The restaurant trade has always been — and will continue to be — a big part of the sales mix for California/Baja tomato shippers. However, with the bumps in the economy, sales to the sector are not as prominent as they once were.
Foodservice demand clearly is off, said Jeff Dolan, field operations manager for DiMare Newman, Newman, Calif. “As a result, you’re seeing the depressed market conditions we have,” Dolan said.
Foodservice orders are down about 20%, because buyers want to minimize shrink, said Cory Puentes, director of Northern California for Interfresh Inc., Orange, Calif.
“Instead of ordering three or four pallets, they’re ordering two or three,” Puentes said.
Despite the slowdown, he still calls the foodservice end a steady customer.
“There’s your typical downturn in the summer with kids away from school,” he said. “Foodservice requires certain specs and sizes. But for the most part it comes down to giving them value.”
John Lupul, general manager of Ace Tomato Co. Inc., Manteca, Calif., said he also is seeing a reduction in movement of tomatoes to foodservice.
“It’s been tough. We’re here to work together, but demand is really slack,” Lupul said. “It’s a competitive market and they are requesting, because they’re getting hammered on their end, that they need product at low cost. There’s obviously a point that we can’t go below.”
With restaurants going out of business, Lupul said that making sure you get paid is a key concern.
“Everybody worries about that. You watch your accounts receivables, even with longstanding relationships,” he said. “Some companies fall on hard times and you have to weigh your risks every day. In this economy you can’t sell blindly.”
To counteract the effects of the poor economy, some companies resort to insuring or selling their receivables, but Ace Tomato has not gone that route, he said.
Bob Schachtel, sales manager for Expo Fresh LLC, San Diego, said that his company cut back in volume in anticipation of having less foodservice business.
“But, I think we, as an industry, could have cut back more,” Schachtel said.
“If Obama doesn’t get the economy out of the doldrums, there’s nothing you can do to entice foodservice,” he added. “Their business is way down, especially with the amount of restaurants going out of business.”
Oceanside Produce Inc., Oceanside, Calif., sells into foodservice on occasion, but most of the company’s focus is on the retail side, said Bill Wilber, president and director of marketing.
“If there’s a big shortage of tomatoes, foodservice will use our product, but it’s not the focal point of our business,” he said, adding the caveat that a good portion of his tomatoes do end up in the hands of foodservice, through sales to wholesalers and other distributors.
With big size beefsteaks for sandwiches and hamburgers, foodservice is a big part of the business for Deardorff Family Farms, Oxnard, Calif., said sales manager David Cook. But, like others, Cook characterized foodservice demand as “slow and quiet.”
“I know the restaurant business is tough for the high-end restaurants. The more reasonable priced restaurants are doing OK, or at least holding their own,” he said. “It’s kind of like the real estate market. The sales on small and medium-sized homes are OK, but there are too many McMansions on the market.”