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Coffee Trends: Traditional Foodservice And OCS Convergence

Traditional Foodservice And OCS Convergence


June 10, 2008
By Brian Martell

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Almost every smaller market in the Canadian OCS context knows something
that larger market operators are starting to pay more attention to;
traditional foodservice is no longer an exclusively roasters game.

Almost every smaller market in the Canadian OCS context knows something that larger market operators are starting to pay more attention to; traditional foodservice is no longer an exclusively roasters game.
 
By traditional foodservice, I mean restaurants, and mainly independent restaurants at that. These are the clients that have sustained small market OCS by providing a broader base of sales and revenues with little regard for the threat of roasters or large multinational distributors moving in on their territory.
 
Being off the beaten path does have its advantages, and being relatively left alone has been great for the small market operators. But it seems the timing is right for the larger market players to look at the foodservice as an integral part of their business strategy.
 
The major roasters are leaving the direct service market and the national distributors, by their very nature and size, require a certain minimum drop to be able to make their deliveries possible. This leaves OCS operators free to explore ways of maximizing their operating efficiencies through greater sales to independent restaurants looking for a greater level of service than could be provided otherwise.

What makes this fit beautiful is that with some changes to the type of brewers used (some will require glass bowl brewers) the current OCS infrastructure is the same as what is required to maintain a foodservice operation.
The big challenge operationally, however, is the need to extend service beyond the traditional nine-to-five hours the usual office account works in.  Operations aside, the biggest change in selling foodservice as opposed to OCS is the culture. OCS is predominantly interested in service; in fact, the industry should be called ocS to emphasize the real nature of the business. The service is there to provide an employee benefit which will, in theory, keep the employees happy, productive and in the office as opposed to Timmy’s down the street. Foodservice, on the other hand, looks at coffee in an entirely different light. Coffee is bought to be sold and therefore must respond to the requirements put forward by the restaurateur. This could be price, quality and/or equipment service … at all hours of the day!  Further, the margins that OCS operators are used to working in will be a big departure in the foodservice business.
 
What makes foodservice attractive on an economic side to the OCS operator is that the volumes are not the same either. If you are an OCS operator, then you are no doubt familiar with delivering a box of creamers to a customer who is out, or even having an account that takes no more than two cases of coffee per month. This is not the case in foodservice where the volumes are always much larger (five to ten cases at a drop, if not more) and the actual GP dollars made per delivery are more than the average GP dollars made per OCS delivery, in spite of the lower margins.

While the competition for the large market foodservice account has and always will be ferocious, the fact remains that OCS operators need to pursue new markets to grow, or even maintain what they have. Tapping into the medium- to small-sized foodservice accounts (and getting them to pay with Visa or the like) can invigorate a company faced with diminishing opportunities with traditional accounts.

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Questions or comments?  Reach Brian at Brian@heritage-coffee.com


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