Catering equipment suppliers in the UK bring a smorgasbord of well-known global brands into the national market. While this can bring service and support benefits for dealers and the rest of the supply chain, do supplier margins have to be so tight that they are damaging their own businesses?
According to RH Hall sales director Kris Brearley: “Wholesalers can often have to work on very tight margins in order to ensure a margin remains for their dealer.
“Many manufacturers are now willing to offer direct terms to a wide range of customers, including web companies who are often selling to end users. This in turn can mean that very aggressive pricing can be obtained online by the customer, with little margin left for the distributor.
“In order to provide their dealer with a competitive price, a wholesaler will often have no choice but to eat into their own margins. However, many manufacturers do now seem to be going back to basics and addressing this ‘issue’ by reviewing the criteria that their direct accounts meet, as some offer no real knowledge of the product and little or no after sales service.”
Nevertheless, he emphasised: “A good wholesaler should be able to offer many benefits that a manufacturer cannot necessarily provide. Generally, wholesalers will provide a wide range of industry brands, meaning that they are knowledgeable and can offer unbiased, independent advice in many areas of foodservice equipment, whereas a manufacturer may specialise in just one.”
RH Hall itself has a full trade discount structure in place for all its exclusive brands, available to its nationwide network of approved dealers. Furthermore it works with a network of key distributor accounts, who receive additional discounts by meeting various criteria, including taking stock of the supplier’s exclusive brands.
The firm supports its dealers with over £2m stock holding for nationwide next day delivery and national marketing and advertising for all exclusive brands, investing upwards of £200,000 a year.
At pizza equipment specialist Linda Lewis Kitchens (LLK), all of its products are imported, with the price lists created on the back of its buying prices. MD Linda Lewis commented: “Our manufacturers would not deal with individual companies in the UK. We offer a service to the dealers of handling the stock, the warranty and the back-up service and spare parts, affording the dealers the luxury of buying equipment that is delivered to the doorstep of the customer with peace of mind. This is not something the dealers would get from purchasing direct from a manufacturer outside the UK.”
She emphasised: “If a dealer makes a purchase from abroad and there is an issue with the equipment, who is going to sort it out for them? They need to be able to contact someone in the UK who has the technical knowledge and expertise to speak to the site and, if necessary, arrange an engineer to attend with the part to do a first fix.
“The end customer expects a service that completes the job in a very short timeframe so they are back up and running again. There are some manufacturers that operate through smaller dealers and we hear horror stories of customers waiting up to 6 weeks to get issues resolved. In the meantime the customer cannot operate and the dealer does not have the correct procedures in place to deal with the issues.”
LLK offers 2 years parts and 1 year labour warranty on our products, with Lewis detailing: “Our warranty costs are 0.03% of our turnover, which is amazing. We stock the parts in the UK and in 99% of cases we do a first fix within 48 hours.”
Elsewhere, Foodservice Equipment Marketing (FEM)’s commercial director Mark Hogan believes: “We act as the bridge between our distributors and overseas manufacturers – and we ensure that we have great relationships with both. For distributors it means they have direct, easy access to technical support and don’t have to deal with issues such as time zones, language barriers and international freight. Dealing with a company like FEM also means they can access multiple brands from the one source.”
The supplier has a sales team throughout the UK and Ireland with a primary aim of supporting its distributors. It runs training and other events to support distributors too, such as offering live demonstrations of its newly-added Vector oven at their venues. Plus the firm’s website features trade logins where distributors can order online, check stock, download product information and search by brand or product. Hogan reported that it is currently upgrading the website further to expand the features it offers to distributors.
He feels: “The strength of our relationship with distributors is reflected in the fact that they have voted us Catering Insight Light Equipment Supplier of the Year twice in the last 3 years.”
Over at Andover-based Blue Badger Wholesale, it imports stock from all around Europe. Alison Harvey, sales office manager, said: “As such, we can negotiate better pricing from European manufacturers as well as cheaper transport to the UK, which allows us to pass on discounts to our dealer network.”
