Cash or delivery?

Saving time and cutting costs are priorities for just about any business these days, and shopping for supplies can be both time-consuming and expensive. As a result, delivered wholesale services are booming, but they're not the best choice for everyone.

Some wholesalers require a minimum order, while others charge for delivery, making them uneconomical for smaller businesses. But for regular customers, the savings can be considerable.

It's not just about price, though. Building a relationship with the right supplier can bring benefits such as flexible service, same-day emergency delivery service and advice on products and menu planning.

The wholesaler's view

Ian Johns, commercial director for non-food wholesaler King UK, says a delivery service is important for the busy caterer. "Cash and carry is open only when a caterer's business is open. And nipping down to the cash and carry isn't free - a small business may have to close if there's no one else to mind it."

There are other advantages too, Johns says. "We act as the link between operators and suppliers. If someone has a floor-cleaning problem, we can put them in touch with the supplier to help. And since we service only the catering, leisure and licensed trade, all the products are made for the trade and packed accordingly. To be on our books, a supplier must be recognised and any product needs to have an established reputation."

The minimum order value for free delivery is £50, and King offers extras such as a personalisation service for printed napkins.

Wholesale customers increasingly have the choice of ordering online, as well as via a hard-copy catalogue and telesales. King has just launched a trial mail-order business, too.

The case for pick your own

Pioneer Foodservice in Carlisle offers both a cash and carry and wholesale delivery service. Director Graham Jenkins says both have their place.

"We deliver to hotels and restaurants, but lots of smaller traders such as cafés, sandwich shops and B&Bs don't buy a lot and find it easier to come into the cash and carry. There's no real price advantage to coming in because we don't charge for delivery on the wholesale side, but cash and carry customers enjoy the social element.

"We also have lines brought in especially for cash and carry, with more attractive packaging, smaller sizes and so on. The meat counter tends to be especially popular. A small pub owner selling a few steaks or a Sunday roast usually prefers to pick their own."

Jenkins points out another obvious advantage to cash and carry shopping. "If you pick your own fresh food, you get exactly what you want," he says, "and there's no surprise substitute for an item that's out of stock."

But he believes the services complement each other. "Often a customer uses both. If a coach-load of people turn up and the caterer realises he hasn't got enough desserts, he can pop down and buy food service-orientated products and put them on his account."

When it comes to buying frozen or chilled goods, however, delivered wholesalers win hands down. One of the advantages of having frozen food delivered is that it arrives in a temperature-controlled van. Increasingly, though, caterers are asking for a one-stop delivery, where chilled, frozen and ambient products arrive together and are detailed on a single invoice. The wholesaler's capacity to deliver such a service is often hindered by lack of space or split lorries, so it's worth checking exactly what kind of service is available.

Discounts on list prices also vary considerably, with most wholesalers negotiating deals with each customer and offering terms such as a discount on a top-20 list - the more chips you buy, the better the deduction at the end of the year.

The customer's view

Jonathan Denby, managing director of Lakeside Inns, used to be a regular cash and carry customer 12 years ago when his business had a relatively small turnover of £200,000 per year. Now that it has grown to include the 34-bedroom Newby Bridge hotel and 37-bedroom Damson Dene hotel in the Lake District, with a turnover of £2.2m, Denby uses only delivered wholesale products.

Lakeside Inns is a member of Beacon, a purchasing group for hoteliers which negotiates special prices with the big nationwide suppliers such as 3663. "That means we can take advantage of the best prices available to the big companies, and then use them to get a good deal from local suppliers," Denby explains.

Membership fee

There's no minimum size required to join Beacon, but the £700 annual membership fee means it's generally not worth small businesses joining.

In Denby's case, membership more than pays for itself, because he gets discounts from the big brewers as well as on foods.

"Discounts can vary considerably," Denby says. "On soft drinks, for example, a small operator might pay 50p for a bottle of orange, which is then sold for £1. A bigger operator might be paying only 12p for the same product.

"Cash and carry is excellent for the small operator, but inappropriate for medium and large businesses," Denby comments. "Our butcher's bill alone is £10,000 a month and it would take an entire day out of the week if we were to buy the meat ourselves."

Did you know?

\ The UK food service market is worth £8.5b.
\ Delivered wholesale represents about 53% of the market, while cash and carry represents 13%.
\ The difference is greater for frozen food, where delivered wholesale represents some 72% of the total frozen food service market, compared with only 7% at cash and carry. This reflects the health and safety issues surrounding transporting frozen goods to the catering outlet.
\ For fresh and chilled, delivered wholesale accounts for 53% of the market and cash and carry 7%.

Source: Dr Peter Stutchbury, head of Research at Brakes
Data from Foodservice Intelligence

Strength in numbers

Caterforce is an independent network of food service wholesalers. It aims to provide the kind of flexibility and service associated with a local supplier, at the same time as pooling resources to offer the cost benefits and choice of a large-scale national wholesaler.

The group has six wholesaler members throughout the UK: Philip Dennis Frozen Foods in Devon; Hunts Frozen Foods in Dorset; Kent Frozen Foods in Kent; Lynas Frozen Foods in Northern Ireland; Pilgrim Frozen Foods in Lincolnshire; and Pioneer Foodservice in Carlisle.

Caterers can be any size to use the network, but members will be given a minimum order value that varies depending on the region, averaging at about £40. Products also differ according to the size of the wholesaler.

Caterforce claims there are several main advantages to using a wholesaler:

\ Orders are delivered to your door on a convenient day.
* Orders can be placed over the phone, and can be added to if anything has been forgotten.
* There's one delivery, one invoice and one bill to pay.
* A small minimum order value is needed.
* It's convenient.
* Prices are competitive.
\ It can give advice to ensure products meet specific requirements.

Contacts

Beacon
Tel: 01904 695405

Caterforce
Tel: 01625 505929