California: Selling in Retail vs. Foodservice with Jeff Kyer, VP of Sales - Retail at Portillo Sales & Marketing
This week on the Titans of Food Service podcast, Nick Portillo speaks with Jeff Kyer, VP of Sales and Retail at Portillo Sales & Marketing. Nick and Jeff traverse the intricate landscape of food service and retail sales, elucidating the distinct methodologies and strategies employed within each sector. Jeff, with his extensive background in retail food brokerage and his recent ascension to Vice President of Sales at Portillo Sales and Marketing, provides invaluable insights into the operational differences and market dynamics that define these two realms. As they explore the robust food service market in California, which boasts over 90,000 restaurants and generates more than $135 billion in annual sales, Nick and Jeff highlight the importance of strategic relationships and fact-based selling in an ever-evolving industry.
TIMESTAMPS
(00:00) Intro
(03:37) Transitioning from Food Service to Retail Sales
(11:06) Understanding Schematic Design in Retail
(15:30) The Dynamics of Retail Sampling
(22:21) Pricing Strategies in Food Service
(28:15) Exploring the Dynamics of Food Service and Retail
RESOURCES
CONTACT
Transcript
There are a million ways to make money in the food service industry.
Speaker A:You just have to find one.
Speaker A:On the Titans of Food Service podcast.
Speaker A:I interview real life movers and shakers in the food game who cut through all the noise to get to the top.
Speaker A:My name is Nick Portillo and welcome to the Titans of Food Service podcast.
Speaker A:Let's jump right into it.
Speaker A:Welcome back to season three of Titans of Food Service.
Speaker A:I'm your host, Nick Portillo and I'm continuing my Journey across America in 50 weeks tour where I travel to every state to sit down with a true titan of food service.
Speaker A:On this week's episode, I'm going to be highlighting my own state, the Golden State, California.
Speaker A:I'm especially excited for this episode because I'm joined by someone I not only respect, but now have the privilege of working alongside, and that is Jeff Kyer.
Speaker A:He's our new VP of Sales, retail at our company, Portillo Sales and Marketing.
Speaker A:Jeff, he brings over 20 years of experience owning his own retail food brokerage business.
Speaker A:He had retail experience prior to that as well.
Speaker A:He successfully built and operated his own company before selling it to Advantage Solutions.
Speaker A:Now he's joined our team to help spearhead our expansion into the retail space.
Speaker A:It's a huge milestone for us.
Speaker A: We started in: Speaker A:We started here in Southern California, expanded in Northern California, then Las Vegas, and then in a couple of years ago into the beautiful state of Hawaii.
Speaker A:So now, you know, we're moving fast.
Speaker A:We're a growing company.
Speaker A:We're going to get into the retail space.
Speaker A:We feel that we've had success on the food service side and that there's a model that can be replicated onto the retail side.
Speaker A:So that's exactly what we're doing.
Speaker A:We're going to be moving into Northern Cal, Southern Cal, Las Vegas and Hawaii in short order on the retail side.
Speaker A:And Jeff is going to help us get there.
Speaker A:Before I dive into my conversation with Jeff, I want to take that.
Speaker A:I do this on every episode.
Speaker A:I want to take a look at the state, in this case, California's food service landscape.
Speaker A:So it's one of the most diverse and influential food markets in the country.
Speaker A:California is home to over 90,000 restaurants, which is just massive, generating more than $135 billion in sales annually.
Speaker A:That's gigantic.
Speaker A:The state is a powerhouse in food trends and is home to some of the most iconic restaurant brands in the country.
Speaker A:When you think of California, especially throughout all of California, we have a lot of chain restaurants, a lot of headquartered chain restaurants.
Speaker A:Are here a lot of, whether they're local or regional or national chains, we are just very robust our food service landscape.
Speaker A:We have chains, we have casinos, we have college universities, we have business and industry that like corporate campuses, we have K12, we have every single segment in the food service channel that you could possibly manage.
Speaker A:Imagine.
Speaker A:And a lot of times when our clients come to us to talk about California, they also view us as a cutting edge state where if they have new products that are innovative or unique, that, hey, this will definitely be perfect for California.
