The Foodservice Dynamics In California

Nick: 00:00:02

There are a million ways to make money in the food service industry. You just have to find one. On the Titans of Food Service podcast.

I interview real life movers and shakers in the food game who cut through all the noise to get to the top. My name is Nick Portillo and welcome to the Titans of Food Service podcast. Let's jump right into it. Hello and welcome back to Titans of Food Service.

I'm your host, Nick Portillo and today I'm going to be talking all about food service in California and how you can be successful in your sales and marketing journey within this market. It's a very vast state.

Obviously there's, it's multifaceted, multi ethnic, a huge geography, many large metropolitan cities, urban cities, rural areas. That's a hard word to say, rural. And more.

We're going to talk all about that here today and how you can be successful in the state or maybe you can at least take a, a couple nuggets away from, from this episode to help in your business. So, the Golden State. It's the land of palm trees, tacos, tech companies, shout out Silicon Valley, and of course, traffic.

This is this last week, actually, I spent pretty much an entire day.

I went and saw ucla, the UCLA Medical Center, Ronald Reagan Medical center, usc, stopped in to see rwzant, which is a local redistributor customer of ours. It was a long day of traveling, there's no doubt about it.

And you have to enjoy that wi what I call the windshield time of being in your mobile office, driving around, seeing customers. It's fun to see customers. I love being face to face.

But that traffic can definitely wear on you, especially when you start early in the morning and you get home later in the evening. And many of that time is stuck, you know, bumper to bumper. And even if you have to go 10 miles, it could take an hour.

It's kind of a crazy place, you know, to live, but it is what it is. It's kind of surreal. It is what it is, but it's part of the game and that's just part of the beauty of California.

So we're going to navigate some of that here today. California, it's also the largest food service market in the country. So that's important to think about.

When we work with our manufacturer partners, a lot of times when they, they'll have teams, right? The regional manager teams that you'll have a person that covers the west, the central part of the country, and then the East.

You could break it up different ways, but that's Kind of a good overarching view how of how people do it with these teams. When they view the west, they say hey, California, it's my biggest market by far. They're smaller states and they do a great job.

But if I don't make my number in California, a lot of times my number west of the Mississippi may be off. It's that big of a population, it's an incredibly important market.

As a broker we understand that working with our manufacturer partners of how important this marketplace is, we feel the pressure, we feel the desire to be in this market, to grow in this market. And so I understand, my team understands how important it is to the overall picture of food service, of having California.

There's other similar markets like New York, Florida, Texas, Chicago and of course California. They get a little bit of the Pacific North Northwest, some of the New England states.

But really if you look at the largest markets, California is up there in the top one or two largest in the entire country. I believe we're probably 10 to 12% of the overall population of the entire country. So that's just putting a little in, into perspect.

So if you want to win in food service California, it better be on your roadmap. Incredibly important.

So whether you're a sales rep or you're maybe a VP of sales for a manufacturer, maybe you're a broker, maybe you're a some sort of leader within your food service team, I want to give you the real boots on the ground playbook on how to sell in this state. So let's jump in. So here's the deal. Why does California matter? California has 40 million people, over 90,000 restaurants. 90, 000 restaurants.

Think about it. In food service we have different segments.

in one segment alone there's: 90000

It's one of the most diverse populations in the country as well. You can drive five miles and go from a vegan cafe to a Mexican taqueria to a Michelin starred sushi spot. And all three are packed.

Being in LA this week, crazy. The different, you know, just driving around, you see all the different opportunities. You see maybe a Chinese restaurant, maybe you see a.

I saw usc, maybe you see a taqueria. Whatever it may be, there's so much opportunity in this state.

You have to just kind of focus and figure out how am I going to figure this out, but complex as well. You're dealing with strict regulations, high labor costs, aggressive health standard and constantly evolving consumer preferences.

And yet this is where trends start. California is the state where trends start. What takes off in LA or San Francisco ends up on menus across the entire country a year later.

It's funny, I was joking with one of our team members recently. A lot of times the food trends, they start here in California and move and move east.

A lot of the art and clothing trends, they start east and move west.

So it's kind of funny how that, you know, especially in that New York area, a lot of trends and clothing and design starts there and moves its way California.

