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DMA Distributor Awards Presented to a Packed House!
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DMA presents several awards each year to recognize excellence in the distribution network. The Nashville Experience delivered four awards October 26th at the W Hotel. Pat Mulhern, CEO, summed up the purpose of the night simply, "we have the best customer base in the industry – and the best distributors in the business are right here in this room." Pat elaborated on the DMA distributor network's longevity as a significant differentiator, "the average age of our family-owned members is 90 years...and as we've seen over the past few years, experience matters in this business. DMA has 68 distribution centers and 15 companies who appreciate and know how to serve chains."


Pat presented the first award of the night to Harbor Wholesale's Lacey Distribution Center. Rick Jensen, President of Harbor Wholesale, summed up Harbor Lacey's recognition to people, "the Erickson family culture has been central to the company's success over the past 100 years. Putting people first is a big part of that and the spirit of service that comes with it."


Based on that philosophy, it's not surprising that Harbor Lacey received the highest marks from DMA's operator survey overall with particular emphasis on customer service and communication, where they received perfect scores.


"Jason Benedetti is the quarterback for our program accounts with Dino D'Aquila also playing a big role," Jensen continued, "but there are SO many team members that touch that part of the business from transportation, warehouse, purchasing, customer service, and pricing ...it truly is a team effort!"


The second award of the night went to Gordon Food Service's Dallas facility. This DC also received a top overall score, but was individually recognized by customers for delivery and pricing accuracy with nearly perfect scores in both of those categories.


Heather Speer Edwards leads the team at GFS Dallas and echoed Harbor's people focused message, "Our people make the difference. We have a solid core of team members that strive to make sure that we are achieving our customers' needs and expectations."


She further recognized team members Julio Rodriguez, Director of Transportation and Warehouse Director, Brad Lamberts. "Obviously , there are a host of people critical to our success, but our operations teams work together to make sure we are being as efficient as possible while providing the highest service."


The third distributor award was presented to Ben E. Keith's San Antonio facility. This facility was the largest of the top performing DCs and customers delivered their highest ratings for limited time offer responsiveness and inventory management.


Doak Pierce manages that distribution center and credits Greg Payne, John Marsh, Beco Maldonado and the entire team with collaborating during times of extraordinary need to still deliver very customized service to the operators in their care. Greg attributes "the best team in the business" title to his customer service and account leaders such as Maria Villareal, Alora Williams, Natalie Castillo and Beckie Sanchez. "The key to taking care of customers is great people," he said.


The sign on the wall at BEK San Antonio speaks not only to their customer focus – but to the other recognized DMA distribution centers as well. It reads, "#1 rule = the customer is always right. Rule #2, if it appears the customer might be wrong, refer to rule #1."

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The final award of the evening was presented to the Account Manager of the Year. This recognizes the best of the best in customer care as rated by the DMA account team and reflects feedback they've received throughout the year from customers as well. Hayden Lesko, this year's recipient, learned his craft from the milk delivery drivers he helped every day in his first role at Shamrock Foods seven years ago. He was offered an opportunity to apply his degree in business management as part of the marketing team and then moved into account management assisting a DMA regional account.


"I focused every day on keeping accounts humming and developing relationships with all my customer contacts. The cool thing about this business is that it truly is all about the people." When a fast-growing, national chain came along, however, Hayden just knew he wanted to be involved with that new opportunity. "I said, ‘I'm your guy!' and was asked to onboard them. It's been great – and now I get to coach and mentor new team members which I really enjoy!"


DMA team feedback ranged from "Works 7 days a week for Shamrock" to "SUPER responsive" to "always exceeds expectations and does excellent work." Pat summarized the superlatives by saying, "Hayden is one of the next generation of leaders is in the industry and joins his colleague Jeff Peitzmeier as one of five winners of this award from Shamrock in 26 years."


Congratulations to Hayden and the DC of the Year winners for 2023!

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INDUSTRY NEWS

Optimism Abounds for Foodservice Despite Recent Challenges

Despite some uncertainty about future challenges, restaurant operators, suppliers, and distributors remain optimistic about the future of foodservice.


That was a general theme on display during the DMA Nashville Experience, held Oct. 25 through Oct. 27 at the W Nashville hotel. While foodservice stakeholders were aware of the challenges, many pointed to positive signals that the industry was already in recovery following the pandemic.


Consumers Want to Visit Restaurants

Despite inflationary pressures, many consumers sought social engagement and full-service restaurants served as an easy solution to meet this need.


"We're only recovering in terms of our social engagement. And that's not something we're willing to give up as consumers, either," said Piper Sandler Managing Director and Senior Research Analyst Nicole Miller Regan, in the first four information sessions held at the event. "They liked the social engagement and they want to be in a full-service restaurant, and I think that it'll calibrate more towards [that.]"