Speaker A:Because in California we look at, you know, our nutrition labels and our health and things like that.
Speaker A:So it's definitely on a, on the cutting edge of the states that are out there for sure.
Speaker A:So we've got Michelin star hotspots in la, in the Bay Area, to legendary taquerias, sushi bars, farm fresh cafes.
Speaker A:I mean, a really wide array on the restaurant side.
Speaker A:And these really define the food culture here throughout California.
Speaker A:It really defines, it's a big defining part of the state.
Speaker A:Now, without further ado, let's go ahead and welcome Jeff.
Speaker A:We're going to talk about retail versus food service sales.
Speaker A:We're both selling food, but there's so many differences between the two industries.
Speaker A:So let's go ahead and welcome Jeff.
Speaker A:All right, Jeff, welcome to the Titans of Food Service podcast.
Speaker A:I appreciate you coming on here today.
Speaker B:Thank you.
Speaker B:Glad to be here.
Speaker A:Yeah.
Speaker A:So.
Speaker A:So tell me, Jeff, how did you get into the food business?
Speaker B:Wow.
Speaker B:I've been in it longer than I like to admit.
Speaker B:I started out with Gallo Winery.
Speaker B:From there I met somebody and I started talking to a gentleman that was in the food brokerage business.
Speaker B:Then he hired me and I was a business manager for.
Speaker B:I was actually in the HBC arena and then I got promoted into their produce arena.
Speaker B:So I've been with produce for 35 years, however long it's been.
Speaker B:And then I started my own company, Interlink Marketing Group, and I had that for 22 years.
Speaker B:Then I sold it to Advantage and left them.
Speaker B:And here I am with you.
Speaker A:When you started your own business, what made you start the business at that time?
Speaker B:So I was a shareholder in a company in a food brokerage company and we called Kelly Clark and Kelly Clark sold their the brokerage firm to Acosta, which is a very large national broker, which I'm sure you're aware of.
Speaker A:Yep.
Speaker B:I really didn't want to work for a large corporation at that point in time.
Speaker B:And I felt that I could break off and start my own business and be Successful at it, and I had a good run.
Speaker A:Yeah, I think my, My dad can probably empathize with that.
Speaker A: ted our own brokerage back in: Speaker A:And, you know, all the different trials and tribulations of that and starting up anew, and we found that people, the words new and change were like two things that we had to constantly overcome.
Speaker A:Like, you know, hey, we are new.
Speaker A:We do want you to make a change, you know, but it just took a little bit of time to really get that going.
Speaker A:When you started your own business, what were some of the challenges that you.
Speaker B:Had early on getting the.
Speaker B:The right personnel to work with, securing new business?
Speaker B:You know, it's a very competitive environment.
Speaker B:And, you know, I was fortunate enough to have a lot of connections in the industry, so I was able to acquire brands fairly quickly.
Speaker B:And then, you know, it gets harder.
Speaker B:It's.
Speaker B:It's easy to build, but it's harder to maintain.
Speaker B:And so that's.
Speaker B:That.
Speaker B:That was the part that was hard.
Speaker B:You know, it's really hard to maintain in this business.
Speaker B:As, you know, it's very cyclical and fickle.
Speaker B:You know, you can, you know, it's.
Speaker B:What have you done for me lately?
Speaker B:So it's, It's.
Speaker B:You got to always stay on top of everybody's business.
Speaker A:It definitely.
Speaker A:There's so many different balls to be juggling at any one time.
Speaker A:You know, we feel that on the food service side as well.
Speaker A:Uh, and you're right, it is.
Speaker A:What have you done for me lately?
Speaker A: You could have: Speaker A:The sales numbers could have been through the roof.
Speaker A: And then: Speaker A: Well, because in: Speaker A:I mean, so you have to.
Speaker A:You battle those different challenges.
Speaker A:You know, it's funny, the.
Speaker A:The most common reason why we lose manufacturer partners is it's not due to performance.
Speaker A:It's a lot of times it's due to the.
