Challenges In The E&S Distribution Channel

Ready or not, professionals in the U.S. foodservice equipment distribution channel are likely to be confronted soon by a series of unprecedented developments. Here’s a trio of the most important changes we see on the horizon and their probable consequences.

• Domestic equipment manufacturers are facing a growing number of European competitors that are looking to gain entry into the North American market. With the EU community’s current spate of debt crises, bail-outs, diminished growth projections and unemployment levels that dwarf U.S. totals, European foodservice equipment makers are seeing our restaurant industry as holding the key to their future success. The result is likely to be an increase of competitive products in an already over-supplied market, further price pressures and greater need to educate operators about the competitive advantages of manufacturers’ products.

• As the restaurant industry becomes ever more global, and chains and hotel companies recognize growth opportunities in emerging giant markets such as India and China, foodservice design consultants will find it more difficult to prosper from their accustomed mix of U.S.-based projects. This will require facility designers to build partnerships with international businesses, bid against lower-cost rivals for overseas projects and learn to specify kitchen equipment in countries where they’ve never done business before. For a profession that came into being just in the 1950s and has been primarily based on small firms with few employees, the challenge of working abroad where future projects are most likely to be is enormous.

• Manufacturers’ reps are in the midst of a collective identity crisis, as they strive to work for their best interests of equipment factories, dealers and their operator-customers. The most market-wise reps are aware that their role in the E&S distribution channel is a murky one and are facing the need to define the ways they add value in the sales equation for all of their business partners. Traditionally low-tech and hands-on, rep firms are now in need of new communication tools and marketing strategies that make sense in today’s increasingly internet-based economy. This will require reps to become more skilled as information providers and operator educators, while still competing successfully in a price-driven market.

When an industry such as ours has stood relatively still for so long, and then undergoes a burst of economic and technological evolutions, the result is the appearance of new problems that go far beyond growing the top line to blacken the bottom. New thinking and new business models are certain to be required.