Selling Local Food Directly to Foodservice and Hospitality

The purpose of this factsheet is to introduce producers to the foodservice industry and the needs of their buyers. It outlines the elements for creating successful business relationships

The favourite buzzword among Alberta chefs is LOCAL.

Before approaching a chef with your product, decide if you are ready for the challenge, and if it will be worth the time and effort.

The best chefs in the province know that the foods they buy directly from the grower or processor are worth the extra effort. Producers need to understand that they have to actively look for foodservice business; it will not usually seek them out.

However, there are three problems chefs and producers need to solve together:

• the right products

• the right amounts

• the right time, on time, all the time

Chefs have an established system of doing business. They tend to order from lists online. The local foodservice connection is still developing, creating opportunity for producers.

If you, as a producer, can meet the quality standards of potential foodservice/hospitality customers, you will find that most chefs are willing to work with you.

Producers who sell to consumers through an on-farm store or at a farmers’ market will find that direct restaurant sales are a new experience. For example, do you have enough volume to supply one or more restaurants? The meat from two or three animals is enough for one restaurant only.

Chefs can be demanding and working with them can be challenging but the relationship can also be profitable.

What is the Foodservice/Hospitality Market?

Foodservice/hospitality is a diverse and dynamic market. Chefs and caterers buy your product to feed their customers. Foodservice is the second largest in volume of all markets after grocery.

The customer can range from a stand-alone 25 seat restaurant, to a chain of restaurants or hotels, to large distributors such as Sysco, and everything in between: caterers, business cafeterias, halls and banquet facilities.

Characteristics of the Foodservice Customer:

1. Stand-alone restaurants are single outlets with a chef owner/operator such as River Café in Calgary, and Hardware Grill in Edmonton. The decision maker is usually the chef. This can be the most satisfying of relationships, or the most frustrating. Your product’s quality and price, and your service will be the most important factors to the chef.

2. Chains are multiple locations having similar styles and menus such as Sorrentino’s and Kelsey’s. The decision maker could be the food and beverage manager, the purchasing manager, or someone from the head office in another city or country. It’s important to find out who it is, and how they wish to be approached. Price, consistency of product and volume will be the most important factors.

3. Hospitals, cafeterias and banquet halls are large volume institutions. The decision maker is usually a combination of the chef, the food and beverage director, the purchasing manager, or someone from head office. Price, product consistency and volume are important.

4. Caterers: Business volumes will vary, depending on season and style – do they specialize in business lunches or weddings? Service and quality are key for caterers.

5. Hotels: The decision maker can be the chef, the purchasing manager, the food and beverage director, or a combination, depending on the property. Some, such as Fairmont, have strict buying protocols. Others, such as the Union Bank Inn, can be quite flexible. Keep in mind that at larger properties, restaurants are usually a separate division from banquets.

The larger organizations prefer to work with suppliers who have Hazard Analysis Critical Control Point (HAACP) certification. (Refer to Farm Direct Marketing: Know the Regulations factsheet Agdex 845-7).

Many small farms do not have the volume required to supply institutions. However, it is a good idea to make a courtesy call and keep in touch even if you cannot supply them routinely. Keeping in touch with chefs ensures they will know who to call when they needs a speciality item (local duck/chicken/cheese for a visiting dignitary’s dinner, for example). Even if you do not end up doing business with these large accounts, they can be valuable sources of information.

Why Would a Producer Choose to Sell to Foodservice?

Selling to foodservice can be an effective use of your time – it’s year round, consistent, and you can package in bulk. A fundamental component of selling to foodservice is this: you must learn what your potential customer needs rather than trying to sell what you grow. This market channel is market-driven as opposed to production driven. Volume is key. You must have enough product to service accounts.

1. What is your potential customer looking for?
First, define your potential market. Will it be a few chef-owned restaurants, or do you have the volume to sell to a chain? Consider ease of entry, seasonality, specific requirements, and geographic constraints (distance from market).

2. Define what you are selling
Are you selling meat cuts, value-added (sausages and prepared meats), or mixed (vegetables and meat)? Each category has to be treated differently as the markets for each are unique.

3. Develop a market for what you have the most of
For example, you already sell vegetables through a farmers’ market but could sell root vegetables in the winter to a restaurant.

4. Treat some products as a line extension
For example, your main product is cuts of beef and you build a secondary business of a value-added product such as sausage. Not all of your primary customers want the sausage, but it could introduce you to another group of customers.

Benefits and Challenges of Selling to Foodservice

Large, year-round volume is the primary benefit of the foodservice market. The research and servicing of this market takes time and money. It’s crucial to find the right fit and to sell at the right price. The biggest challenges are the initial effort, time invested, and a slower financial return.