Speaker A:They're.
Speaker A:They're acquired by another company, and then that company has an existing broker relationship, so it kind of gets swallowed up into, you know.
Speaker B:That's very true.
Speaker A:Yeah.
Speaker B:When a new.
Speaker B:When they bring in a new VP of sales or something like that, they have, you know, their relationships that they want to bring in.
Speaker B:You're absolutely right.
Speaker A:Totally.
Speaker A:So on the food service side, right, Are the go to market or not?
Speaker A:Go to market strategy, really the way it works is you have the manufacturer that produces the product and then as on the broker side, we're really the liaison between the manufacturer and the market that we're in.
Speaker A:So in this case here in the west, so we use different distributors and operators.
Speaker A:That's who we're selling to.
Speaker A:Distributors and operators.
Speaker A:Operators being like restaurants, casinos, college, universities, anywhere.
Speaker A:They're serving food away from home.
Speaker A:And then your distributors, you know, you have your large broadliners like Cisco or US Foods or Shamrock Pfg and then you have your independent or more regional distributors as well.
Speaker A:How does it work in retail?
Speaker B:The same, except that we probably have more direct warehouses than you do.
Speaker B:So for example Safeway here in Northern Cal, they have a warehouse in Tracy.
Speaker B:And so all the manufacturers ship the product directly to the warehouse and then the warehouses disseminate the product to the stores.
Speaker B:So we, they don't use district, they use distributors for incidental things, items that are not warranted for a warehouse space.
Speaker B:So they're, they're, they need to have it in the store, but they don't really sell much of it.
Speaker B:So they'll use UNFI or KHI to supply those items.
Speaker B:But again it's, it's very minimal in that aspect.
Speaker B:Save Mart uses it, they have their own warehouse, Raley's has their own warehouse.
Speaker B:Now when you start getting into the ancillary accounts, the smaller accounts they do use distributors like OK Produce, NorCal Produce, you know, so they will have their customer base and supply these, these independent stores.
Speaker A:So I guess we, we have that too, right?
Speaker A:Your different distributors that, that service these accounts.
Speaker A:So when you go into a, a large headquarters and you make a presentation, what does that look like?
Speaker A:For example, later on today I'm going to go make a presentation to a restaurant chain here in Southern California.
Speaker A:And I've got samples, I've got pricing, I've got different point of sale and stocking guides.
Speaker A:So I'm going to make my presentation around, have them try the products.
Speaker A:You know, we want to get the buy in there, but then also have in the back of, I know that you buy through this distributor and this distributor and these are the products that are available with the pricing.
Speaker A:How does it work in retail?
Speaker A:How do you make a presentation on that side?
Speaker B:Well, so much, much the same way we are becoming more fact based selling.
Speaker B:So when we go in we, we need to have information for that buyer how the items are doing in the, in the, in say in Northern California.
Speaker B:How is it trending?
Speaker B:So we, we pull Nielsen data, and then what we'll do is we'll do a category review with the buyer and we'll go through the entire category if we're down to the nitty gritty.
Speaker B:So let's say we've presented this item, she's interested, and we, and we go in.
Speaker B:We will also put together a schematic.
Speaker B:And that schematic will show where we recommend the product to be on the shelf, what items should come out.
Speaker B:And we base the products that'll come out on the fact based, selling on the information that we have, that these items aren't moving as well.
Speaker B:You should probably take these ones out, put these ones in.
Speaker B:And sometimes, you know, just so the buyer believes in us and really believes we believe in their business.
Speaker B:And, you know, a lot of times we have to recommend our own items to discontinue.
Speaker B:Sometimes, you know, that's not what we want.
Speaker B:But if we're going to recommend an item that's coming out and it's doing better than the one of our items, that doesn't really say we're doing the best job for category management for that buyer.
Speaker B:So there's a lot to it.
Speaker B:So that's, that's basically how you do it.
Speaker A:What is a, when you use the word schematic, what is that?
Speaker A:I'm not familiar with that.
Speaker B:Okay, so a schematic is when, when you walk into the grocery store and you walk up to the shelf and you look at it, that is all schematicized.