Jonathan Maze, Editor-in-Chief of Restaurant Business, said the fast-food segment was doing well despite current challenges. He noted fast-food sales were returning to a more normalized state of things, but that the way consumers engaged with those operators changed since the pandemic.


For example, the pandemic forced operators and consumers alike to shift towards mobile ordering, which has remained popular with customers. That said, he noted in-person service was still going to be an important aspect of fast-food operations for years to come.


"There's still going to be a segment of your customer base that for one reason or another is going to come into the restaurant. And so I think that we've also learned that you can't just completely keep your dining rooms closed," he continued.


Sustainability Key for Today's Customer

The Sustainable Packaging in the "To-Go" Decade panel, hosted by Datassential's Marie Molde and featuring InnoPak Director of Sustainability Nathan Schultz and Raising Cane's SVP Supply Chain Kelby Leuthold, showcased the consumer demand for sustainable packaging.


Both Leuthold and Schultz noted the transition to more environmentally friendly packaging had business considerations that must be addressed, including increased prices and consumer expectations regarding the quality of food. That said, both agreed that their companies were working towards these sustainable goals.


"The conversation about climate change is very real and happening among consumers today. They're thinking about that, and it's really driving their behaviors toward wanting to be more sustainable for a healthier planet," shared Molde, explaining the importance of a sustainability journey for foodservice stakeholders.


Restaurant Traffic Comes Back

In the fourth panel, RJ Hottovy, Placer.ai's Head of Analytical Research, argued restaurant visits per location seemed to be normalizing. He noted visitation trends were very healthy in the suburbs as Americans migrated from major cities, and that growth was evident in Florida; Phoenix, Arizona; and Dallas, Texas.


Hottovy noted the fast-casual segment was being impacted by inflation with bifurcation evident among existing fast-casual customers. Lower-income customers headed more toward quick-service restaurants, while consumers on the higher end turned toward full-service operations. Food Institute Focus


Supply Chain Success Depends Upon Collaboration

For supply chain success, all stakeholders from manufacturers to operators must collaborate openly and effectively.


That was the general theme of the "Supply Chain Talent All Star Panel" at the DMA Nashville Experience. The event featured Tropical Smoothie Café SVP Supply Chain Kristin Kingery, Focus Brands SVP Supply Chain Anissa Mandell-Chance, and Firehouse Subs VP Supply Chain Matt Riddleberger.


DMA Vice President of Business Development Amy Snook opened the panel discussion by highlighting how consumers were more aware of the supply chain than ever before following the pandemic and related port shutdowns, freight delays, and trucker shortages.


This new consumer dynamic underscored a need for strong relationships along the supply chain and a strategy to go with it. Riddleberger noted that after four decades, the days of assumed 90+% fill rates were gone—instead, supply chain specialists had to look further up the chain to ensure a menu item like a limited-time offer (LTO) was feasible.


"Where is the manufacturer? How are they on raw materials? How are they on their packages? How's the freight? All those things are now being communicated up to the c-suite. And previously, they just took it for granted," he said.


Data Visibility Changes Operations

All three panelists agreed that operators have gotten better at "flying blind" over the past three years.

Mandell-Chance said a focus on data quality helped her organization better control its own supply chain, and that data quantity could often lead to more confusion. Instead, partnering with distributors and suppliers for end-to-end visibility made it easier to address issues before they happened.


"We want to do more about fire prevention than firefighting. And in order to do that, we have to have that visibility upstream," she said.


Riddleberger said operators were looking for consistent data, too, and that many distributors and suppliers utilized different metrics. A more unified approach to this data would benefit the entire supply chain.


"In the old days, knowledge was power. The information was power. Now we've got to share with everybody we're going to survive through this," he said.


A Focus on People and Connections

The new dynamics of the distribution industry led to new hires for all three companies. Riddleberger noted Firehouse Subs had brought in an inventory control manager to issue daily critical inputs reports; Focus Brands established a data analytics team to automate tasks that were burning workers out; and Tropical Smoothie Café expanded its bandwidth in the inventory management space via new personnel hires.


Kingery said a culture of giving at Tropical Smoothie Café helped to stall against burnout. She added that the company encouraged franchisees to give truck drivers a free smoothie upon a delivery as one of the many ways the company helped to build camaraderie along the supply chain.


Mandell-Chance said Focus Brands had developed a steering committee to walk through decision-making processes. She said 9 out of 10 times, the original plan would work. The steering committee strategies, however, helped transform an essential process due to the increased collaboration when outlier problems arose, rendering the original plan ineffective.


According to Riddleberger, Firehouse Subs wanted to hire people from other parts of the supply chain to help the organization better understand upstream inputs. He also noted it was worth cultivating relationships with counterparts at distributors and suppliers.