On the subject of margins, she commented: “Everyone in the industry are working to tighter and tighter margins, and wholesalers are no exception. Although manufacturers may have more margin in individual products they also tend to have a smaller offering and less volume ultimately means higher costs. Servicing hundreds of small accounts can be costly and you need the systems and set up to be able to do so efficiently. Manufacturers who utilise wholesalers in the best way reduce their costs by passing their smaller value enquiries through us.”
Harvey feels that dealers benefit from Blue Badger’s expertise and recommendations across many brands and ranges. “We understand both the positive and negative aspects of a huge range of units and are able to provide dealers with advice when it is needed. We also make it easier for the dealer to upsell different products.
“Dealers often approach us with unusual requests for units that are not easily accessible to them or their customer. There may well be a factory lead time but we already have the relationship and terms agreed so we can get the order moving faster.”
Blue Badger is currently in the final stages of creating its new website, which will aim to allow dealers to access their account information, live stock availability, pricing, and order progress, 24 hours a day.
Newcomer to this country’s market, Hendi UK, offers dealer discounts on all Hendi products. National sales manager Kenan Koymen revealed: “Unlike many other suppliers, we have a standard discount policy across the board which means that we don’t discriminate against the smaller dealers because of their size or turnover. Hendi UK wants to give all dealers a chance to help us build the brand and we think that the best way to do this is to be very honest and straightforward with them by creating a level playing field.”
He believes that suppliers have to work on tighter margins than manufacturers, as the manufacturer has its own margin requirements built into the sale price. “As a result, the margin that suppliers/wholesalers can make, whilst still remaining profitable in a very competitive marketplace, is constantly under pressure.”
Koymen commented: “The main benefit to using a supplier/wholesaler, especially one like Hendi UK with over 4,000 products in its portfolio, is that we can offer a one stop shop for all a customer’s equipment needs. So, instead of dealing with a whole host of different manufacturers – each with its own point of contact, pricing and discount structure and terms and conditions – distributors have one point of contact, a uniform discount structure and create fewer purchase orders.”
Hendi UK is supporting its growing dealer network in the form of onsite training days, demonstrations, sales literature, marketing support, service and maintenance back-up, downloadable resources and a 2 year parts and labour warranty on all products as standard.
Ascentia Foodservice Equipment’s route to market is geared via the dealer network too. Development chef Scott Park reported: “We have a very attractive and dealer-focused pricing structure to support them. We have a wide-ranging and varied equipment portfolio from standard boxed items with published list prices and generous dealer discounts, through to bespoke and custom-built equipment having special dealer net pricing.”
However, he added: “Unquestionably, margins are tighter than we would ideally wish them to be and perhaps not as generous as some may perceive, and there is of course a very good reason for this. We do far more than simply shift a box.
“We offer an extensive range of equipment, backed up in some instances by industry-leading warranties and add a tremendous amount of additional value to the process, benefiting both dealer and end user alike.
“This includes the promotion and marketing of our brands throughout the UK, including at exhibitions and trade shows, equipment demonstrations in our fully working test kitchen with two full time development chefs available to both dealers and end users, onsite client training where required, plus design assistance and liaison on specialist bespoke items.
“Clearly all of this comes with a cost, which has to be built into the pricing structure. European and other manufacturers selling direct into the UK market simply cannot claim to offer the same level of service.”
Park concluded: “The UK market is unlike any in the rest of Europe and as a specialist equipment supplier based in the UK we have a unique understanding of this market, something a manufacturer based in other parts of Europe won’t necessarily have.”
Wholesaler Cater-Bake supplies pizza and bakery ovens and food preparation equipment to UK dealers at a “substantial discount from our list price”, according to head of sales, Steven Lilley.
He added: “Any good supplier and distributor should set pricing responsibly, but also have a substantial system in place for customer support, new product research, staff training and other features that will benefit the customer in the long term.
“Before we complete a sale at Cater-Bake, our team will always ensure that they are open about the details and benefits of our products, offering honest advice on what equipment you should purchase, delving into all technical details and offering straightforward delivery advice. We also offer exceptional after sales care, with full onsite warranty, assisted delivery and optional install.”
Lilley concluded: “Distributors who choose to work with suppliers and wholesalers will have access to more flexible solutions than that of a manufacturer. Suppliers like Cater-Bake have multiple brands to offer, brands that will complement each other with their strengths to give a wider, more robust range.”