Thinking of starting a Froozen Food distribution business in the west!... any advice?

Eamonn T

Hi all,

Id appreciate some advice or opinions here, I’m thinking of starting up a Frozen Foods / Foods distribution service in the west of Ireland. I worked for a few years as a delivery agent for a dairy creameries and I gathered some knowledge on how a delivery service to shops, hotels and restaurants have to be run. I would like some advice on how to persuade shops, Hotels & Restaurants to buy from me rather than their current supplier ect. I have sourced myself out some good suppliers / wholesalers & cash & Carry’s based in Northern Ireland but I feel their prices could be better. Are there any other supplier options I should be exploring?
Also would I be better to operate as a LTD Company or a Sole Trader?

Thanks All

DoMyBooks

A lot of smaller restaurants and pubs deal with suppliers on an ad-hoc basis. In other words if you walk in the door with something at the right price there likely to deal with you. I would strongly suggest setting up as a sole trader for the first year to keep your accountancy costs down.

Your problem is going to be the competition in that area is quite big with the likes of pallas foods. The big + is you've long expiry on the frozen stuff.

Accountancy

hi EamonnT,
Can i ask how are you for financing? That will be the deciding factor on wheather you set up or not. You will obviously want vans and storage. Have you priced these?
Have you done business projections? That will decided LTD or sole.

I am a practicing accountant in the west with serveral restaurants and food suppliers and the things that will win business are:
1. Quality of product
2. Price
3. Service you offer

How you meet these businesses are do your research and contact them and show them your pricing. A face to a name is a good start.

HTHs

DoMyBooks

More importantly I should have mentioned. The margins in that business are pretty tiny so you need to run a tight ship and most importantly of all it can be very hard to get paid so cashflow is hugely important.

Eamonn T

DoMyBooks wrote: »

More importantly I should have mentioned. The margins in that business are pretty tiny so you need to run a tight ship and most importantly of all it can be very hard to get paid so cashflow is hugely important.

Thanks for the advice Domybooks, I set up a business in 2008 in the motor trade but due to business inexperience on my side and poor advice and big bills from my current accountant things have basically grinded to a holt. I am VAT registered and a Sole Trader at the minute but my plan was to turn the business in a totally different direction as I feel its something that might work and save me from the doll queue!..:D I’m based in Donegal and the 2 biggest threat I can see are Pallas and Lynas foods but they seem to do more restaurants than pubs or shops. I spent a number of years as a Creameries delivery agent and I feel I can get into some of the shops, pups, hotels and restaurants I delivered too back then as I would know the business owners well. I would be hoping to then expand into other areas but start off in Donegal. I was thinking the margins would be pretty tiny alright so sourcing food suppliers at the right price would be key but at the minute I’m looking at Cash & Carry's in Northern Ireland and the UK as a supplier. I also remember back in my creameries delivery days that getting paid was not a major problem, there was 1 or 2 guys that owed money. but most paid every Saturday or maybe the bigger supermarkets paid monthly.

Eamonn T

Accountancy wrote: »

hi EamonnT,
Can i ask how are you for financing? That will be the deciding factor on wheather you set up or not. You will obviously want vans and storage. Have you priced these?
Have you done business projections? That will decided LTD or sole.

I am a practicing accountant in the west with serveral restaurants and food suppliers and the things that will win business are:
1. Quality of product
2. Price
3. Service you offer

How you meet these businesses are do your research and contact them and show them your pricing. A face to a name is a good start.

HTHs

Hi Accountancy

I may look at getting financing from a bank but with the way things are with banks at the minute I wouldn’t be expecting much help there, I was prepared to fund the venture myself or perhaps look into some grants from The county Enterprise board or Udarais na Gealtact ect. I have priced up vans alright as Iv been in the motor trade for a while. I think I would start with 1 good used fridge van and if this went well I would look towards leasing a new van or perhaps 2 if I was lucky enough to need 2!..:D
Have not done any business projections yet just some observations into competitors ect. I don’t intend on getting off the ground till next summer or so but I want to have all my homework done before then. The price on the products are the key thing I was going to focus on, the brands will be the usual everyday items and brands and I would have to develop a good service strategy to serve the customer so plenty to do yet but all advice I can get will be helpful..