Kingery agreed, saying that it was even more important for connections across a company's hierarchy. She likened relationships between account managers and the c-suite to a cross-bar in a building.


"You know, there's a reason in buildings that people put in crossbeams because they make things stronger. So, if you've got a straight line, you can break the beam real easy, but when you fill up a network and a web, it just makes that relationship a lot stronger," she said. Food Institute Focus


Modular, Climate-Controlled Farming Hits Ohio

Square Roots and Gordon Food Service have expanded their effort to make locally grown food available more widely, opening a 2 million-plant indoor, climate-controlled farming facility inside Gordon's Springfield, Ohio, distribution center.


The farm has the capacity to grow more than 2.4 million packages of leafy greens and herbs annually, Square Roots said. The operation uses a modular, climate-controlled platform. Software constantly monitors and controls multiple climates, allowing a number of crops to be grown simultaneously.


"Since 2019, we've been on a journey with Square Roots, delivering on our vision to make locally grown, nutritious produce available to our customers, regardless of outdoor weather conditions or the time of year," Rich Wolowski, president and CEO of Gordon Food Service, said in a press release.


Gordon Food Service is one of the largest U.S. food distributors, servicing restaurants, schools, hospitals and retail stores. Food Institute Focus


Store News:

  • Taco Bell is leveraging edge computing to support the myriad digital ways customers place orders, according to VP of technology Vadim Parizher. The company places a computer server at each location which aggregates data from in-person and digital orders and customer loyalty accounts to better inform kitchen operations and timing, reported The Wall Street Journal (Oct. 20). Full Story
  • Meanwhile, Taco Bell introduced electric vehicle charging stations at a location near San Francisco. Partnering with ChargeNet, one Taco Bell location debuted six solar-powered EV charging stations that can provide a 100-mile charge in 20 minutes or less for about $20, reported Business Insider (Oct. 18). Full Story
  • Free Fries Friday returned at McDonald's. Order through the app on Fridays and receive a free medium fry through the end of the year. Full Story
  • Yum! Brands began exiting Russia and selling the business to Smart Service Ltd., which is operated by one of the company's existing KFC franchisees there. The new owner will be responsible for rebranding the restaurants to non-Yum concepts and retaining the company's employees, reported Bloomberg (Oct. 24). Full Story
  • Hot chicken chain Tumble 22 has been acquired by a group including an ex-Texas Roadhouse COO. Doug Thompson will become the CEO of the five-unit brand, reported Restaurant Business (Oct. 26). Full Story
  • Smashburger agreed to pay $5.5 million to resolve claims that it falsely advertised its hamburgers as containing "double the beef." The settlement benefits consumers who purchased menu items like the Bacon Triple Double Hamburger between 2017 and 2019, reported News.Law (Oct. 26). Full Story
  • Sweetgreen will test fully automated restaurants in 2023. Using robotic Spyce technology acquired last year, Sweetgreen CEO Jonathan Nemen said automating its stores could be "transformative" and help the restaurant offer better quality food, better portioning, and a more consistent customer experience, reported Restaurant Business (Nov. 8). Full Story
  • Meanwhile, Sweetgreen launched its first national dessert, a ‘healthy' take on the Rice Krispies Treat. The launch of the prepackaged dessert, made with organic brown rice, quinoa, millet, and honey-date caramel, comes as Sweetgreen looks for ways to push up sales, reported CNBC (Nov. 3). Full Story
  • Carl's Jr. announced plans to continue its European expansion. CKE Restaurants Holdings secured a franchise agreement with Spycher Burger Gang AG to develop Carl's Jr. locations throughout Switzerland starting in mid-2023. Full Story
  • Restaurant Brands International opened a digital food hall in Florida. The digital-first, downtown Miami concept offers food from Burger King, Firehouse Subs, and Popeyes as well as half a dozen local restaurants. Customers can order from all at once, reported Restaurant Business Online (Nov. 7). Full Story

Executives on the Move:

  • Red Robin Gourmet Burgers named Todd Wilson as CFO effective Nov. 7, reported The Wall Street Journal (Oct. 31). Full Story
  • Little Caesars has named Greg Hamilton chief marketing officer. Hamilton is a 20-year veteran of the pizza chain, reported Restaurant Business (Oct. 31). Full Story

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SUPPLY CHAIN NEWS

Sustainable Packaging Goals Must Be Aspirational and Achievable

As consumers are starting to demand more sustainable packaging solutions for foodservice products, operators, suppliers, and distributors must make sound business choices in their sustainability journeys.


This dynamic was on full display during at the DMA Nashville Experience during the Sustainable Packaging in the "To-Go" Decade panel, which was hosted by Datassential's Marie Molde and featured InnoPak Director of Sustainability Nathan Schultz and Raising Cane's SVP Supply Chain Kelby Leuthold.


