Economic downturn hits foodservice sector harder - The Packer

Economic downturn hits foodservice sector harder

06/29/2009 10:09:19 AM
Andy Nelson

CHELSEA, Mass. —  The recession has taken its toll on the Boston produce wholesale market, with restaurants either asking for less of their typical items or for less-expensive alternatives, wholesalers said.

From 75% to 80% of produce sold by Lisitano Produce Inc. winds up at foodservice, said Frank Lisitano, president.
The recession, he said, has affected foodservice and retail differently.

“Retailers fluctuate more depending on price,” he said. “Retailers buy different items, foodservice buys less of the same items.”

“You keep hearing how bad it is, then you go to a good restaurant and wait an hour and a half for table. People may skip a drink or a dessert or an appetizer, but they still want to get out."

— Henry Wainer

Specialty produce foodservice giant Sid Wainer & Son, New Bedford, continues to grow despite the recession, said Henry Wainer, president.

One reason might be the company’s close relationships with chefs who work at some of the 25,000 restaurants the company supplies up and down the East Coast.

Wainer & Son owns an experimental farm just outside New Bedford, where chefs are invited not only to visit but to stay in the guest house there, Wainer said. Each week, several groups of chefs take tours of the Wainer & Son facility, Wainer said.

If chefs have an idea for a locally grown fruit or vegetable, Wainer & Son will give it a whirl on one of its experimental farms.

“Chefs want the best product, and they want it when they want it,” Wainer said. “They’re trying to outdo each other, come up with something new.”

Sam Rocco, president of foodservice specialist BC Produce Inc., has heard reports of foot traffic for some retailers climbing 7% in recent months as a result of the recession. (The same reports do, however, also report smaller per-person rings at the cash register, Rocco added.)

If retail is up, given the economy, that can mean only one thing for foodservice.

“If you’re worried about losing your job, you’re not eating out,” he said. “I think restaurants in general are slower. People involved in retail have got to be fine.”

Still, there are exceptions, Rocco said. One of his restaurant customers in nearby Cambridge’s Harvard Square, for instance, is doing great business.

Rocco has a theory why — a Harvard University student body that’s in no danger of shrinking.

“If your kid’s in Harvard, you’re going to do everything you can so they can stay in,” he said.

Wainer said there are many such exceptions.

“You keep hearing how bad it is, then you go to a good restaurant and wait an hour and a half for table,” he said. “People may skip a drink or a dessert or an appetizer, but they still want to get out.”

Rocco has high hopes for summer, when Cape Cod and other area resort areas provide “big business” for companies like BC at the foodservice end. Last summer was a good one for business on the Cape, Rocco said, despite $4.25 gas.

Foodservice buyers are less likely than ever to spend north of $40, $30 or even $20 for a box of vegetables, said Steven Piazza, a salesman with Everett-based Community-Suffolk Inc. A range of $11-16 per box is the target price these days, he said.

While it’s certainly unwise to try to price too high out of that target range, by the same token, Piazza said it’s no good for wholesalers if prices get too much below it, either.

Take tomato markets, for instance.

In the early weeks of 2009, many customers were getting their tomatoes from Mexico because of the cheaper price, said Bobby Nano, owner and president of Boston Tomato & Packaging Co. LLC, which leans heavily toward foodservice sales.

But what they save in cost, Nano said, they lose in quality.

Tomato markets continue to suffer from the lingering after-effects of last year’s Salmonella Saintpaul outbreak, and a much more recent salmonella outbreak, though unrelated to produce, hasn’t helped erase the connection with tomatoes from consumers’ minds, said Peter John Condakes, president of Peter Condakes Co. Inc.

“Consumption of tomatoes has not returned to where it was,” he said. “And now peanut butter has brought the issue to the forefront of people’s minds again, and it’s still hurting tomatoes.”

It wasn’t until November, long after the Salmonella Saintpaul scare had passed, that a large number of consumers told pollsters they felt safe eating tomatoes, Condakes said.

That situation is only compounded by the oversupplied market, which Condakes traced to “gorgeous” growing weather in Florida as well as to a glut of product from Mexico.

The economic downturn also has affected foodservice demand for organic fruits and vegetables in the Boston area, said Leonard Dankner, organic specialist for Gregg Dziama Inc.

Snow pea sprouts and radish sprouts are among the organic items Dziama sources that aren’t in as high demand now at the local restaurants the wholesaler services, Dankner said.

While there are pockets of hope and opportunity, some Boston-area wholesalers, such as Yanni Alphas, president and chief executive officer of The Alphas Co., paint a bleak picture of the current restaurant scene.

“The restaurant business is absolutely decimated,” he said.

This article was featured in The Packer's annual Foodservice section, published June 29. For more stories about the foodservice sector, visit www.thepacker.com/foodservice.



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