Your personality and style of doing business will influence who your customer is and how you reach them.

Servicing directly means that the producer decides what to plant, grow, or raise; negotiates the sale; delivers the product; handles invoicing and accounting; and services the customer’s needs. This creates a close working relationship with the buyer but the producer does all the work of delivery, collecting, and maintaining the relationship. The better price may be consumed by delivery and other costs. Chefs like working with distributors as it cuts down on the time they spend ordering, accepting deliveries, and writing cheques.

Each producer’s situation is different. Base your decision on business volumes, time, money saved and suitability.

Finding Foodservice Customers

What’s the difference between a foodservice customer and a farmers’ market customer? The big one is you have to go to foodservice; they do not come to you. Foodservice customers expect to be sold – but how do you find those customers?

Research and legwork

Find lists of possible restaurant customers on web sites such as Dine Alberta; Slow Food Edmonton and Calgary; and, restaurant groups.

Check out potential customers

Drive-by to evaluate size, location and style. Be aware of the different styles of restaurants such as fine dining, three meals a day or casual bistros. There is no sense trying to sell a breakfast sausage to a restaurant open only for dinner. Do not miss opportunities in your own community such as the local diner, ag society, and hall caterer.

Be creative

You may have a product for each style of restaurant. Even a hot dog stand could be good business for your bratwurst or relish.

Personal contacts

Ask friends, colleagues and neighbours who they sell to. Chefs already using many local suppliers may not be able to do business with you, but may be able to point you to new restaurants or other chefs who could use your product. A positive and ethical business attitude will get you in the door. Even if the chef can’t buy your product, you might get some good leads and might become the secondary or fill-in supplier.

Other channels

Grocery stores, freezer sales, home delivery services, and farmers’ markets are other market options. Never forget that chefs and food and beverage managers are also consumers. Marketing channels in Alberta are extremely flexible with lots of overlap, so doing business in one channel generally provides benefits in the others.

Media

Read local, regional and national food media (magazines, newspapers) and make yourself known to them. This helps your marketing efforts by creating word of mouth.

Chefs’ associations

Want to meet chefs? Become active in their associations as a speaker and supplier. Or, participate in showcases.

Product associations

Work with colleagues to share marketing costs, and build a good reputation for yourself and your community of producers.

Food shows, charity events, community suppers

Use these events to build a strong reputation for your products so chefs want to work with you.

Develop a media kit

Keep it simple. Compile business cards, high quality photocopies of articles written about your product, a fact sheet, price lists, your story (again, keep it simple; get help if needed) either in a folder, on a disc or a USB drive. Keep it to three or four pages and current, neat and tidy. Marketing materials (called collateral) such as brochures, postcards, a website, or social media (Facebook, Twitter) can be developed from your simple and always updated kit.

Budget

You will need to spend some time and money finding and developing customers. Don’t overspend. Business cards and email/telephone numbers are key.

Communicating with Foodservice Customers

As the producer, you will always be your own best advertising. Good communications with your potential customer can be as simple as a first phone call at the right time for a meet-and-greet with the chef.

Once you have decided to try selling your product to a particular restaurant, call to set up that first appointment. It will save valuable time for both of you.

Be positive about your product. Be prepared to explain why it’s unique and wonderful. Do bring samples of your products attractively arranged (clean and trimmed). Samples will show, rather than tell, the chef what you have available. The samples will also establish a spirit of goodwill and hospitality, which is the basis of a successful restaurant.

It’s a Buyer’s Market

Remember that you are the person with something to sell, so do not be afraid to make that first call to chefs to set up a meeting. They need to hear from you, and about you. Otherwise, they will likely go elsewhere – probably to the producer who did make the calls.

The best time to call a restaurant is usually after the lunch rush. That’s usually between 1:30 pm and 3:00 p.m. – in other words, when the chef will be able to give your call the time and attention it deserves.

Checklist for the first meeting

• present yourself professionally (clean clothes)

• expect the first meeting to be short (15 minutes)

• discuss chef’s specific needs

• leave a media kit

• leave samples if required

• arrange a follow-up meeting

After you have made that convincing first visit with samples, you might discuss delivery methods as well as possible delivery dates and times.

Do not be disappointed if the chef does not presently need your product. You have established contact with a potential market and made a good first impression. Use this first meeting to find out what the chef is looking for so you can better decide whether or not to pursue this account.

Write down and have available all the relevant information the chef will need to contact you after he checks the sample - your daytime phone number, fax and e-mail.

Be sure to follow up. Check your phone messages and e-mails at least daily. Return messages the same day.

