Easy Does ItChoosing a distributor that's right for you
By Jeanette Hurt
A good distributor of dry goods may not guarantee the success of your coffee establishment, but a bad distributor can practically break you. “If you don’t have to worry about your supplies, then you can focus your efforts on growing your business,” says Don Eckles, president of Harvest Roasting and Coffeehouse in a Box in Omaha, Neb. “You need to work with someone who knows the business better than you do so you can get on with your business. You want somebody who can help you with your business, not just somebody who sells products.”
And it isn’t just the product selection or the price that matter. “There are many factors that go into selecting distributors,” says Jim Piccinich, Internet sales manager for 1st-line Equipment in Manalapan, N.J. “The matrix of decisions should include quality, service and price, with relation to the acquisition of all the items that are capitalized or expensed. In other words, [you should follow] the same parameters for the purchase of the build-out of the facility and for the daily operations of the coffee shop or stand.”
Price is often the first consideration in selecting a distributor, and now, with rising fuel costs and the almost ever-present add-on of fuel surcharges, it is an issue that even well-established business owners are grappling with. “This is a growing issue for all of us, whether we’re on the wholesale or the retail side of the business,” says Randy Adamy, co-owner of Red Mountain Coffee Roasters and O’Henry’s Coffees in Birmingham, Ala. “Because of the cost of getting things from point A to point B, everyone is having to re-think their strategy.”
The cost formula or price equation varies for each business. And the bottom-line price of goods isn’t always the real price in the end. “There are soft costs that you don’t always see in the bottom line,” says Jay Weller, owner of Barista Pro Shop, which is headquartered in Denver and has a warehouse outside of Boston. “If you are driving all over town to get your goods, there’s wear and tear on your vehicle, and it definitely takes more of your time. Every minute you spend on [getting goods] is time you could be spending promoting your business, getting more people in the door, and that’s critical. Saving a couple of pennies on the cost side isn’t as impactful as getting a few new customers a day.”
Matthew McClutchy, owner of Milwaukee’s Anodyne Coffee Roasters, says that if price is your only consideration, it’s going to take a lot of work. “If you’re the kind of business owner who is always looking for the very best possible price, you’re probably going to end up with six or seven distributors, and that’s more time consuming, and it takes a lot more work,” McClutchy says. “In some cases, it’s easier to pick one distributor, develop a relationship and get a fair price on everything.”
Cost of goods should never be the only determining factor in choosing a distributor. “Price is important, but it should always be about quality more than price because quality is the thing in the long-term that will determine whether you are successful or not,” says Eckles.
“The price paid for equipment, beans, teas, furniture and other supplies will usually reflect the quality and service to fit your business,” Piccinich says. “The highest price does not always mean the best quality or best service, and on the other end, the lowest price does not always mean the lowest quality or poorest service.”
Some people choose to save money by going to big-box warehouse stores that deal in bulk, but there are pros and cons to using such stores. “I do pay 25 cents or 30 cents more from my milk purveyor than picking it up at Sam’s, but I don’t have room to store 100 gallons of milk,” Adamy says. “I do have customers who buy my coffee who get their milk at Sam’s. They don’t go through as much milk, and they save that way. If you’re shopping at a warehouse, that gets expensive when you consider your time. What you have is the cost of your time, and it takes you an hour or two hours to make a round trip to go to one of those. That means you’re out of the store or someone else is covering for you, and in the end, it may not be priced as good as it seems.”
Most experts advise against solely using a warehouse store as your purveyor of dry goods. “One disadvantage to using a conglomerate is that while they may be bringing the main players of some of the best products, they don’t offer the whole product line,” says Walter Bateman, owner, president and CEO of Java Estate in Wilmington, N.C. “They also aren’t always dependable. I had a customer the other day who called us. They were getting a smoothie mix from Sam’s, and Sam’s wasn’t going to order it again. When that happens, you’re scrambling to find a distributor. We get to know our customers, know what their needs are and try to get them exactly what they need on a consistent basis.”
Customer service isn’t something you’ll find at Sam’s or Costco, and it’s something that a good distributor will be able to offer. “First and foremost, the distributor should work for them—they don’t work for the distributor,” says Kevin Tuttle, founding partner at Everything Coffee & Tea in Alpharetta, Ga. “All too often, this relationship gets turned around backwards. I know our customers look to us as a partner, somebody who’s there for them, working in their best interest, sharing new ideas and better ways of doing things. I know our customers look to us to share what’s new, what’s innovative.”
Weller suggests that the first course of order in checking out a distributor is to find out the basics—how long they’ve been in business, what kind of reputation they have and whether they have enough variety that you can one-stop shop if you want to. Then you need to find out the basics of their shipping: how do they ship, do they add fuel surcharges or do they help pay for shipping? Once you find a distributor you think you like, Weller suggests a try-out. “Even if you are dealing with us, I would encourage people to place a small order to see how things work,” Weller advises. “See how the product arrives. Do they ship it quickly? Do they take good care of the product? Don’t go nuts and order $700 on the first try. Instead, order half a dozen bottles of syrup. With your try-out, you can see how reliable a company is.”
A good distributor can keep your customers from experiencing occasional inconvenience. “Your customers should never see a blip on the screen, and you should never have to tell a customer that you’re out of stock on anything or that it’s on back order,” Tuttle says. “That’s our responsibility, and we need to earn your business every week.”
Two of the big questions facing coffee establishment owners are: Do you use one or several distributors, and do you use local or go with an Internet purveyor? “With a one-stop shop, a proprietor is placing more eggs for the success of the business in one basket,” Piccinich cautions. “Also, this makes that one-stop supplier of mix products more easily available to the competition. However, choosing too many suppliers will add expense in managing invoices, payments, receipts of ordered items and reconciling supplier accounts.”
Bateman says the number of distributors you use depends on what you directly need for your business. “It really comes down to how many different products you use and how many distributors carry those products—that will determine the number of distributors you use.”
As to whether to go local or go Internet, most providers now offer Internet ordering service, as well as the more traditional phone and fax methods. “We designed our Web site with the wholesale customer in mind, and people can order when it’s convenient to them, but we still have customers who like to call in their orders or talk to a particular person and ask a couple of questions,” Tuttle says. “The bottom line is we work for them; whatever’s most convenient for them is how we do it.”
“The Internet has made it easy for people to get whatever they need, and since we’re based in Omaha, we can usually get products within just a day or two,” Eckles says.
“Better online establishments are better prepared to solve problems over the phone more quickly, whereby a local agent may be ‘on the road’ and not able to answer the phone,” Piccinich adds.
Online ordering is a good thing, but sometimes it’s better to first call in your orders. “You might want to develop the relationship before ordering before you rely on online activity,” Bateman suggests.
But going local also has its advantages. “The advantage to buying locally is that locally, you can put a face to the order, and if you have trouble, if you have an issue, you’re not e-mailing—you know who you’re dealing with,” McClutchy says.
The end question, Bateman concludes, is this: “Who’s going to get you the product you need when you need it, and at the best price?”