So if you can win in California, you're not just going to be selling food, you're going to be building influence which is going to help your overall brand across the entire country, across the region, across multiple markets. So let's talk a little bit about distribution. This is where a lot of new brands that get stuck. California has all the big national players.

We have Cisco, we have US Foods, we've got pfg, we've got Vistar, we have regional players like Chitakis, we have local players like Buy Right Vidco, Giordano's and so on and so forth. So we've got all of the players here.

I think in California alone, there's probably a thousand different distribution points all the way up from the large national broadliners like your Cisco, US Foods, pfg, all the way down to the jobber trade. What's the jobber trade? The jobber trader, like the white vans that you see driving around.

They may have a handful of customers or maybe they're super specialized. Maybe they just sell seafood or just sell protein or dairy or something of the sort.

And that's their overall business and they can leverage, you know, maybe RWZANT or J. Hellman or other local redistributors to warehouse their products and then they can take it out to the customers from there.

Just because you get into Cisco or US Foods or some of these distributors in other markets, it doesn't mean you're going to get it here. It's nice to get stocked other places.

Build your Cisco S UPCs, your US foods APNs, which are essentially the code numbers that those distributors require to have when it's stocked so that an operator or the internal system, they can flag the item. So if you get it stocked other other places, does it necessarily affect the sales here in California?

No, but what it does do is create those SCPCs or APNs or whatever the code numbers may be for any other distributor to be able, it's one less step you have to do. Once they set up the code one time, it's good for the whole country. So think about that. That is, that's a benefit in this market.

We also have redistributors, as I was kind of mentioning a little bit with Rwzant and Jay Helman. So companies like DOT Foods, Honor Foods, which purchased Rwand, Honor Foods, I know is well known in the northeast. So they purchased Rwand.

You've got Jay Hellman, you had Astro Food Service, which is recently acquired by Alpine. So there's different opportunities and ways to think about your business of working with these redistributors.

Sometimes maybe Your minimum is £2,000 or it's a few pallets, or maybe it's a truckload. I have seen that in many instances as well.

And you say, I want to be able to sell into the market, but I can't be selling, selling, you know, someone to call me, buy £500 for me at a time. Okay.

If you have redistribution set up, for example, if you have DOT set up, they can warehouse the product and then they can send as little as one case anywhere in the country, which is really nice to have because they're, they're shipping into all of these distributors every day, every week.

And so adding one case of yours, maybe 100 cases, somebody else, 300 of someone over here, two of another brand, they can add up weight on that truck. And so it makes a lot easier to sell in.

So think about, maybe there's a redistribution play for your business overall when it comes to redistribution. They can help you scale, especially with specialty products, products that don't have as much velocity as, let's say, your center of the plate items.

So when you're in the specialty space, if you can get that warehousing that, that redistribution warehousing, that can really help explode your business across the country and even in California, because you need to have the product available, but then you need your team to work and create that pull through as well. No movement, guess what equals no reorder. So what works?

Things like strong broker support, local sampling, working with chefs to create menu ideation, and staying close to your sales team and distributor. Sales teams broker sales teams, making sure that you're continuing to train them and teach them all about your products.

So let's go into operator segments that drive volume. Chain restaurants huge. In California, you've got brands like in N out. You've got Mendocino Farms, you have the habit, you have Sweet Green.

They drive serious volume. If you can sell one SKU in there, it'd probably make your number for the next few years it's going to be that big.

But those, those large ones, they're not, they're not easy to crack. If you're going to get on their menu, it's going to take potentially years of follow up ideation, sampling, price negotiation, things like that.

It's going to take a long time. You got to earn those seats through consistent follow up and culinary value. Then you've got your independent restaurant scene which is also massive.

You've got your mom and pops, you have your large, you know, single unit operators. I think of one right, right down the street from where I live, it's called Water Grill.

I think they're doing like nearly $20 million in revenue a year. One unit. It's a massive place. They've got hundreds of employees that work in that one location.

You also have your emerging chains, things like, you know, places like 2 to maybe 15, 20 units that want to grow and be the size of an in and out or be the size of a sweet green or the habit. Those are good places to get in on the ground floor because they have less red tape to get through. They can move a little bit faster.

