Kroger Dallas Division goes into Restaurant Supply biz

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Kroger Dallas Division goes into Restaurant Supply biz

Post by pseudo3d »

https://markets.businessinsider.com/new ... 1031334539

An odd choice, to be certain, with Kroger trying to get into the restaurant supply biz. But...I'm not sure about it. First, there's a lot of companies that do the same thing, and Sysco is practically a code word for "bad restaurant" even if it's exaggerated, imagine Kroger. Plus, Kroger trying to diversify (especially when it spent so much effort to get OUT of other businesses) in Dallas with a secondary source of business, is....odd, to say the least.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by Romr123 »

Is there something analogous to Gordon Food Service/GFS and Smart and Final in Texas? Wondering if they're seeing a niche there...
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by storewanderer »

Actually this may be a very good way to leverage the Ocado centers...

If they manage this right, this could be a very significant revenue driving concept for them.

The food delivery trucks like Sysco, etc. are not priced very competitively especially for rural restaurants that do a low volume of purchases. It is not unusual for those restaurants to deal with getting food on their own (drive to the nearest Costco, etc.). I suspect Kroger could offer them lower pricing if they are grouping the deliveries with other deliveries going to individuals.

Many of Kroger's "store supplies" are the same type of supplies restaurants need. Food take out containers, utensils, hair nets, aprons...
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by buckguy »

Many, many chains have done some version of this in the past and it usually hasn't last long. Some of this niche is covered by wholesale clubs.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by pseudo3d »

storewanderer wrote: April 5th, 2022, 11:21 pm The food delivery trucks like Sysco, etc. are not priced very competitively especially for rural restaurants that do a low volume of purchases. It is not unusual for those restaurants to deal with getting food on their own (drive to the nearest Costco, etc.). I suspect Kroger could offer them lower pricing if they are grouping the deliveries with other deliveries going to individuals.
The problem is Kroger's Dallas division is clustered almost entirely in Dallas-Fort Worth or its suburbs (and a small island of stores in Shreveport); there are no rural stores (at least, not anymore). Brownwood closed several years ago.
Romr123 wrote: April 5th, 2022, 9:42 pm Is there something analogous to Gordon Food Service/GFS and Smart and Final in Texas? Wondering if they're seeing a niche there...
Gordon Food Services bought into a local Houston food distribution company about 6-7 years ago and they are opening stores like the Midwest, but I'm not sure of any Dallas equivalent.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by storewanderer »

buckguy wrote: April 6th, 2022, 4:31 am Many, many chains have done some version of this in the past and it usually hasn't last long. Some of this niche is covered by wholesale clubs.
What chains have done a version of this in the past, what regions was it in, and what years did they do this?

Ones I can think of:

I think Costco has a business delivery program that has been running for a while and you could say is similar to this idea.

URM Stores (Spokane, WA based wholesaler) has some kind of convenience store/food service division and runs some Cash and Carry stores for restaurants. Those operations have been part of URM Stores for decades.

Smart & Final of course had Smart Foodservice which was previously Associated Grocers Seattle Cash & Carry (similar to the URM operation still open today) that they bought from Unified Grocers, and in the 90's they had some ownership in some kind of food service division that was separate from the retail stores.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by buckguy »

For starters, Colonial did this for a short time in the 70s. First National did it back in the 50s or 60s. During the diversification wave of the 60s and 70s there probably were others. The one successful long-term historical example probably was SS Pierce which started in the Boston grocery trade and ended up with a private label and institutional business. It's now part of Seneca Foods which ended up with Green Giant's canned food business, among other things.

More successful were the chains that shared ownership with wholesalers---the wholesale side outlasted them in some cases like Abner Wolf (Allied/Wrigley) in Detroit. A remnant of Alterman's wholesale business in Atlanta does trucking. Alterman had been Big Apple/Food Giant and also provided various services to independents before being sold to Delahaize and SuperValu.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by BillyGr »

Perhaps they are looking at how things often go. When prices are on the high side, people may not go to restaurants as often but buy more in stores, while in better times the opposite occurs.

Thus, if you have operations that cover both sides of the coin, it is easier to shift supplies from one to the other to keep both working better (for instance, having a stock in the commercial sizes they could have put into the stores in 2020 would have helped the stores be better stocked while not having the commercial stuff hanging around when restaurants were more limited).
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by pseudo3d »

In Kroger's defense, a lot of those are from a long time ago when the business was very different. (I think Riser Foods had a foodservice arm, sold to Sysco in the early 1990s), and none of them were from a huge national company. (I'm also a bit surprised they're using their own name instead of a new name).

Maybe they're grooming a foodservice company for acquisition, and they're testing the waters. Who knows.
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Re: Kroger Dallas Division goes into Restaurant Supply biz

Post by storewanderer »

buckguy wrote: April 7th, 2022, 5:41 am For starters, Colonial did this for a short time in the 70s. First National did it back in the 50s or 60s. During the diversification wave of the 60s and 70s there probably were others. The one successful long-term historical example probably was SS Pierce which started in the Boston grocery trade and ended up with a private label and institutional business. It's now part of Seneca Foods which ended up with Green Giant's canned food business, among other things.

More successful were the chains that shared ownership with wholesalers---the wholesale side outlasted them in some cases like Abner Wolf (Allied/Wrigley) in Detroit. A remnant of Alterman's wholesale business in Atlanta does trucking. Alterman had been Big Apple/Food Giant and also provided various services to independents before being sold to Delahaize and SuperValu.
I also recall the period where Ahold owned US Foods (or am I completely imaging that) maybe in the early 00's?

Anyway, I really think this Kroger program, not knowing exactly what they are doing, may be rooted with the Ocado thing. And it may be just what the doctor ordered to get the "top line" up on the Ocado. Even a small restaurant utilizes thousands of dollars of food in a week, often from multiple suppliers. I don't see how profitable it is for Kroger to run an Ocado truck to 50 houses and deliver $100 orders all day. But if they can run a truck to 20 houses and deliver $100 orders and hit 5 restaurants and deliver $1,000 orders to each of them, then you are starting to see something meaningful from a revenue perspective.

Kroger, for all of its faults, seems to have people involved in the company that keep coming up with solid ideas to grow that top revenue line (even if the ideas don't make much money; grocery is a fractional cent business; growing the top line is the only way to grow the bottom line successfully long term).
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