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The Trouble With the Foodservice Supply Chain

Businesses that serve food are facing roadblocks that are rarely discussed.

lempert

There are three problems facing food delivery: fragmentation, last-mile logistics and a lack of pricing transparency.

Techcrunch writes that services such as Amazon and Instacart are pushing for our business and attention and thus making it great for the end users. By comparison, food and ingredient delivery for businesses is vastly underserved. The business of foodservice distribution hasn’t gotten nearly as much attention—or capital—as consumer delivery, and the industry is further behind when it comes to serving customers. Food preparation facilities often face a number of difficulties getting the ingredients to cook the food we all enjoy.

We are talking about restaurants, hotels, school and business cafeterias, catering companies, and many other facilities that supply to grocery markets, food trucks and others. U.S. restaurants alone earn about $800 billion in annual sales, according to the National Restaurant Association, while foodservice distribution in the U.S. is $280 billion.

These problems don't make the headlines, mostly because this channel goes through food distributors that are completely fragmented, and the quality of fresh ingredients varies meaningfully from one distributor to the next. Prices fluctuate constantly, typically on a weekly basis.

What’s worse, Techcrunch says, is delivery timeliness, or rather the lack thereof. These distributors each employ their own delivery staff and refrigerated trucks. This important channel seems to be below the radar, and not getting any of the high-tech talent or VC money like Instacart and others.

Why not create a platform that hosts a catalog of products from these distributors, with updatable availability, pricing and inventory? To be fair, there are smaller startups like Forager that are trying to do just that, but the sourcing is limited and not able to supply all the foods and beverages that are needed for foodservice.

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