Strategies for building strong chef/producer relationships

It is important to maintain a positive relationship with your buyer. Some strategies include:

Be reliable

Being reliable means delivering the quantity of product desired at the times promised. Chefs do not want to know that your lettuce was hailed out. Instead, they need to know that you found a fill-in producer whose lettuce was not damaged and is comparable to yours.

Depending on your product, try to supply cutting charts and/or recipes, especially for unusual produce or alternative meats.

A Few Words from the Chef

According to Chef Blair Lebsack, “The most important thing for a producer is to be flexible. In this business, we don’t dictate what our clients will eat. The clients make those decisions. But as a producer, you can help influence both clients and chefs by remaining flexible and making suggestions.”

Be convincing

For example, if duck breasts are the only part of the duck the chef wants have him try your duck sausage, a secret-recipe duck-liver pate, or duck eggs.

If everybody wants rack of lamb on the dinner menu encourage the chef to try your sample of lamb riblets, lamb burgers or braised lamb shanks at lunch.

Be flexible

As the producer, you have an advantage. You know the animal, you know what is possible, and you can suggest new ways to use alternate cuts. Push that advantage. For example, bison hump makes a great roast for the carvery.

Maintain sound business practices

Keep accurate lists and accounts. Be professional in invoicing. Be able to give chefs projections about the availability of your products at least one to two weeks ahead.

Invite chefs to visit your farm

Extending an invitation to chefs to visit to your farm to see how your plants/animals are produced will help the chefs learn more about you and leave a lasting impression. They may become your ambassadors, sharing your story with patrons.

Under promise and over deliver

Grow more than you think you need so you can select the best. Bring extra products just in case. Go that extra mile for your customer.

Become a customer yourself.

Once you’re on the menu round up a fan club of family and friends and go for dinner. It’s an investment that will pay off.

Product Quality

One of the first key elements of selling to foodservice and hospitality is unsurpassed quality of products and ingredients. Quality and taste is what chefs are interested in. They are willing to pay more for a quality ingredient because they know there will be less wastage in preparation and the products will look spectacular on the plate. This means chefs want clean, healthy vegetables of the desired size; well-marbled beef with cuts of the same weight and size.

Quality is also having the correct product. For example, it does not matter how red and juicy your beefsteak tomatoes are if the customer is looking for heirloom tomatoes.

Consistency means the same size and weight. However, each chef may want something different. Some will want unwashed vegetables, some will prefer portioned cuts, and others want full sections. Be prepared to discuss individual needs.

High quality will usually get you a better price. Local producers have an advantage in that quality should be part of their (true) story.

Food Safety

Consumers are looking for assurance that their food is being produced in a safe manner. Together, industry and governments are developing food safety process control systems that focus on preventing hazards rather than detecting problems during inspection of the end products. These systems are based on the principles of Hazard Analysis Critical Control Point (HACCP) and support Alberta’s gate to plate approach to food safety.

Implementing these systems shows due diligence in production and product manufacturing, meets consumer demands and may facilitate market access. There are different food safety programs that can help you provide consumers the assurance they are seeking.

Food Safety Systems

• Prerequisite Programs
Effective food safety systems are built on a solid foundation of prerequisite programs. These programs provide the basic environment and operating conditions that are necessary for the production of safe, wholesome food. They include protocols for premises, storage and transportation, equipment, sanitation, food handling, personnel, product recall and traceability. Provincial prerequisite program guidelines are described in the document Meat Facility Standards while federal prerequisites are outlined in the Food Safety Enhancement Program (FSEP). Like the food safety system itself, all prerequisite programs should be documented and regularly audited.

• On-Farm Food Safety (OFFS) Programs
OFFS programs help create a proper operational environment for food safety through the implementation of Good Production Practices (GPPs) on the farm. These types of practices can be applied to any type of agricultural production operation. OFFS programs reduce the risk of unsafe food products originating from the farm. On-farm food safety programs are developed by the national commodity associations. Contact your provincial commodity association for more information.

• Hazard Analysis Critical Control Point (HACCP)
The HACCP (pronounced HA Sip) system is a proactive program that is internationally recognized as an effective approach to food safety in processing facilities. HACCP requires an assessment of what food safety problems can occur at any stage of the process. Control measures are then identified to prevent, reduce or eliminate these hazards to an appropriate level to avoid adverse human health consequences. While HACCP is still voluntary, many companies are choosing to develop and implement a HACCP program.

The following will provide additional information on developing food safety protocols for your business:

• The online Marketing Food Safely home study manual .The manual is a reference guide, a workbook and a planning tool to help you market your food safely. It is available from
http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/explore13314#pdf

• The two-day food safety provincial certification course offered by Alberta Health Services.

