who can perform tasks such as developing custom refrigeration for clients.

Economy makes a point of hiring individuals with strong mechanical back-grounds, enabling the firm to perform many tasks in the field that might otherwise require the effort of a rep or service agent. For instance, members of the Economy team are able to calibrate equipment and perform spot-welding.

In addition, they are able to do basic equipment repairs. Economy, in fact, keeps a small parts inventory to facilitate such repairs. This is useful, Pipinos says, because a long downtime can alienate chain operators, whose volume makes them particularly valuable clients. “If I have to send a guy somewhere in the middle of the night to get these guys going, I’ll do it,” Pipinos says. “Customers generally know that and appreciate it. If they don’t realize it, the relationship is too one-sided.”

Indeed, the ability to offer additional services beyond equipment sales and even installation can cement a relationship.

For example, thanks to its investment in its custom fabrication and millworking capabilities, QualServ is able to build items to a customer’s specification. For some chain customers, it mass-produces items as part of its work as a dealer, while for others QualServ acts only as a manufacturer and does not provide them with any additional goods or services. “One of our chain customers recently wanted a fabricated metal item,” O’Shia says. “They wanted 500 and needed them in two weeks, and we were able to do that. It was good for them and it was profitable for us.”

While large distributors often offer services such as custom fabrication and custom millwork, smaller distributors can provide similar services, though typically on a much smaller scale.

Economy, for instance, performs sheet-metal work, allowing it to build corner guards, wall caps and ductwork for its customers, thereby eliminating the need for clients to seek out vendors to fill these needs.

In Closing ...
Landing the right chain account can be a boon to dealers of any size, offering both volume and growth in a time of flux for the E&S supply chain. In order to create and maintain these relationships, though, dealers must establish practices that form company-to-company partnerships and continuously seek out individuals who can create a unique value proposition for their business.

“Anybody can ship a ramekin on time and do it fairly cost-effectively, all of us have the same freight programs,” QualServ’s O’Shia says. “The difference is the value-added services you provide.”

Wanted: A Partner, Not Just a Dealer

Headquartered in Jacksonville, Fla., The Loop Pizza Grill is an emerging chain that’s looking for a new E&S vendor. Specializing in Chicago-style deep-dish pizza, the company currently has 23 locations in operation and franchise agreements to develop an additional 85 restaurants.

With this rapid expansion comes the need for The Loop to establish new vendor relationships, including its relations with E&S dealers. The firm, says Chris Hartley, The Loop’s operations field supervisor and de facto purchasing and construction manager, wants to do business with a single dealer that can serve all of its restaurants as it expands across the Southeast and, eventually, the country.

But the ability to ship anywhere is just the most basic attribute Hartley wants. Just as important are the “intangibles” that come with the formation of a true partnership: the ability to give input on the direction of the company and its brand, to offer advice on whether a need can be filled with a stock item or if a custom-made piece is the better route, and to follow-up after an installation to make sure everything is running smoothly.

Of course, Hartley adds, price is a key factor. “There is a considerable investment in a start-up, so if it gets to a point where it’s not in our interest to continue to buy from a vendor, we will discontinue that relationship.” Other reasons for firing a vendor, he says, are commonsensical: Poor service, not meeting commitments and lack of responsiveness can all kill a relationship.

While Hartley understands that his partnership approach asks a lot of vendors, this way of doing business benefits both parties. If, for example, a dealer is not profiting from its relationship with The Loop, Hartley wants to know so they can collaborate on a solution. Such a solution, he says, could include reworking the logistics of the relationship, such as receiving and shipping of goods.

“I want to know as much about how the business is working for them as about how it’s working for us. If someone is dissatisfied, I want them to tell me so we can work on it together as opposed to arbitrarily adding freight or an additional margin to each piece of equipment. ... Our goal is to be open and honest so we can find alternative solutions that work for everyone.”

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