Speaker B:So meaning, like, for example, here's a good example, cereal, when you go into cereal that's schematicized, all the, all the sweet cereal will be schematicized on the lower shells.
Speaker B:And that is because the kids walk by and they look and go, mommy, can I have that?
Speaker B:Cocoa pups, Cocoa Pops, you know, and so, you know, so everything is looked at that way.
Speaker B:Who, you know, who's gonna, who's gonna buy it?
Speaker B:So, you know, if you're, if you take the item from the bottom shelf to eye level, you're gonna get an automatic 35% increase.
Speaker B:Not in, not in cereal, but just in general.
Speaker A:Wow.
Speaker B:Okay, so eye level is where you want to want your products.
Speaker B:So whenever you do a schematic, that's what you're going to want to put your products, because that's where they're going to sell.
Speaker B:Higher up is more difficult, especially for some women that are not as tall, and so they have a hard time grabbing it.
Speaker B:So they might not even look up there.
Speaker B:And, and the head never really goes down to, to the floor.
Speaker B:You know, you're, you're looking here and you're walking by.
Speaker B:You also don't want to be on the corner of this, of the shelf because as the consumer is walking by, they're probably going to take three or four steps before they start looking at the section.
Speaker B:So if you're at that corner, they're going to miss it.
Speaker B:So these are things you think about when you schematicize and where you want to put your product, if that makes sense.
Speaker A:That does make sense.
Speaker A:I think, you know, just for my own personal shopping, when I go into the store, I do look in the middle.
Speaker A:You're right.
Speaker A:So that, that 35%, you know, you said there's a 35%, you know, higher increase in someone looking at the middle of the shelf.
Speaker A:Is there a premium that a brand would have to pay to be in that area?
Speaker B:No, it's all, it's again, all based on fact based selling.
Speaker B:If the product warrants to be eye level, they'll put it where, if it doesn't, if it's not, if it's just, if it's, if it's a slow seller.
Speaker B:And one of the reasons it's probably a slow seller is because it's on the bottom or the top.
Speaker B:So it's, you know, it's one of the jobs is to try to sell the buyer that it will increase if you can put it eye level.
Speaker B:But that's where everybody wants to be.
Speaker B:So it's hard when your items aren't selling very well and they're on the bottom to try to get it moved up.
Speaker B:But that's, that's our job.
Speaker A:So let's say, you know, a Kroger property brings in the products.
Speaker A:Do you have to then be on site to make sure that you're merchandising and making that, you know, products pulled forward, the stickers are correct and all that kind of stuff?
Speaker B:Yeah.
Speaker B:So we have a retail sales force that will go out and to your point, make sure that all the tags are up, have the right price on them.
Speaker B:If they're, if they're on, if they're on ad, we want to make sure that the ad price is on the shelf.
Speaker B:So we check that, we check rotation.
Speaker B:So if we get new Items in, usually 90% of the time, what will happen is they have a category review for that section.
Speaker B:Everybody goes in and gives the category review recommendations and then the buyer will develop a schematic based on everybody's input that you're seeing all the manufacturers, and then that person will develop a schematic, and then we have to go out and set the stores.
Speaker B:We will get a certain percentage, so it'll be based on how many items we have in the section.
Speaker B:So if we have 10% of the section, then we have to do 10% of the stores and reset them to that new schematic.
Speaker A:Oh, interesting.
Speaker A:So if, like, if someone has a hundred stores, you'd have to go, in this case, 10.
Speaker A:Go do 10 stores.
Speaker B:10 stores, that's correct.
Speaker A:Got it.
Speaker A:And they give you where to go, or you kind of choose what 10 you want.
Speaker B:Yeah, they get.
Speaker B:They.
Speaker B:They put a schedule together.
Speaker B:They usually, most accounts want it done within 30 days.
Speaker B:And then they'll give us the 10 stores that they would like us to reset, and then we will go out and schedule it.
Speaker B:Schedule with our reps to make sure that they go out and set them.
Speaker A:When they go out and set, are they doing samplings as well?