So think about those types of places.

Then you have like 20 to 100, maybe a few hundred before you get into a national chain like McDonald's or you know, when you get to that large size that are here also in this marketplace, I mean you've got California Pizza Kitchen, you've got lazy dog, there's BJ's that are really good sized chains that if you sell something in there, it's going to absolutely move the sales needle and it's going to influence distribution to bring your products in. In California you also have the independent restaurant scene as well. So I mentioned you have like places like Water Grill.

There's places like that all over the place that might, that would make sense for your brand.

Now I'm not saying to go out and sell the mom and pop restaurant on the corner, you know, your local Italian restaurant right down the street from your house. Those places, we love them, they're great customers.

But if you want to drive new business and new sales, they're not necessarily the place you're going to want to go to create that, that pull through if you will. You want to find, if you're going to spend your time out there, boots on the ground, what we would call dragging the bag.

You're going to want to really find the opportunities that can move sales and move the sales needle. In SoCal, if you're not walking into kitchens, you're not selling. You have to get product in front of people.

Email, it works sometimes to get presentations set up.

You also have to remember if your decision maker is a chef, they're on their feet all day, they're working with their teams, they're not necessarily looking at email. You have to be on, on the ground, live, selling face to face. Here's my products. Putting product in their mouth.

That's super important to get product on menus. It's still very much relationship driven.

You see, especially here in California, you got Silicon Valley constantly pushing and trying to innovate and disrupt the food service industry.

But at the end of the day, there is still a huge relationship game to be played here in this market, people want to taste product, talk about recipes and see how it fits on their menu. Another huge monster segment, healthcare.

Think Kaiser Permanente, Hoag Hospital, Scripps, so many more, Cedars Sinai, some of these massive hospitals, sometimes they're hospital groups. They could be part of a GPO like let's say Premier or HPSI.

That if you can get those GPOs, if you can get, if you can become a hard spec or essentially win an approval to be able to sell into them, that can also help really move the needle for you. Another segment to think about is K12. Does my product fit into K12? Does it. Well, think about, is it made in the U.S.

are you part of any commodity products programs or can you be. Do you have CN labels, CN labels set up or offer solutions that make the food director's lives easier?

You have to understand compliance for this category.

It's, it's food service, but they're speaking a different language, they're wanting different products than your traditional kind of more mainstream food service. But it's a massive category in this, in this state. You've got LA Unified School District, you have San Diego Unified Schools District and you have.

So there's hundreds of districts here, all with great buying power.

With some of them you've got what they call a co op, which is essentially a collection of smaller to mid size districts that can pool together their buying power and kind of act like one large district. So something to think about there as well. In this market, you also can't sleep on bni which is business and industry, industry, tech campuses.

I mean, we've got massive ones.

You Have Google, you have Yahoo, Tesla, I mean, you can walk up and down the street there in Silicon Valley and there's tons in la, in even in Irvine, near where I'm, I, I live, they are building up more infrastructure to bring in and welcome more tech campuses like Blizzard Entertainment or entrepreneur.com and others like that in this market. So also think about that especially we're in the better for you space.

They've got a lot of times they have a kitchen that's selling more elevated dining experiences. They want better for you grab and go items, so on and so forth. So something to think about if you're in that space.

Okay, I mentioned real briefly GPOs. So let's talk about GPOs and procurement realities. There's this myth that if you get on a GPO contract, you're good to go.

That's not necessarily true. They, whether it's Avendra or Premier Food by Compass, Sodexo, Integra, Vizient, I mean there's so many.

Just because you get the yay, yes you can, you're now approved, that that's not the entire story. It opens the door, especially if you know your product is, is meant for healthcare or BNI or hospitality or casinos or whatever it may be.

But that's just the start. You still need to educate the operators. The GPO tells them what price they can get, not what product they should choose necessarily.

So it's you and your team's job to get in there and spread education of hey, this is what's available, here's how the product performs, here's some samples. Then you also have to make sure that's on their mogs, their menu ordering guides.

Just because it's approved at the Corvette level with Saidexo, for example, or Food by Compass, it doesn't mean at the operator level that it's on their mogs. So you have to work with them and their distributor to make sure that the product is stocked.