Regulations

There are federal and provincial regulations that must be met in the production and marketing of food products. It is the responsibility of producers to ensure that their products and facilities meet legislative requirements and they have all the necessary permits as foodservice buyers may ask to see copies.

Alberta Health Services (AHS) and the Canadian Food Inspection Agency (CFIA) are two agencies with responsibility for enforcing regulations related to maintaining safe food products. Visit their web sites for further information.

www.albertahealthservices.ca
www.inspection.gc.ca

Pricing and Payment

Foodservice customers expect you to offer a wholesale price. Remember, your product is only part of the final dish the chef presents to his customer. Your price needs to accommodate their costs and profit as well as your own.

• Do you represent good value for money?

• Is there seasonal variability in your price? Or, can you offer the same price for the entire season?

• Is your price realistic, given the product costs? Does it cover your inputs, fixed costs and allow for a reasonable profit margin?

• What is your minimum order?

Know your Product Costs

Here are just some of the expenses you’ll need to cover:

• Production costs – ingredients, seed, fertilizer, feed, etc., depending on your crop.

• Packaging – paper or plastic, bags, boxes or jars, etc. There will be costs associated no matter which packaging you choose. Will you need labels? If you can design and print them yourself, it will save money but cost time.

• Labour, including adequate staff housing if required.

• Equipment – washing, packaging, warehousing, etc.

• Shipping and delivery, possibly using a distributor.

• Sampling costs.

• Possible loss/waste of product.

• Legislative compliance - facilities, equipment, staff training, traceability, recordkeeping, etc.

Billing

This is something you can and should negotiate. Most restaurants prefer to be billed. They are business people, and they require written invoices. Like you, they need to keep accurate records.

Payment

Most restaurants prefer to pay within 30 days, although some can pay in 15. Again, this is negotiable.

Delivery

The where, when and how of delivery can make or break your relationship with a chef. Foodservice people expect delivery of the product to their door. Three common styles of delivery are:

• Do it yourself.

• Establish a group delivery service. Work with a few nearby farmers.

• Use a distributor.

Preparation and Transportation

If you use the same vehicle for carrying farm inputs, loading in the field and delivering to the restaurant, you will need to take extra care with cleanliness as well as having a food permit from Alberta Health Services. It is illegal to make, store, transport or deliver food without a valid permit.

Thoroughly vacuum and wash the vehicle before loading to avoid possible contamination with non-food products such as fertilizers, pesticides, etc., that might have been carried in the same vehicle. Do not use the vehicle for transporting live animals – chickens, baby pigs, calves or the family dog.

Your truck or other vehicle should be covered during transportation to keep out insects, dust and other contaminants.

If you are transporting high risk, temperature sensitive products follow this general rule of thumb: keep cold foods cold and hot foods hot. Cold foods must be kept at or below 4°C, while hot foods must be kept above 60°C (a less likely situation, unless you’re dealing with a caterer).

When to Deliver the Product

Timing is important. Delivery times are critical for chefs, who may have your item on the menu for specific days and specific meals. Negotiate delivery times with the chef. For example, if the potatoes come in the back door at 5 p.m. and service starts at 5:30 p.m., you’re too late. Worse, if the item happens to be frozen, as in fish or meat, there’s no time for it to thaw. If it requires trimming or cleaning, the same problem will exist.

The challenge may be finding a day and time that is convenient for both you and your customer – the chef.

Where to Deliver the Product

Ideally, you want to deliver your product to the chef’s kitchen door. If a chef has to pick up a product, he likely won’t bother dealing with you. Check local parking/loading restrictions to determine your best drop-off spot.

Be sure to have a dolly or other method of moving heavy sacks of vegetables or boxes of meat from your truck to the restaurant door.

Make sure the product is taken into the kitchen and stored properly. You don’t want it left out on the delivery dock to heat up and lose quality or spoil.

Using a Distributor

A food broker represents your products to a variety of food prospective buyers. A distributor delivers your product to foodservice customers for you. Depending on the distributor, services range from pick up and delivery to production help, market knowledge and access, accounting and sales.

“Deciding to use a distributor starts with getting all your production ducks in a row.”
Lori Menshik, Full Course Strategies, Edmonton

Your decision about whether or not to use a distributor or food broker will depend partly on how busy you are, how fast you are growing and your own interest. Too many good producers burn out because they try to be all things to all people.