Speaker A:I know, like, if I go to Whole Foods or I go to Ralph's or I go to even Costco, they do sampling.
Speaker A:Right.
Speaker A:With.
Speaker A:With people there.
Speaker A:Even Total Wine and more.
Speaker A:I've seen them sample different drinks and beverages.
Speaker A:Is that something you have to do on your side as well?
Speaker B:You.
Speaker B:You don't have to.
Speaker B:Okay.
Speaker B:It's part of the marketing budget.
Speaker B:So if.
Speaker B:If the client that we have has a budget and they want to sample, then, yeah, we will do it.
Speaker B:Sampling is very expensive, but it can be effective.
Speaker B:It's one of those things.
Speaker B:Is that where you want to put the money in there, or do you want to promote heavier?
Speaker B:Do you want to do specific programs with an account?
Speaker B:So there's different ways, you know, if you have the money to do it.
Speaker B:Yeah, it can be effective.
Speaker A:And when you say money, you have to pay the broker or you pay the store to do those.
Speaker B:So you have to pay a company that does sampling.
Speaker B:So.
Speaker B:So it probably costs $150 per store.
Speaker A:Oh, yeah.
Speaker A:It's pricing that can add up.
Speaker B:Yeah, yeah.
Speaker B:So it can add up.
Speaker B:It can be effective.
Speaker A:The.
Speaker B:The only thing that I say about it is it can be effective.
Speaker B:But when you.
Speaker B:You only get a window of maybe two hours.
Speaker B:So let's say you pay $150 for two hours, and let's say you don't get that much foot traffic, and maybe, maybe you have 100 people come in that store.
Speaker B:How many do you really sample?
Speaker B:Do you sample?
Speaker B:10, 20.
Speaker B:And so how effective is it during that time frame?
Speaker B:That, that's, I'm not so sure you're touching enough people.
Speaker B:Now Costco's a little bit different because Costco is known for that.
Speaker B:People go and have lunch there just eating the samples, you know, that's so it's a little bit different.
Speaker B:But again, it depends if the item is a.
Speaker B:Something that's new and innovative, you know, it might be an avenue to take because maybe the consumer is not going to want to take it off the shelf if they don't have any idea what it is.
Speaker B:So again, maybe the more you demo, the more people try it and the better off you are of getting it off the shelf.
Speaker A:Yeah, that makes sense.
Speaker A:Yeah, you're right.
Speaker A:Like when I do go into the store and the off chance there is someone there sampling like let's say my, you know, for my house or my wife and I, we go shopping once a week and so every, you know, if we go once a week, the other six days we're not there.
Speaker A:You know, what about everybody else?
Speaker A:Are they really hitting that, that target consumer walking in the door?
Speaker A:I'm sure they probably prioritize certain time slots that are maybe more, more busy, like 5 o'clock, like right after work or.
Speaker B:That's not, that's not necessarily the case.
Speaker B:Oh, you know, you might, you might get a 3 o'clock time spot.
Speaker A:Oh, so they kind of dictate what time you're going to have.
Speaker B:Well, yeah, because if you have so many scheduled, you know, you have, you have to use the hour.
Speaker B:You know, everybody probably wants the 5:00 to 7:00 time time spot.
Speaker B:Or a Saturday or a Sunday.
Speaker B:Yeah, the middle of the day during the week.
Speaker B:You really, that that's going to hurt.
Speaker A:It even more on the food service side when we relationships is a really big deal to us.
Speaker A:You know, relationships with large operators and operators in general, relationships with distributors.
Speaker A:Is that the same in retail?
Speaker B:Yes.
Speaker B:You know, you, you got to have relationships, but again it's very, it's becoming more fact based selling.
Speaker B:Yeah, but again there is a human element in it where, you know, if you have a relationship, you might be able to get in a little bit more frequently to see that buyer.
Speaker B:But the buyer is also doing their job of making sure that they're putting in the best mix of items in their shelf that they can.
Speaker B:So are they going to do you a favor?
Speaker B:Not if that item doesn't do well.
