Key Takeaway: In the United States, the food distribution system includes many players, which is one aspect of what makes it complex. These players include middlemen who produce, manufacture, distribute, transport, advertise, and sell food products. This is all done through food distribution channels in the food supply chain.
Once a product gets displayed on the grocery store shelf, it has already traveled long distances and been handled by numerous people through the shipping and handling process. Each party involved has assessed and inspected the product to determine its risk and opportunity. During the shipping process, it's crucial for employees to understand how to print shipping labels properly to ensure proper delivery times.
During this process, people also consider the product quality, food safety, price, including wholesale vs retail price, packaging, including eCommerce packaging, labeling, direct to consumer or DTC marketing, and B2C and B2B marketing ideas. Once the consumer purchases the product, the manufacturer, broker, wholesale food distributor, and retailer have already made sure the product is viable and profitable.
A big part of the food supply chain management process is distribution. This involves receiving the product efficiently and in good condition. The consumer will see its condition and how it’s consistent with the brand’s image which will drive them to purchase the product. In order for a consumer to purchase a product, it must first go through various distribution channels.
What Are Food Distribution Channels?
Food distribution channels refer to both the middlemen that are involved in distributing food products from manufacturers to consumers, as well as from other wholesale restaurant supplies distributors.
Companies, programs, and organizations are involved in collecting food products from producers, storing them in warehousing facilities, and distributing them to restaurants, grocery stores, cafeterias, and government aid programs such as Feeding America, food banks, and an emergency food assistance program.
4 Different Food Distribution Channels
It’s common for a business owner to work with food distribution channels when they’re opening a business of their own. This can include opening a restaurant, opening a coffee shop, or opening a grocery store.
The four common food distribution channels include:
- Cash and carry distributors
- Specialty distributors
- Broadline distributors
Wholesale sales, wholesale distribution companies, and wholesale distributorships don’t always sell directly to consumers. They purchase MOQ, EOQ, or bulk quantities of food products, also known as wholesale products, from manufacturers and resell them to retailers.
There are some companies that focus on running a wholesale business by selling wholesale products directly to the consumer. Such food products include wholesale dairy, wholesale meat and seafood, wholesale produce, and wholesale alcohol.
Wholesalers also have the option to sell subscription boxes full of specialty products to their customers. They might include the best coffee subscription boxes and more.
2. Cash and Carry Distributors
Additionally, these warehouses are visited by food service operators, so they can choose products they want to buy and walk out with them on the same day. Cash and carry distributors are commonly used by nonprofit organizations, restaurant businesses, and catering businesses.
3. Specialty Distributors
Specializing in a specific product category, these distributors work with niche market food service operators. These include kosher or halal restaurants and catering companies. This is done to prevent the risk of cross-contamination.
This is considered to be the most general food distribution category. The largest broadline food distributors are responsible for handling large product volumes, and they mainly work with large retail food businesses and grocery store chains.
Due to the large quantities of products they distribute, there are often price advantages and discounts for buyers that buy in bulk. This includes bulk fish, meat products, wholesale produce, and packaged goods.
How Does Food Distribution Work?
Food distribution participants are in charge of handling the transportation and storage of food as it moves through the supply chain process. Certain distributors specialize in specific food products including fresh produce, wholesale meat, or seafood.
Many food distributors utilize warehouses for short-term storage whereas others use refrigerated trucks to transport the food products to food service operators. In this case, route optimization software is used to ensure the optimal routes are taken and time is saved during transit.
It’s possible for food service operators to purchase products directly from distributors instead of from producers. This means that some distributors will also market and sell their products.
If distribution channels didn’t exist, people would be restricted to eating whatever they could grow on their own. However, with distribution channels for food products, we’re able to eat foods even when they’re out of season.
Food Distribution Software
The food distribution process can be complicated due to the many processes and moving parts involved with indirect channels. However, food distribution software helps streamline the processes. This kind of software ensures that orders and necessary information are gathered throughout the entire supply chain.
Processing, scheduling, and tracking food distribution orders are all possible through food distribution software. Users have control over their payment processing software, inventory management process, invoice creation, and report building all in one place. This is a solution that was designed to manage the food distribution process from end to end.
Food traceability software also allows distributors to track the ingredients and origin of food products. Blockchain technology can assist with this process. This is useful for specialty distributors in the industry that deal with food allergens or restrictions. The software can ensure that there is no risk of cross-contamination.
How Do Restaurants Find Food Distribution Channels?
Restaurants find food distribution channels through food suppliers, promotional ideas, advertising, and internet marketing techniques. When opening a food truck, opening a bakery, or another food establishment, your food distribution model should be created to increase customers. In order to do this, you have to get creative and experimental when it comes to the different distribution channels that are available to you.
Food quality has a huge impact on whether your restaurant will see repeat customers. Within the restaurant industry, distribution channels begin with food suppliers. This is where customers purchase products and supplies. It’s key to choose a quality provider in order to develop a solid reputation.
Restaurants often design free novelty items such as pens or keychains with their name printed on them. These are promotional items that they give to their customers as a way to spread the word about their business. The same can be done with food distribution channels.
Distributor marketing or advertising your restaurant is crucial for creating solid distribution channels for your business. Using print, TV, and radio advertising will help to discover new distributor opportunities for your business.
Businesses in the digital age have to take advantage of social media and the internet. That includes eCommerce email marketing and internet marketing. This can increase awareness and encourage customers to visit your restaurant.
By creating a website and about us page for your restaurant, you can feature your menu (see Menu Meaning), promotions, and nutritional information. Restaurants can also encourage visitors to join their mailing lists by requesting email addresses or directing them to their social media pages. This is also an ideal way to increase social media ROI.
Frequently Asked Questions About What are Food Distribution Channels
What Is the Purpose of Food Distribution?
The purpose of food distribution is to ensure food products make their way from producers to warehouses to relevant distributors so they can eventually reach consumers. Companies and organizations handle the distribution process and get the food to specific manufacturers, restaurants, grocery stores, and cafeterias.
What Are Examples of Food Distribution Channels?
Food distribution channels include:
- Cash and carry distributors
- Specialty distributors
- Broadline distributors
They represent the chain of business or intermediaries that goods or services go through once a buyer finalizes a purchase.
What Problems Does Food Distribution Face?
Food distribution has problems related to the lack of markets, the inability to afford production costs and consumption, and inadequate means of transportation to markets. These problems affect the quality and availability of food products.
What are the Four Main Channels of Distribution?
The four main channels of distribution are: