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Chicago vendors try to fill foodservice void with retail gains

CHICAGO (Dec. 11, 2009)—Perhaps the biggest statement of how the foodservice sector has suffered during these difficult economic times in this area is how many distributors say they're focusing more of their business in retail.

Which is most of them.

"The foodservice segment has suffered, so we've tried to make it up with retail," said Greg Mandolini, president of Mandolini Co. Inc. at the Chicago International Produce Market. "And even then there's still a shortfall from what sales were. We've got to tread water for a while and wait for the economy to get back."

Dave Watson, president and chief operating officer at Strube Celery & Vegetable Co., also at the terminal market, said the number he's heard around town is that foodservice is off about 25% in the last 12 to 18 months.

"We sell to companies who sell to restaurants," Watson said. "(I think foodservice is especially off in) expensive items. These days, people are buying staples. And the (profit) margins have slipped because we're trying to keep our customers competitive."

Many distributors aren't dealing as much with foodservice companies today because they say it's more difficult to ensure timely payment on accounts receivable. It's not necessarily the foodservice companies' fault, they said. With the large numbers of restaurants going out of business, foodservice operators are having trouble collecting accounts receivable as well.

"Cumulatively, those hit hardest in accounts receivable are small jobbers," said Mark Pappas, president of Coosemans Chicago Inc.

Pappas said he's noticed restaurants in his area adjusting their operations to weather the current economic storm.

"I've noticed restaurants shortening their menus," he said. "You're seeing less steak, more chicken.

"I have a friend with a sports bar, and he's limiting his menu to what he can buy. He's keeping it simple, cutting down on staff."

Mike Ruffolo, salesman at Michael J. Navilio & Son Inc., said the foodservice companies that are successful at collecting the money owed them are probably doing OK.

"No one's rocking the (business) world right now, but if anyone had an inkling of trouble before, it's foodservice," he said.

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