MidlandsM

An observation ;

Watch the currency difference - your NI supplier prices may look ok now, but come next summer it might be a different story.

But if your GUT tells you its good and the numbers work, go for it.

Bandara

Eamonn T wrote: »

I also remember back in my creameries delivery days that getting paid was not a major problem, there was 1 or 2 guys that owed money. but most paid every Saturday or maybe the bigger supermarkets paid monthly.

Sadly this is most definitely not the case anymore.

Voltex

OP...a very competitve business you are trying to get involved in.
Pallas, Lynas, Complete Cuisine,Crossgar, French Mill (Gallaghers) part of the Cuisine de France/Aryzta Group and a whole lot of smaller companies.

Correct business planning will be key..basic SWOT/PEST analyses may help you identify niche areas away from the big boys.

Buford T Justice

You've also got Abbey Frozen Foods and Union Food & Drink in Sligo to contend with, amongst other fresh meat providers that supply the restaurants.

Eamonn T

Voltex wrote: »

OP...a very competitve business you are trying to get involved in.
Pallas, Lynas, Complete Cuisine,Crossgar, French Mill (Gallaghers) part of the Cuisine de France/Aryzta Group and a whole lot of smaller companies.

Correct business planning will be key..basic SWOT/PEST analyses may help you identify niche areas away from the big boys.

Yes, True, I know it certainly is competitive alright. Pallas, McGuires, Inishowen Frozen Foods, Lynas & Crossgar are definate competitors but Gallaghers ( French Mill ) and Complete Cuisine are bakery suppliers so I wouldnt think I would have much trouble from them although Gallaghers have started doing some hot deli counter foods now too.

Is there any type of operating Licence form any government dept or authority I would need to get does anyone know?

Kristopherus

You will have to register with the Food Safety Authority (FSA). The local HSE HQ will have some Environmental Health Officers who are seconded to the FSA. They will advise you on their requirements. Please note that though there remit is to "police" food outlets, they disperse advice in a totally non-adversarial manner and will definitely be worth talking to. Best of luck.

finisklin

Getting paid is going to be your biggest problem.....particularly in the retail end of it. Look at some other threads in this forum as it has been referenced and I see that hammertime has reflected the same above.

I think you are up against it - however if you are well organised and can set up direct debit or cash on delivery it may go well for you. Be careful......

Voltex

Eamonn T wrote: »

Yes, True, I know it certainly is competitive alright. Pallas, McGuires, Inishowen Frozen Foods, Lynas & Crossgar are definate competitors but Gallaghers ( French Mill ) and Complete Cuisine are bakery suppliers so I wouldnt think I would have much trouble from them although Gallaghers have started doing some hot deli counter foods now too.

Is there any type of operating Licence form any government dept or authority I would need to get does anyone know?

this is what i mean by doing your swot analysis. Youll find Gallaghers is part of the cuisinde de france group which also incorporates the Pierres brand.
Your best bet is to identify a niche in the market...dont try and compete with the big boys.
i think your in a great position..once you get the right approach. Offer more in the way of customer service...make your customers see just how far you will go to service and add value to their businesses.

pavb2

You mention shops,hotels restaurants would this include the petrol station/deli market? Could there be an opportunity there?

dave109

pavb2 wrote: »

You mention shops,hotels restaurants would this include the petrol station/deli market? Could there be an opportunity there?