Speaker B:Right.
Speaker B:So.
Speaker B:But you do have an opportunity to get in there and show them new items that maybe normally they wouldn't have time to see if you have that relationship.
Speaker B:So relationships are still, you know, needed.
Speaker B:But again it's, it's, it's, it's very fact based selling.
Speaker A:Gotcha.
Speaker A:In food service they, it's funny, sometimes the food service teams are run by people that are retail backgrounds and the sale, the sales cycle is different.
Speaker A:One is faster.
Speaker A:If I were to make a presentation to a large, like, like later on when I go make my presentation to this chain, they've got 20 units.
Speaker A:You know the chances of them buying on the spot, it takes a while.
Speaker A:Like it's not easy to do that because they have to change all the menus, they have to train their staff on the products, they have to make sure distributions aligned and pricing.
Speaker A:They may have multiple distributors that they work with.
Speaker A:And so it's just a whole process to get products stocked, get them open coded, get them sent to the stores, the menu set.
Speaker A:So it takes a while.
Speaker A:So it's interesting when we have retail people, I feel like is the sales cycle shorter?
Speaker A:Because sometimes it's like what can you sell in the next 30 days or 60 days?
Speaker A:And I'm like, we don't really work like that.
Speaker A:There might be some low hanging fruit you can hit.
Speaker A:But really the big opportunities take time.
Speaker B:Yeah.
Speaker B:So it's, it's, it's much the same way in retail except that in retail the retailers have calendars on when they look at certain categories.
Speaker B:So for example, they might look at juice in October.
Speaker B:So when they look at that, you got to get in there, present all your new items, present everything at that point in time.
Speaker B:They will probably finish evaluating it by December.
Speaker B:Okay.
Speaker B:So it takes that long.
Speaker B:And then the schematics developed and then we will start setting the stores.
Speaker B:So it does take a while but.
Speaker B:And then they might not look at juice again until the next October.
Speaker B:Now sometimes they will do a refresh and they might like in May or June look at it and say, you know what, maybe we can do a plug and pull.
Speaker B:Meaning they can pull an item that's not doing very well and put in a new item without having to do the whole schematic.
Speaker A:Got it.
Speaker A:Okay.
Speaker B:But again it'll, it doesn't, it doesn't happen overnight.
Speaker B:It does take, it's much like your business, you know, they have to look at everything.
Speaker B:They look at the entire category.
Speaker B:Maybe the category is, is growing in a different area that they don't have the items that they should have.
Speaker B:So then they have to figure out what are they going to take out, what are they going to put in.
Speaker A:That's definitely unique in that it's, it's seasonal.
Speaker A:We have certain seasonal type things like, you know, selling corned beef.
Speaker A:You want to sell that in, you know, maybe early in the year to hit, you know, March for St.
Speaker A:Patty's Day, or you have wings, which are really popular during March for March Madness.
Speaker A:You want to plan ahead for that.
Speaker A:But most of the time there isn't like necessarily seasonal windows that open up in food services.
Speaker A:You can kind of go in at any time as long as it works for the buyer or the decision maker with their schedule.
Speaker A:Now, the holidays might get a little different, you know, around Christmas and Thanksgiving just because they're busy or, you know, it's just the holidays in general, but for the most part you can go in at any time throughout the year.
Speaker B:Yeah, see, we aren't like that anymore.
Speaker B:I mean, it's, it's, it's more like I said, they, they will look at specific categories.
Speaker B:It's specific times of the year.
Speaker B:Now there are holiday shows that they'll have.
Speaker B:So they'll book out, you know, in, in May.
Speaker B:They'll, they'll book out their holiday season on things that they think they're going to need.
Speaker B:So they'll have a holiday show.
Speaker B:So you take in shippers and that kind of thing.
Speaker B:So they can determine what they're, how they're going to merchandise in their stores during the holidays.
Speaker B:Same thing with St.
Speaker B:Patty's Day.
Speaker B:You know, they'll bring in items for that.
Speaker B:So that's all.
Speaker B:A Super Bowl.
Speaker B:Super bowl is huge.
