Unsurprisingly, food service distributors have grown more consolidated and concentrated in tandem with the sector they serve, too.

According to Amen, the top 500 food service chains comprise 65% of total restaurant sales today.

“To illustrate the growth of restaurant chain sales: the top 100 restaurant chains comprised 51% of total restaurant sales in 2001; by 2011, they were 58%,” Amen says. “Distributors have gained significant market share over the years. In 2005, the top nine distributors had 35% of total food service sales. By 2010, the top distributors reflected 46% of total food service sales.”

For perspective, giant food distributor Sysco cites $42.4 billion of sales in its 2012 annual report; $1.1 billion in net earnings.

In general, there are three types of food service distributors, ERS says:

  • Broadline food service distributors. These are companies that traditionally purchase a wide range of food products from manufacturers and stock these goods in one of their distribution centers. Most broadline distributors offer value-added services designed to meet the needs of single-store restaurants and small chains. For instance, food service operators without the staff to research new products and plan menus may rely on a distributor’s sales representative for assistance.
  • Specialty distributors. These are entities that don’t stock a wide range of products, but operate in niche markets where it’s necessary to have specialized knowledge about the type of product being handled or type of operator being served. For example, there are product specialists for specialty-cut meats, produce, ice cream and coffee. Market specialists serve a wide range of niche operators, such as convenience stores, hotels/motels, and club warehouses.
  • System distributors. These are food service wholesalers that serve a customer base consisting mostly of chain restaurants with centralized purchasing and menu development. Individual operators within chains may not require the value-added services provided by a broadline or specialty distributor, such as obtaining information about new products or assistance in developing and preparing new menu items.

Doing it right

Once a calf leaves the ranch, or a fed steer loads out of the feedlot, producers have no control over how the beef will be handled. By knowing more about the process, though, Henger says you have keener awareness of how vital everyone’s role is at each stage.

“It’s just so important that each step in the supply chain is done right. It’s critical that each one does their job right so the next one in line can concentrate on what they do,” Henger says. “Everyone relies on everyone else before them and after them to do the right thing.”