The U.S. foodservice industry is facing one of its most challenging periods in recent history. With food and labor costs at all-time highs, an increasing number of restaurant closures, and growing uncertainty ahead of the 2024 election, every player in the foodservice ecosystem—from sales representatives to operators, distributors, brokers, and group purchasing organizations (GPOs)—is feeling the pressure. Foodservice manufacturers must navigate these complex dynamics while ensuring they remain competitive and relevant to both chain and independent operators. Here are five reasons why manufacturers must adapt to industry pressures in 2024 and how they can support their partners across the foodservice landscape.
1. Growing Volume and Margins in an Era of Rising Costs
As food and labor costs continue to soar, both chain and independent operators are seeking ways to protect their already thin margins. Foodservice sales representatives are tasked with growing sales volumes in this environment while grappling with administrative burdens and distributor brand competition. Manufacturers must help their sales teams by offering streamlined administrative processes and equipping them with tools that allow them to focus on growth, rather than paperwork.
For foodservice manufacturers, offering pricing models that address rising costs without sacrificing quality is crucial. Demonstrating how their products can help operators reduce waste, optimize labor, and improve efficiency will make a strong case for their continued use, even in a cost-conscious climate. Manufacturers should also ensure they are transparent about pricing and provide options that cater to the specific needs of both chain and independent operators.
2. Supporting All Operators with Differentiation and Value
Both chain and independent operators are fighting to stay competitive as they deal with inflation, higher operating costs, and increased customer demand for value. With restaurant closures on the rise, all foodservice operators are feeling the pressure to differentiate themselves in the market. Manufacturers have an opportunity to provide solutions that meet these needs.
For chain operators, manufacturers can offer consistent, scalable solutions that allow them to streamline operations across multiple locations. For independent operators, flexibility is key—offering multi-purpose products, diverse pack sizes, or ingredients that help them manage inventory more efficiently will resonate. Whether working with a chain or an independent operator, manufacturers need to focus on delivering high-quality, cost-effective products that help operators stand out while managing their costs.
3. Managing Distributor Brand Competition and Trade Spending
Distributors are facing challenges of their own, including rising food costs, shrinking margins, and the pressure to push their private label brands, which tend to offer higher profits. This creates a competitive environment for foodservice manufacturers, who must compete for attention in distributors’ product catalogs.
To counteract this, manufacturers should offer strong promotional support, trade spending, and incentives that align with the distributor’s sales goals. Working collaboratively to offer innovative, in-demand products can help manufacturers secure better positioning and maintain their presence. As the market matures and new opportunities become harder to find, manufacturers must also support distributors by exploring new product categories or emerging food trends that excite consumers and drive growth.
4. Enhancing Broker Relationships Through Communication and Training
Foodservice brokers are vital in connecting manufacturers with operators, yet they often face challenges related to communication, training, and compensation. In today’s volatile market, brokers need manufacturers to provide ongoing product education and clear communication to effectively represent their products in the field.
Manufacturers can support brokers by offering regular training on new product lines, market trends, and selling strategies that account for rising food and labor costs. By fostering a two-way communication channel, manufacturers ensure that brokers are equipped with the knowledge and tools they need to succeed, which, in turn, helps the manufacturers maintain a competitive edge in a crowded market.
5. Navigating Economic and Political Uncertainty with GPOs
Group purchasing organizations (GPOs) play a critical role in helping operators—both chain and independent—lower their costs through collective purchasing power. However, GPOs face their own set of challenges, including concerns about maintaining their reputation, attracting new members, and balancing relationships with manufacturers and distributors. With the upcoming election creating uncertainty around economic, social, and political stability, GPOs are operating in an increasingly difficult environment.
Manufacturers can strengthen their partnerships with GPOs by offering transparent, flexible rebate programs and pricing structures. By focusing on long-term relationships and helping GPOs navigate complex market conditions, manufacturers can ensure that their products remain part of these purchasing networks, which are crucial for cost-conscious operators during uncertain times.
Manufacturer Implications
As the foodservice industry faces historic challenges—including rising costs, increased restaurant closures, and a volatile political and economic landscape—manufacturers must take a proactive approach to supporting all stakeholders. Whether it’s helping operators (both chain and independent) reduce costs, ensuring distributors continue to carry their products, or enhancing relationships with brokers and GPOs, manufacturers have the opportunity to turn these challenges into growth opportunities. By delivering differentiated products, streamlining processes, and fostering strong partnerships across the supply chain, foodservice manufacturers can position themselves for long-term success in 2024 and beyond.
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