Speaker B:Do a lot of business for the Super Bowl.
Speaker B:It's, it's amazing.
Speaker A:Yeah, I bet, I bet.
Speaker A:What about when it comes to pricing in food service?
Speaker A:You know, we've got our, our, we call it the FOB price, which stands for freight on board.
Speaker A:And that is, you know, your pickup price.
Speaker A:Right.
Speaker A:And then you have your delivered price.
Speaker A:If someone doesn't want to go pick it up, they just have it delivered straight to them.
Speaker A:How does pricing work?
Speaker A:Oh, the same in retail.
Speaker A:You have the fob and.
Speaker B:Same in retail.
Speaker A:Okay, gotcha.
Speaker B:Yeah.
Speaker B:So if, if the, if the warehouse is accessible.
Speaker B:Manufacturer's warehouse is accessible.
Speaker B:Yeah.
Speaker B:Safeway.
Speaker B:Like if it's, if it's on Highway 5 going up and down the, you know, they'll still just swing in and pick it up and save, save money from the delivery charge.
Speaker A:When you go in to make a presentation to your buyers, let's say the price is $10 a case.
Speaker A:Are they looking to really take that price down and you know, for marketing monies and things like that.
Speaker B:Absolutely.
Speaker B:They're.
Speaker B:They're going to negotiate.
Speaker B:They'd like to get it for $5.
Speaker B:So.
Speaker B:Yeah, so it's a.
Speaker B:It.
Speaker B:You know, they, they will try to work you on it.
Speaker B:Now there, there's things we can do.
Speaker B:Like you said, there are marketing dollars.
Speaker B:There's.
Speaker B:There's slotting dollars.
Speaker B:Okay.
Speaker B:So slotting is.
Speaker B:You have to pay a slotting fee for the warehouse to get into it.
Speaker B:Okay.
Speaker B:So there's only so many slots in a warehouse.
Speaker B:So they have to take something out of the warehouse.
Speaker B:So you have to pay a sliding fee to get in.
Speaker B:And that, that can be very, very expensive, especially in center store items.
Speaker A:Essentially, you're just buying out inventory to create space for your own.
Speaker A:Is that what it is?
Speaker B:Or I guess you can call that it's.
Speaker B:It's more of.
Speaker B:It's.
Speaker B:It's a fee to get your item into the warehouse.
Speaker B:Where that fee goes on, you know, that only the retailer knows.
Speaker A:Gotcha.
Speaker A:Like I've seen over the years in food service, this may have been more pre Covid, but distributors would say, hey, I've got this list of hundreds of items that haven't moved in a certain amount of time.
Speaker A:And each one, let's say there's 10 cases of product X and each case is worth $50.
Speaker A:So if you want to pay $500, you can buy that slot.
Speaker A:Now you have to go out and sell the product.
Speaker A:Right.
Speaker A:Because you have to create the movement yourself.
Speaker A:There's no customers behind it, but you can buy that slot.
Speaker A:I don't see that as much now post Covid, but I did see that a little bit.
Speaker A:Because in food service, getting that distribution set up is really the hardest part of the sales process.
Speaker A:It's the most expensive.
Speaker A:It's the most time consuming to have them bring it in.
Speaker A:They have to set up a code number.
Speaker A:They have to.
Speaker B:Well, and that's why they charge a slotting fee on the retail side.
Speaker A:Gotcha.
Speaker B:Is for all those same reasons.
Speaker A:Okay, yeah, that makes sense.
Speaker B:Now sometimes they'll take one case per store free.
Speaker B:Instead of charging you a dollar amount, they'll say, okay, bringing in three items of yours.
Speaker B:I want one case per store per item.
Speaker B:And that will be the slotting fee.
Speaker A:Oh, got it.
Speaker A:So when you, you, you pay all, you pay these fees, right.
Speaker A:Your product goes on the shelves.
Speaker A:How do you ensure that the product moves?
Speaker A:We have, like in, in food service, we have cash and carries.
Speaker A:Like Restaurant depot is a big one.
Speaker A:There's US Food Chef stores and there's others throughout the country.
