by Terrie Ellerbee/associate editor
Affiliated Foods in Amarillo, Texas, would like to see its shareholders—grocery retailers—purchase products for their in-store bakeries/delis and sit-down restaurants from the cooperative. Grocers own the cooperative, so they would in effect be buying from themselves, just as they do when they buy for their retail stores.
The cooperative owns a separate foodservice company that serves hospitals, schools, restaurants, prisons and other accounts. Randy Arceneaux, president and CEO of Affiliated Foods, sees no reason why the subsidiary can’t also serve the grocery retailers who belong to and own the cooperative.
“If we can service a full-fledged steak restaurant that serves 400 to 500 patrons a day, we can service anything a bakery/deli has in a supermarket,” he says.
Arceneaux sat down with The Shelby Report’s Gordon Lowry to talk about the potential for retailers and the cooperative. Arceneaux was fresh off the Affiliated Spring Food Show, which this year spotlighted the company’s foodservice products and services. Affiliated is hoping to get retailers who already are members of the cooperative to use it for their foodservice needs.
“Everyone is starting to focus more on deli and foodservice-type businesses within their stores because the consumer is dictating it,” Arceneaux says.
Buying a meal at retail is appealing to younger consumers and empty nesters, he says.
“They are finding in most cases it’s more cost-effective to go pick up a meal already prepared than it is to prepare the meal,” he says. “So there are a lot of opportunities for the supermarkets to continue to develop and grow the bakery/deli, hot food line or bar, cold sandwiches and other offerings you’re putting out there for the consumer to purchase.”
Affiliated cooperative members can buy foodservice products at grocery markups vs. foodservice markups, Arceneaux says, calling the difference “very distinct.”
The cooperative has been working on getting more retailers to make the switch and use Affiliated Food Service for some time now. Executives would notice on visits to their members’ retail stores that trucks from other foodservice distributors were pulling up to unload.
“My belief is that we have anywhere from $15 million to $20 million of foodservice business on the retail side through Affiliated that we’re not tapping into because of competition,” he says.
Mike Snyder, director of Affiliated Food Service, believes the sticking point is department heads who continue to use other distributors. Retailers haven’t made foodservice a priority because they see departments doing well enough and leave decisions up to the department heads, so the key is to educate retailers, he says.
“They’ve got to do their homework and realize that they’re buying product from 10, 15 to 20 percent cheaper, because they’re buying it at member pricing,” Snyder says. “The people they’re taking orders from, from ‘Brand X,’ have their inside margin, plus their commission.”
Retailers are catching on as grab-and-go foods grow in popularity. Snyder sees increased interest on the part of retailers firsthand.
“At our show, many people walked up and said they want to expand their delis,” Snyder says. “This company hasn’t really put a huge push on seeking the foodservice business from its existing retailers. It’s overwhelming to me that our stockholders—retailers who own this company—don’t buy the entire package.”
Snyder says that along with better pricing, Affiliated can help cut and control food and labor costs thanks to the quality of pre-made offerings like pot roast, lasagna and meatloaf that are available.
It all comes back around to retailers saving money when they buy from Affiliated Food Service. Those purchases help strengthen the cooperative, which in turn helps the retailer, who is a shareholder in Affiliated Foods.
“Foodservice has the products that retail needs for the delis,” Arceneaux says. “Retail buys the product at the lowest price they can, plus it’s a rebate-able value to them at the end of the year, and their extra volume helps foodservice to be more competitive in the restaurant arena.”
Snyder is happy to see the attention being paid to foodservice.
“I’m excited about where Randy Arceneaux is taking our company and really working with our Affiliated Food Service division,” he says. “He loves foodservice, embraces it and understands it. It was his vision on this first show bringing the foodservice in, and I think this will do nothing but grow. This was our maiden voyage and the next one will be even better. We’re excited.”