When you are too busy with production to make the sales calls and deliveries that are necessary, it may be time to consider using a distributor. Or if you are a producer who wants to simply produce and do not have the interest in marketing, you then need to use someone who can effectively market your product – a staff person, family member or distributor. Of course, the costs and benefits vary with each option.

Four Things the Right Distributor Can Do

• sell your product

• pick up and deliver your product

• deliver the product on time

• suggest minor tweaks to improve your product

Get Your Ducks in a Row

Before contacting a distributor, understand that you must be able to carry some inventory. You will need adequate space for that inventory storage. It could be a garage, basement or spare room with shelving.

Be sure your storage/inventory space can be kept at an optimum temperature, humidity and light. This is important to keep your product at its best. For example, preserves will lose colour if exposed to light. Frozen product can suffer freezer burn. Non-refrigerated produce will lose texture, appearance and flavour. Have a method for rotating your products so they remain in inventory as short a time as possible.

Be sure your product can be traced back to your farm.

Timing

Be on time, all the time. Understand that although chefs are too busy to make the product you want to sell, they need you to be on time with every product delivery.

Be prepared to survive the odd bounce in the market. Your chefs may all want your beet relish or cranberry mustard this month, but none the next month. Be prepared to wait it out.

Distributors and Food Brokers Come in Many Sizes

Small producers should be aware that working with large distribution companies may require additional costs such as listing allowances which could be from 18-25 per cent. With any distributor you may need to adjust your wholesale price.

Getting Along with Distributors

Learn to let go. Try not to be a control freak with your product. Good as it is, you will need to establish a partnership of trust with your distributor.

CHECKLIST: Do You Have What it Takes?

Top Ten Steps to Success

1. Are you prepared to look for your customers?
Are you willing/able commit the time required? Foodservice customers expect to be sold. It is up to the producer to make and maintain the contact; if producers don’t keep in touch with clients, the clients will find a source that provides better service.

2. Do you have the tools for business?
Email and telephone message capability are business bare minimums. Are you prepared to check e-mails daily and return messages ASAP?

• Media kit, business cards, price lists, and brochures are essentials.

• Website or blog are a great asset to have. However they need to be maintained.

• Have a sampling budget. Samples sells product, so it is a very important tool and you need to ensure you have allotted money for it.

3. Define and research your customer.
Make sure you and your potential customer are a good match.

4. Be your own best advertising.
You are a local producer, so let everybody know about your products.

If there’s a local producers’ association, join it and support it. No association? Consider forming one and join related business groups such as the Chamber of Commerce.

5. Your product
Are you making a product that has a market? Or are you making a market for your product? Know the difference.

6. Volume
Do you have the volume required? Can you deliver what chefs need in terms of weight, size, and condition?

7. Do you know your costs?
Knowing your costs will help decide if foodservice is the right market for you. Controlling costs is critical to profit.

8. Delivery
Can you do it on time? Have you settled on time/date/place?

9. Payment
Have you agreed on method and timing? Are you prepared to invoice?

10. Fall-back
If the weather turns against you can you supply an alternate at least once? This would require some partnering with other growers.

Red Flag for producers:

Do not try to sell retail (grocery) plus foodservice (caterers or restaurants) at the same time. Trying to service both can quickly get you in over your head. A large retail account can be too easily cancelled, leaving the small producer with too much unsold inventory.

Additional Resources

Food Safety

Marketing Food Safely Manual
Go to http://www.agriculture.alberta.ca and enter “Marketing Food Safety Manual” in the
search field.

Public Health Act – Food Regulation
Go to http://qp.alberta.ca and enter “food regulation” in the search field.

On-Farm Food Safety Programs in Alberta

Recognized Programs

• Beef Cattle - Verified Beef Production

• Chicken - Safe, Safer, Safest

• Dairy - Canadian Quality Milk Program

• Eggs – Start Clean, Stay Clean Program

• Pullets - Clean Start

• Grains, Oilseeds, Pulses – On-Farm Food Safety Program

• Herbs and Spices - Good Agriculture and Collection Practices

• Hogs – Canadian Quality Assurance Program

Horticulture – CanadaGAP Programs for:

• Combined Vegetables

• Leafy Vegetable and Cruciferae

• Potatoes

• Small Fruit

• Tree and Vine Fruit

Sheep – Food-Safe Farm Practices
Turkey – TFC On-Farm Food Safety Program

Published by:
Alberta Agriculture and Rural Development
7000 - 113 Street
Edmonton, Alberta T6H 5T6

Copies of this publication are available from:
Publications Office
Alberta Agriculture and Rural Development
7000 - 113 Street
Edmonton, Alberta T6H 5T6
Phone: 1-800-292-5697

2012 12 200
Reprinted 2013 1 200