What is in this article?:
- How Smaller Management Companies Can Thrive
- Hard work can pay off
Starting a contract company sounds easy enough, but competing with the big boys isn’t. Here’s how three companies have succeeded.
The hero of Jonathan Swift’s famous tale, Gulliver’s Travels, once found himself in the land of Brobdingnag, home of 70-foot tall giants. He had to step lightly and quickly to avoid being squashed underfoot.
That’s the way numerous local and regional foodservice contractors survive and thrive in the land of their 70-foot tall national and international competitors.
Gulliver escaped from Brobdingnag when a giant eagle scooped him up and dropped him in the ocean, where a passing ship rescued him. There’s no giant eagle to rescue the smaller foodservice operator. He or she has to use skills, strategy and strong customer relations to keep and gain business in the fiercely competitive corporate foodservice marketplace.
“He or she” is the right phrase. Nearly all of these companies are privately held, usually led by one or more founders who had left a larger contractor to pursue their own vision. But they hardly fit the image of a “mom and pop” business. A company doing ten to even a hundred million dollars annual sales is small in the contracting world, but is the employer of hundreds of people—not exactly a candy store.
How do they do it?
Finding the gaps
“Hit ’em where they ain’t” said Wee Willie Keeler, the 5 ft.-4½ inch 1890s baseball legend. His 1898 batting average of .385 proves his strategy was sound.
Café Services of Londonderry, NH uses the same approach, aiming for corporate locations with 500 to 1,000 employees, says Brian Stone, founder and CEO. “We go into smaller locations the big boys can’t afford to go into.”
From a start in 1993 in the metro Boston market, Stone’s company has grown to $35 million in sales with accounts from New England to Delaware. About half of his business is with corporate clients; the balance is in public schools, summer camps and senior dining.
“We win clients who are looking for something very specific,” he says. “We beat them [the major companies] on quality, service and purchasing.”
But he’s able to compete toe-to-toe with the largest competitors when the circumstances are right. Stone cites one large, multi-location account where his company operates four dining facilities, having succeeded a national contractor at two of them. He says his company has recently been awarded a fifth site after a competition with another national contractor who had offered the client a substantial “signing bonus”—up-front cash—just as a professional sports team would offer a promising rookie.
Hitting them where they ain’t can take another form: concentrating in a market niche and territory. Developing a strong reputation among a specific type of client in a limited geographic area can be both profitable and enable the small operator to compete on a more than equal basis in its chosen arena against larger, more generalized competitors.
By specializing and limiting the number of clients, the company’s leader can have a direct hand in each operation, creating strong client relationships and ensuring meals and services live up to the leader’s standards and vision.
That’s the strategy of Food for Thought, a Lincolnwood, IL, company serving clients in Chicagoland and nearby areas of Wisconsin and Michigan. Organized as a catering company in 1983, a contract foodservice division, FFT Hospitality Group, was formed in 1989.
“We stay in the higher end [of the market] where the amenity is as important as the price, providing an exceptional food experience.” explains Nancy Sharp, co-founder, president and CEO. “Gracious hospitality and amenities are part of how companies operate now.”
The specialization has resulted in a roster of some 20 clients. That’s not very many, but they generate some $27.5 million in sales—more than $1.25 million per account, well above the industry average. Clients include law firms, museums and colleges.