Speaker A:And a lot of times you get the product on the shelves, maybe you do a sampling.
Speaker A:But like, how do people know about the product and to, and to start buying it?
Speaker B:Again, that would be through marketing with a specific chain.
Speaker B:You can do a lot of things.
Speaker B:Some, some clients will even put up billboards, you know, and things like that to try to promote it, you know, or they'll run TV advertising.
Speaker B:Again, that's going to be a manufacturer's larger, your smaller manufacturers that can't afford the tv, sometimes they'll do billboards or they'll, they'll definitely promote within the store and they'll do have really hot pricing for given periods of time.
Speaker B:They also have things like a Catalina program, which, you know, when you get you, when you go in and you, you get your receipt and, and behind it you have coupons.
Speaker A:Yeah.
Speaker B:So a lot of times they'll, they'll do that and they'll have a coupon.
Speaker B:So the next time the consumer comes in, they can use that coupon on that item.
Speaker B:So there's a lot of ways to promote you.
Speaker B:You do things within the store.
Speaker B:The programs specific to, let's say Safeway and Monopoly, you know, you'll participate in the monopoly and then the consumer will kind of say, oh, I wonder what this product is?
Speaker B:And then they'll go look at it.
Speaker B:And again, it's way to get exposure to the consumer.
Speaker A:And when it comes to consumer as well, you know, you mentioned TV ads.
Speaker A:You mentioned the super bowl previously with the super bowl upcoming.
Speaker A:Right.
Speaker A:You'll, I've seen commercials that they're selling Snickers bars or Wonderful pistachios.
Speaker A:How do they, in like, how do they ensure that the products are on the shelves and available before the Super Bowl?
Speaker B:Well, if, if the retailer knows that you're running an ad on TV like Wonderful, they, the, the Safe ways of the world, everybody will make sure they have a lot of product because they know the exposure that the consumer is going to get to that item.
Speaker B:And so they'll put up displays.
Speaker B:And that's one of the things that, you know, Wonderful will do.
Speaker B:They say, hey, we're going to run three ads during the Super Bowl.
Speaker B:And with that, what we want is, you know, two, two independent displays around the store along with the product on the shelf.
Speaker B:And they'll, and Safeway will say, absolutely, because they know that the consumer is going to come in and then they'll run a hot price on it.
Speaker B:They'll have a very high price on it also, I guess.
Speaker A:Yeah, I guess it's just free exposure for the store for people to come in and come buy that product.
Speaker B:Correct, Correct.
Speaker B:Yeah.
Speaker B:I mean, the customer is going to love if.
Speaker B:If there's TV advertising, because that just drives the consumer into their stores.
Speaker A:Yeah, that makes sense.
Speaker A:All right.
Speaker A:All right.
Speaker A:Yeah.
Speaker A:Well, Jeff, this has been.
Speaker A:I.
Speaker A:I learned a lot.
Speaker A:You know, there's.
Speaker A:I always.
Speaker A:I.
Speaker A:I've been telling people that there's similarities between food service and retail.
Speaker A:We're both selling food, but our end consumer is different.
Speaker A:I'm on the food service side.
Speaker A:I'm selling these big, ugly, heavy brown bo do on.
Speaker A:On the retail side, how.
Speaker A:You know, the boxes are mainly for someone for personal consumption at home.
Speaker A:You know, might have the colors on it, might be bright, you know, catch somebody's eye and stand out amongst the others.
Speaker A:And the distribution's similar, but there's some differences and whatnot.
Speaker A:So it's really fascinating between the two, retail and food service.
Speaker B:It is.
Speaker B:It's.
Speaker B:It's an interesting business.
Speaker B:Both sides of it.
Speaker A:Totally.
Speaker B:I'm learning a lot on the food service side.
Speaker A:I'm sure.
Speaker A:I'm sure.
Speaker A:Well, thanks for doing this, Jeff.
Speaker A:I appreciate it, man.
Speaker B:You bet.
Speaker B:No, really.
Speaker A:Enjoy.
Speaker A:Thank you.