And then the product shows up on their many ordering guides so that they can actually place an order for them. It's your job. You have to drive awareness. You have to send the samples.

You have to get the local distributor reps or broker reps on board to help you, which makes it easier to switch out the products.

A lot of times some of these GPOs, they'll give what I call good, bad report good, meaning when it's a good product, that means they're buying your product or they're buying on contract. Bad means they're buying a competitive product that's off contract.

So you can, a lot of times you can toggle those Excel sheets and find which ones are the largest bad opportunities and hit those first.

If you can convert those, then they force the distribution because distribution has to bring it in and get in on the mogs which then you can get down to the smaller ones and it makes your job and life a lot easier. Here's a real story. We once had a brand with pricing through a major gpo, but the hospital system didn't even know existed.

We brought in the chef, ran a testing and now they use it across six campuses. Kind of crazy how that works. You influence one which has multiple. So a lot of times these GPOs, like let's take the UC system.

If you work there's one, many times one, there's one decision maker for the UC system. If you can work with that person, a lot of times they can influence other campuses throughout the country. So something to think about.

Now let's go to looking at again how to win in California. Here's some tactical stuff. Being bilingual, big help. We have a large Hispanic population. We have a large Asian population.

We have many different ethnicities speaking different languages. So if you can speak English plus another language or plus another couple languages, that just gives you a nice leg up in the game. Focus on flavor.

Health is important, but your product got to taste great. Don't show up with just a sales sheet. Show up with an idea. You can.

There's the old adage of dumpster diving, of going into the dumpster out back behind the, behind the operator's kitchen and seeing what they're throwing away. You could look at, you know, the bottles or you could look at the cases being tossed or the packaging to say, hey, what are they buying?

And maybe I can match some stuff up or replace what they have. Then going inside and looking at what's on the menu, focusing on your items and where they would fit. Maybe it's a, it's a one to one conversion.

Maybe you're selling a chicken item of some sort of. And they're buying chicken. Hey, I've got a complimentary. I've got an item that would be.

Maybe it's better cost, better flavor, better value of some sort and you can go through and switch that out. Know the regulatory stuff. California laws around sugar, sodium plastic packaging, labeling. You need to be buttoned up. We have different laws.

I remember recently, a few years ago, they got rid of the, they, they implemented a law where you could have on the table sugar packets or salt packets or little creamers for your coffee. But now it's against the law to put those on the table. The only way that the customer can receive them is upon ask.

So if they ask then the server or whoever the person is waiting on the tables can bring that out to them. So knowing those types of regulatory stuff helps position your product as well. You want to be everywhere.

That means when opportunities work, food shows, school co op shows, tech campus tastings, which we've done, we do those as a broker, we do those at tech campuses, we've done them at college universities, we've done them all over the place. Distributor ride alongs. Everywhere there's opportunities. You want to be there.

You want to create that groundswell where people are talking about your brand, you're building buzz, they're sharing it with their friends and that's how it really gets out there.

It's that force multiplier effect which I've talked about on previous podcast episodes of how can I take myself and spread myself across the entire state or entire market. And then also having a broker that understands the business and has the relationships super, super important.

If you want to help scale, you have to have your direct sales team and then a broker team that is constantly out there pushing, pushing, pushing, trying to drive new sales for your business and scaling it up so you can continue to grow year over year. So in closing, here's my California sales playbook. I've been selling in the state for for over a decade at this point.

Actually we just hit a decade last week, so pretty exciting stuff. I've been kicked out of kitchens.

I've been literally vehicly escorted off a property because I was being too persistent by and so security said you have to go get in your car on let's go. I've been ignored by buyer buyers. I've been ghosted after tons of follow ups. It just happens. It's part of the game.

But I've also seen brands go from nobody's heard of you to we can't live without you just by doing the little things right California. It rewards effort. If you show up, stay present and stay persistent. I'm telling you it will pay off.

So whether you're trying to launch your first product here or you're trying to scale a nasty brand, I hope this episode gave you something useful. If you want to chat more, shoot me a message on LinkedIn. I'll always take time to talk strategy.

Until next time, keep hustling, keep sampling and keep building the food service future. Again, thank you so much for listening if you enjoyed the episode.

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