Foodservice sector stuck in rut

05/22/2009 04:20:28 PM
Ashley Bentley

The nation’s restaurant business is hurting, and it’s no exception up in Minnesota.

“Restaurants are down in ordering volumes,” said Doug Strandquist, produce manager for Upper Lakes Foods Inc., Cloquet, Minn., which ships produce from its Superior Produce and Specialties subsidiary in Northfield, Minn. “Their sales are down 10, 20, maybe 30%, from what chefs are saying.”

Strandquist said some restaurants have been shaken out of the market, but not a huge amount.

“The only restaurant entity that’s increasing in sales is Buffalo Wild Wings, which had headquarters here,” Strandquist said.

He’d heard a report that the company’s revenues were up 38% from the previous year.

“Pretty much everywhere else we’re hearing doom and gloom,” Strandquist said.

In the spring of 2008, Upper Lakes Foods opened a distribution center in Northfield, Minn., that is now devoted specifically to produce and other fresh items. The location is the headquarters for Superior Produce and Specialties.

“Our focus in our operations is to sell the restaurant trade in Minnesota,” Strandquist said.

Strandquist said Upper Lakes Foods was working to attract new produce business in the Twin Cities market but that the concern was the Cloquet facility was too many miles from the metropolitan area.

“We decided to have a separate entity — separate trucks, separate logo,” Strandquist said. “And now we’re able to service the cities much better than we had.”

Strandquist said the company has three salesmen and seems to be acquiring a couple of new accounts per week.

“In a market that’s pretty depressed, we’re filling two trucks and looking to fill another one,” Strandquist said.

The main problem in the foodservice supply business right now is margin erosion because of the competitive nature of the business, propelled by the state of the economy, Strandquist said.

“I was produce manager at U.S. Foodservice before here, and I thought it started to affect them in 2007,” he said.

Restaurant business is on the rise for Co-op Partners Warehouse, the distribution arm of Minneapolis-based The Wedge Co-op. Tom Rodmyre, warehouse manager, said in the last year and a half the warehouse has gone from distributing to five restaurants to distributing to 20. The company supplies almost exclusively organic produce.

“What happens with organics is produce is kind of cost prohibitive for chains to be big in organics,” Rodmyre said.

Rodmyre said prices on organic produce fluctuate throughout the year because availability is not always year-round.

For restaurants to have organic produce on their menus, it is important that they be able to make changes accordingly, something that is more difficult for multiple unit chains.

“So it’s pretty much chef-dictated,” he said. “They can look at our price list on a Monday or Tuesday and adjust to that. So, the chef isn’t locked into a menu.”

Superior Produce and Specialties is supplying more lower-grade fruit, Strandquist said.

“I think you’re seeing lesser grades and seeing specialty and organics demand down,” Strandquist said. “It’s still there, but there’s less demand.”

In order to keep costs down and combat the recession, chefs are using more red vegetables and playing around with less expensive items on their plates, Strandquist said.

“Chefs are trying to find ways to reduce their cost of goods,” Strandquist said. “They’re doing more comparisons, pricing out weekly. It’s more competitive.”

There is hope in the restaurant industry, though. Paul Piazza, president of Minneapolis-based Minnesota Produce Inc., said there are a few large-scale construction projects going forward.

“On the west side of Minneapolis, it’s a long way from being completed, but I’m sure there are going to be a lot of restaurants,” Piazza said.



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