Have you started this venture? i'm in the food game and would be interested in speaking to someone based in your end of the country.

inspired38

Hello Eamonn T, well done on considering starting a business. There is always room for more businesses. Some things that you need to consider:
1. Be very clear on "Why" customers should buy from you. If its just about price then the probability of long term survival is low and your returns for what you do will always be under pressure
2. Be very clear on how you can grow beyond one vehicle - thats when the cashflow can get tested because it will take a while to get the second run profitable. Also to get the second run profitable, who is going to do the selling and opening of new accounts

What I'm says is that you need to get some sort of plan written and understandhow the cash will be managed. Many of the accounts that come to you easily, will also leave easily - how good are you are client retention because its important in this business.

i have seen Frozen Food Businesses do very well in this country in recent years and have also seen them struggle mainly down to lack of knowledge on finances and inability to collect their money and lack of discipline collecting money On a 20% or less margin business like this, you cannot afford to offer extended credit. Otherwise, it will take you too long to start making any money.

mickmcl09

This is a very difficult business to get something back out of it.
I've worked in the grocery trade for 10+ years and I would be very familiar with all the distributors out there.
I'm now at the other side of the distributor, working for a food producer.

Firstly, get yourself the Bord Bia Foodservice manual, essential reading!!!!!
Sit down for a full day, read it from cover to cover and make notes for yourself. This manual is far more important than anything else. It doesn't matter what financials you put together until you have a very deep understanding of the industry.

It's not only about the requirements of your customers. You need to think about what you have to offer to the food producer as well.

Why would they want their product listed with you?
Does their product have a presence in your area?
How flexible/adaptable will your service to the end customer be?
Will you have your own storage facility?
What volume can you output per month?
Will you take bulk delivery from the food producer? Ie each product by the pallet/multiple pallets of each product line.
How are you going to convince a supplier that you will (always) prioritise the sale of their product?
Do you realise that its not simply just selling on a product? Most suppliers will insist that you provide them with detailed sales volumes broken down for each individual product further broken down by location/customer.

Top food suppliers will want their product listed with Pallas, BWG, C de France or Musgraves or any other one that has been mentioned that has the best coverage for their target market. That's why it's going to be very difficult for you to break in properly.

I also have an insight into one frozen food distributor, who would be considered very small and he has 10+ vehicles. I've seen the work he puts in. He's got no life, it's 24/7, seriously. He's in the depot before 6am and there isn't a finishing time. This guy would be very similar I'd imagine, to where you plan to go, but it's taken him 20 years and he pays himself 70k AFAIK and the ship is really tight financially (for an established business). He covers about 7/8 counties.

Best of luck, but trust me there's easier and more secure ways to make money, not to mention all the headaches of a business like this.

Don't forget as well most business' will not only insist on ISO certification but BRC as well.

antoinolachtnai

inspired38 wrote: »

Hello Eamonn T, well done on considering starting a business. There is always room for more businesses.

I am sorry to put a damper, but this is not a correct statement. The Irish domestic economy is contracting in many respects and stagnant at best. There are actually too many businesses focusing on the domestic sector. Consolidation is what will happen in many cases, not new entrants. Businesses will go to the wall or merge.

Being good at retention or bookkeeping will not really do the job. You need to be rabidly aggressive to get business. You need to be better and cheaper than any of the other guys. It is a terrible thing to say, but the only way to succeed in a distribution business in a stagnant economy is to somehow put someone else off the road. It is a zero-sum game.

i have seen Frozen Food Businesses do very well in this country in recent years and have also seen them struggle mainly down to lack of knowledge on finances and inability to collect their money and lack of discipline collecting money On a 20% or less margin business like this, you cannot afford to offer extended credit. Otherwise, it will take you too long to start making any money.

This is good sense, but I question whether it is really possible. These ingredients distributors are not really in the food business at all. They are actually in the business of investing money in restaurants through providing credit lines. They will not want to admit to this, but it is true. If you are not able to similarly invest, and you do not have something else special about your business that they cannot replicate, then I think it is going to be very difficult indeed.