FOOD-SERVICE FIRMS READY TO USE EFR AS WEAPON

MINA WILLIAMS

CHICAGO (FNS) -- The tone of the first Efficient Foodservice Response conference here was that of an industry that sees itself well positioned to benefit from the pioneering successes, and mistakes, made by the retailers' Efficient Consumer Response initiative.

What's more, speakers at the conference last month also characterized EFR as an offensive measure that food-service operators can and should deploy to grab a bigger piece of the at-home meal pie.

More than 400 attendees were preregistered for the event, sponsored by the International Foodservice Distributors Association, International Foodservice Manufacturers Association, Grocery Manufacturers of America and Food Marketing Institute, along with other trade groups.

The attendees were told that their EFR initiative is centered on focusing on the consumer, with the players in the food-service supply chain integrating their efforts to meet recognized and identifiable consumer needs.

This, speakers said, differs from the supermarket industry's ECR initiative because ECR was thrown up as a defensive strategy to cut operating costs in the face of competition from mass merchandisers and category killers.

"ECR was used as a defensive tactic," said John Gray, executive director of the IFDA. "Alternative formats were at the door, business was not [good]. EFR is born out of strength."

Speaker after speaker eluded not to the estimated $14.3 billion the food-service industry would save if its supply-line practices were modernized and streamlined, but to the $800 billion that could be gained if all home-meal preparation shifted to home-meal replacement items bought from food-service operators.

Gray of the IFDA proposed that if the industry experienced 1.6% per year growth through EFR, the $800 billion goal could be achieved by the year 2000, effectively shifting eight share points away from supermarkets.

It is precisely this share of stomach, speakers said, that is motivating the food-service industry to identify waste within its supply chain and look for ways to slice into supermarket sales.

The supermarket industry "wasn't focused, dealing with the low hanging fruit," said Kim Ewers, vice president and general manager of the foodservice division of Land O'Lakes, Minneapolis. "Issues such as forward buying still haven't been dealt with."

"EFR is not an initiative for only large companies," said Martin Whelan, president of Ettline Foods Corp., York, Pa. "It truly gives small distributors or manufacturers an opportunity to utilize technology to be more competitive in the marketplace.

"As supermarkets sell more food service and food service sells more grocery, what's being done is to take dollars out of all systems to keep us all competitive," Whelan said.

Layering category management on top of EFR can help shift even more consumer dollars away from supermarkets, conference participants emphasized. By increasing the value of food prepared away from home and matching up supply and demand, food-service operators can capture growth.

Harry Balzer, vice president of the market research firm NPD here, told food-service players to be wary of consumers' price wariness.

"The nation is not changing as you think it is," he added. According to NPD research, 74% of all females prepared at least one meal per day, compared with 27% of all males. "These women are looking for an easier meal," Balzer said.

His research also indicated that today's consumers are basically eating the same menu items they have enjoyed over the past decade -- ham sandwiches, hot dogs, peanut butter and jelly sandwiches, steaks. The major shift is that now fewer of these items are prepared in the home from scratch.

"Consumer trends change slowly over time," agreed Charles Troyer, partner with CSC, a consulting firm. "It is technology which changes rapidly."

Balzer said NPD reports that of all the dollars spent for food away from home, 46% goes to food service, 54% to retailers. "The explosive growth is halting in 'going out to eat' basically because of the cost of a restaurant meals vs. an in-home meal," Balzer said. On average, an in-home prepared meal costs $1.46 while a restaurant meal costs $4.25, or 2.9 times more.

Balzer said that if food-service operators are looking at reducing their costs, they should then drive down the cost of a restaurant meal, "creating more volume and business."

Joseph Fassler, president and chief executive officer of Restaura Inc., a Phoenix-based dining service company, also recommended that "by using EFR, cutting costs and eliminating waste, we can pass along savings to the customers. EFR will also benefit customer service, giving a fresher product of higher quality and reducing out-of-stocks."

Growth is the motivation to join the ranks of EFR devotees, said James Miller, president of Alliant Foodservice, Phoenix. "EFR gives consistent reporting measures," Miller added.

Many of the attendees at the Efficient Foodservice Response Conference were from the processing and manufacturing communities, and many have already gone down the ECR road through the grocery-manufacturing arms of their companies.

There was in addition a smattering of food-service distributors, a group that has been greatly consolidating over the past few months. There were even several grocery wholesalers on hand, which prompted other attendees to question if wholesalers were considering entering classic food-service distribution or if they were seeking to deepen their own members' knowledge of how to trim costs out of beleaguered home-meal replacement programs.

Most of the speakers said food-service industry players are learning from the supermarket industry, and would not repeat the mistakes of ECR: that they wouldn't take five years to implement programs, that they would not expect to reap benefits within a year, and that their trade practices and relationships were in far better shape than that of the supermarket industry when ECR was launched.

"Those of us who were out in front with ECR five years ago have a leg up," said Henry Lambert, president of Nabisco. "The essentials are the same: bar coding, uniform product identification, EDI transaction sets. If you were out in front with ECR, the fundamentals are in place with EFR and you have the people within your company with years of experience with ECR, which can immediately impact EFR programs."