Sustainability a Growing Concern for Consumers

Molde opened the panel with a presentation on the growing importance of sustainability among consumers. Datassential employs a menu adoption cycle curve to explain how different trends proliferate, with the newest trends placed within the "inception" category while more tried-and-true trends are placed within the "ubiquity" bucket.


Molde said many sustainability issues were currently in the inception stage among consumers, including "zero waste" and "food as activism" trends. Animal welfare and plant-based proteins were already proliferating across menus, however, showcasing the importance of sustainability to consumers in the current day.


Climate change was also a top concern among consumers (31%), trailing only the economy (45%) and healthcare (41%). Consumers also recognized their role in mitigating climate change by eating differently (65%), but 67% agreed that agricultural companies and restaurants bear more responsibility for addressing climate change than individual consumers do.


"The conversation about climate change is very real and happening among consumers today. They're thinking about that, and it's really driving their behaviors toward wanting to be more sustainable for a healthier planet," shared Molde.


Sustainability Adoption Hampered by Cost

Despite consumer interest in more sustainable options, Molde argued costs remained a major barrier to adoption of more sustainable packaging products.


"What we found in our research is that we're driven to do this because just as humans, we want to do what's right. So if being sustainable is the right thing to do, we generally want to do that. But there are barriers to it, and the number one barrier is the cost," she said.


Leuthold agreed with the assessment and noted many sustainable packaging solutions were much more expensive than traditional counterparts. As an example, he said paper bags for foodservice products could be as much as 25 times more expensive than plastic bags.


He also argued the consumers would only embrace sustainable packaging solutions if they didn't impact the way food tasted after being placed within it.


"You know, one of the most important parts is that it's going to work well for the food; it has to taste like when the customer actually visited. So I think there's been a lot of innovation from the packaging side and the manufacturing side to help with that," he said.


Aspirational Consumers Challenged by Sustainable Products

Despite consumers reporting they would sacrifice functionality for sustainability, there was some question as to whether consumers truly understood the tradeoff. Molde pointed to paper straws as an example.


"We've all seen that there's a plastic island the size of Texas in our ocean and there's turtles with plastic straws up their noses, but we also hear complaints that when you have a paper straw, then it disintegrates within your beverage," she said.


Schultz noted the fiber clamshell and other fiber packaging was a great example for this type of tradeoff. The current solution on the market was very good at preventing leaks, but consumers could be thrown off by new packaging for cosmetic reasons.


"You're going to see staining where you didn't before. You're going to see bleed-through where you didn't before. And when you figure in delivery times (30-40 minutes generally), taking the food home, preparing it, and finally eating it is a long time for stuff to potentially sit in the package," he said. Food Institute Focus

ECONOMIC PULSE

Restaurant Sales Hold Strong in September

Restaurant same-store sales growth remained strong at 5.2% in September, dropping just marginally from the 5.3% increase reported in August, according to Black Box Intelligence. The group noted steep declines in gas prices and the moderation of inflation rates appeared to help with the bolstered sales dollars.


That said, an erosion of guest counts were seen across nearly all segments in the month as guest continue to pull back on their spending as earning decrease year-over-year. Same-store traffic growth fell 3.6% year-over-year during the month, representing the seventh month in a row of negative traffic growth numbers. Full Story

 

Selected Results:

  • Chipotle Mexican Grill's August price hikes paid off. After raising prices in August for the third time in 15 months, the chain said same-store sales rose 7.6% compared to the previous year and topped Wall Street's estimates for third-quarter earnings, reported CNBC (Oct. 25). Full Story
  • Yum Brands' same-store sales rose 5% in the third quarter, with KFC, Pizza Hut, and Taco Bell all posting growth, reported CNBC (Nov. 2). Full Story
  • Restaurant Brands International reported a 9.1% same-store sales increase during third quarter 2022, with increases reported for Burger King (+10.3%), Tim Hortons (+9.8%), and Popeyes (+3.1%). Digital sales increased 26% year-over-year to $3.4 billion, representing about a third of system-wide sales, reported Seeking Alpha (Nov. 3). Full Story
  • Papa John's said summer travel, which made a comeback this year after many Covid restrictions eased, hurt pizza sales in the third quarter. Papa John's restaurants also saw "food basket costs" jump 18%, driven by a year-over-year increase in the price of cheese, reported Bloomberg (Nov. 3). Full Story
  • Starbucks U.S. sales beat expectations for quarterly earnings and revenue, as customers spent more on iced coffee drinks and Pumpkin Spice Lattes. Fueled by fall promotions, U.S. traffic bounced back to 95% of pre-pandemic levels in September, reported CNBC. Full Story

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