That's what Jeff Braverman, president of Hawkeye Foodservice Distribution, Inc., Iowa City, Iowa, has been doing to grow business during his 10-year tenure at the helm of the distributorship.
"If you're one distribution center, you can only drive so far and grow your business. There comes a point of diminishing returns from a transportation standpoint and from the ability to take care of problems and issues that arise, when you're more than three or four hours away," Braverman explains.
Braverman launched two expansions since 1992 that were spearheaded by opening a 65,000-square-foot distribution center in Danville, IL, and, with the acquisition of Draper Foods, an equally large facility in Fairmont, MN. According to him, the centers gave Hawkeye "the capacity and ability to go to areas where there are large concentrations of people." Braverman points out that investing money in developing the Iowa City distribution center would not have been cost effective because it would have required long hauls to serve customers in nearby states. The Danville facility, which is located some 120 miles south of Chicago, for example, can easily handle business commitments in the Windy City as well as Indianapolis.
"We're not going to invest dollars in Iowa City because the economies of scale are such that when we are driving four to six hours, it's awful hard to make money," adds Drew Beck, vice-president of sales and marketing. "Real growth and real profit has to do with how many miles you drive and how much you're paying for gas."
While business has not been good, Braverman and Beck are not discouraged by prospects because based on their market share, they know that they haven't tapped all opportunities. In Beck's words, they want a three-to-four-hour radius around each distribution center to fully capture their capacity. "The trend that we see in the industry makes us feel good about our business model now. Our business model is centralized purchasing, centralized accounting here in Iowa City, at the corporate office. Then we look to have distribution plants in the marketplaces, so that we're cutting down on the miles," Beck says. "Our business model is to continue to grow, look for opportunities to expand in different geographies that are drivable distances to Iowa City so that we can still be hands on in management and grow our corporate culture as we go along."
Hawkeye's expansion strategy has also overcome another industry trend that Braverman has spotted: the corporate dead end, whereby independent distributorships grow to a certain size with one distribution center and then sell out rather than expand by submersing family or ownership in additional risk by building a second distribution center.
Hawkeye Foodservice was incorporated in 1952 by David Braverman and his son, Dick, the current president's father. Jeff Braverman initiated a successful leveraged buyout of the company from his grandfather's family in 1992 that solidified his presence in the foodservice business. Hawkeye, with 80 percent street sales, was 30th on the ID Top 50 list with 2001 sales of $147.6 million, which represented a drop in one place since the previous year.
"In the past two years we showed a little less than 2 percent decline each year. In the previous two years we showed 20 percent-plus growth each year," Braverman says. By the recession of the first quarter of 2001 the distributorship was managing for profitability. "We were either trying to increase penetration or make decisions not to do business with customers based on their contribution to our bottom line. We were catching our breath in 2001 and in 2002 we simply didn't feel comfortable based on the economy investing significantly in new people, new power units, new trailers to go out and get the business," he recalls.
However, echoing comments by his colleagues, Braverman is looking for 2003 "to be a break out year" and he expects sales to grow 7-9 percent. "We have a battle plan, fairly well laid out, and we're also opportunists. The growth that we are planning for 2003 is all street growth. We are very much a street-driven company, and that percentage will grow this year based on our projections," he boasts.
While he declined to reveal his battle plan, Braverman did explain why he is an opportunist: "Sometimes you have to take what's thrown you way and be flexible and see how it fits into your plan even if it's something you have not anticipated. That's one of the benefits of being an entrepreneurial-type organization and being independent."
Stating that Hawkeye has a close partnership with its vendors, Drew characterizes the distributorship as a branded house. "We want to be a branded house because our competition is not. We look at the two nationals and see that they go to market as private-label houses. We see just the opposite in the marketplace. Being 80 percent street, we see a reaction to that. People want specific brands and that's how we're going to market," he notes.
Since the last ID Top 50 survey, Hawkeye has added five DSRs for a total of 65 and, according to Beck, "we're always in the hiring mode." The company doesn't offer its sales reps any special incentives other than their commissions, which "motivates them," says Braverman.
"I think the type of DSR that we hire has experience. We typically don't hire someone fresh off the street or just out of college. We look to our reps to educate their customers. All our marketing pieces are geared toward education as far as looking at your menu, redoing your menu, costing out your menu, looking at your average check size, increasing the number of covers you get. We're always trying to promote the business of the restaurant industry," Beck adds.
Hawkeye's affiliation with UniPro, DMA and SEFA boosts its ability to help independent operators, secure new chain accounts as well as distribute equipment and supplies. "A lot of companies are broadliners, but the smallwares and equipment is something they leave off the truck. That is something that we are trying to lead with and take advantage of," Braverman points out.
The two executives were eager to express their concern that their biggest challenge this year will be to help their customers thrive. With consumers leery about increasing discretionary spending, questions remain about the pace of their dining out. "Our whole focus here at Hawkeye is that we're street driven so all of our programs and promotions, the whole company culture is based on partnerships and relationships with our customers. We want them to be healthy and we want a larger and larger piece of their business," Braverman says.
But when asked about further expansion or acquisitions, Braverman merely replies: "We're opportunists."
Take care of customers first
Hawkeye Foodservice Distribution's policy of taking care of customers first and then asking questions to fix any problem has endeared it with its accounts. "We want to have systems and operations that are efficient and effective. We don't stand around and analyze why something is screwed up when the customer needs to be taken care of," says Jeff Braverman, president of the distributorship. One of its customers, Monical's Pizza Corp., a 50-unit pizza chain based in Bradley, IL, name Hawkeye Vendor of the Year due to its:
* Quality of products
* Correct delivery timing
* Product consistency
* Product temperature at time of delivery
* Reasonable pricing
Hawkeye has maintained a 99 percent order fill rate and a 99.5 percent on-time delivery record for the 21 stores that it serves in central Illinois. They provide basic paper products, sauces, cheeses, pastas and meat.
"Hawkeye Foodservice has been a remarkable partner since they started working with on eight stores in 1997," comments Harry Bond, president of Monical's. "Their commitment to our business and our people has just grown with the time we have worked with them" Bond also cited the effort of Larry Fields, Hawkeye's program sales representative, who "does whatever it takes to make sure our teams have what they need, when they need it."