Carolina Food Service in Loris, South Carolina has done exceptionally well since opening in 2009. This broadline food distributor specializes in supplying products to Latino and Mexican restaurants across the Carolinas. From their very beginning, the leadership team focused on the most important factor to their future success – superior customer service. As their reputation and client base grew, revenue increased proportionally. From 2016 to 2019, annual sales nearly doubled to $6.0M. It was at this point that the leadership team realized that there was even greater potential to grow, but they needed to be more strategic in this progression.
On March 22, 2023, Carolina Food Service hosted the OpExChange at their distribution center in Horry County. Juan Serrato, President and Chief Executive Officer for the company shared their success story and how they utilized some key South Carolina resources to harness their growth and strategically plan their trajectory for the next five years.
In 2019, Juan contacted the South Carolina Manufacturing Extension Partnership (SCMEP) to conduct their complimentary competitiveness review (CR) at their site. This one-day assessment is a tool the SCMEP uses to identify limiting factors to an organization’s success and provides a snapshot comparison to other companies.
Juan indicated that the assessment confirmed some strengths they knew they had had but it also pointed out some significant areas for improvement – actions that could substantially improve their profitability and competitiveness. There were three key areas the SCMEP identified for improvement: establishing a formal strategic plan, sales and marketing, and continuous improvement.
“We knew we needed this, but we had no idea where to start,” Juan stated during the opening presentation. They had always done the right thing for their customers and treated their employees well. However, many of their activities were more reactive rather than being part of a proactive plan.
Chris Wayne, Vice President of Business Development & Growth for the SCMEP, led the leadership team through a series of sessions in which they established a formal “STRAT plan.” The early stages of this were to establish the vision, mission, and values of the organization.
Juan expressed that the resultant company values are something of which he and his team are particularly proud, because they truly define the essence of their group. “When we finished this portion and saw the final product, we were so happy and proud of ourselves! Every single word was something we felt to the heart.”
In developing the STRAT plan, five years were mapped-out, focusing on three primary areas: Sales & Financial Growth, Sales & Marketing Improvements, and developing a core-competency in continuous improvement.
Sales & Financial Growth
Part of determining growth potential is first understanding the total available market. In order to gain a deeper and more comprehensive knowledge of the sixteen territories in the Carolinas, CFS partnered with Golbon Marketing
CFS partnered with Golbon Marketing, a leader in foodservice procurement. They determined that CFS currently holds about three percent of the total market. By the end of 2025, they intend to grow that to nearly eleven percent. This will effectively increase their current revenue levels by 363%, while also increasing the gross margin percentage.
Fundamental to achieving the sales volume is onboarding sales personnel. The STRAT plan identifies onboarding additional people each year to meet the sales goals. CFS recently began using an assessment tool prior to the candidate’s interview. The assessment provides a personality profile, workstyle, and work values of the applicant. It also suggests interview questions based on the candidate’s profile. Juan added that he defers to hiring individuals with the right characteristics over an individual with food distribution experience.
A key part of the STRAT plan is to align individuals to the objectives of the plan. In order to align their sales folks to not only the sales revenue but also the gross margin, the compensation program was revamped to incentivize both. This is driving the right actions to support the strategy plan.
Sales & Marketing Improvements
Improving the effectiveness of the sales and marketing team was the second objective of the STRAT plan. Some of the actions taken included improving the technical abilities of the team in prospecting, developing, and refining sales skills, and coaching on interpersonal skills with different personality types.
Enterprise Café is an analytical tool that sales folks now use to analyze ordering data. Juan provided an example of how this is beneficial. Every Mexican restaurant serves cheese dip with the tortilla chips. If CFS is supplying the cheese for the dip, they should also be supplying the milk and jalapenos. These are all commodities, and it would be easier for the customer to order from just one source. Of course, CFS would like to be that source! The sales team now uses this tool to identify which customers should be approached to purchase milk and jalapenos to simplify their ordering process.
Communication with different personality types is a different type of skill set, but a critical one in developing and maintaining meaningful relationships. CFS put all of their salespeople through a “People Styles Workshop” from the SCMEP which taught them how to interface effectively with different personality styles with their own individual style. The results of this were so good that they proceeded to put all of their employees through this training.
Core Competency of Continuous Improvement
The third area identified as part of their STRAT plan was to establish a core competency, or culture, of continuous improvement in their organization. As any OpExChange member will attest, this is something that takes constant focus, nurturing, and support from the leadership team.
CFS is not only looking at the warehouse and logistics operations for this but is also involving the entire organization, including sales, marketing, and purchasing. CFS is making good use of the OpExChange and SCMEP resources as tools in cultivating this. In December of last year, Juan and his team attended a value-stream mapping workshop with other OpExChange members. Several team members have participated in lean manufacturing and process improvement workshops.
During this site visit, Juan and his team shared how the warehouse team is putting this knowledge to work in their pack out operations. By implementing standard work for the picking and pack out, they improved the hourly pack-out rate by 154%.
Supply Chain – Where’s the Beef?
The timing of the strategic plan could not have come at a better time. Just as it was established, the Pandemic hit in early 2020. Although they did have to adapt their timeline, the STRAT plan provided a framework to keep them focused on the primary objectives. As part of their marketing strategy, their sales manager, Ivan Serrato was exploring new regions. Ivan discovered that some of their larger competitors were unable to meet customer demand for beef. Because CFS was well-positioned on beef inventory, they were able to get their foot in the door to many new and larger customers. Sales continued to grow in 2020 and sky-rocketed over the next two years. Revenue growth over this three-year period averaged 38% with a 58% increase in 2021.
Juan proudly stated that keeping the new customers is not a problem for them. In the food distribution business, there is not much that differentiates suppliers from a product perspective – these are essentially commodity items, with very little price differential. However, a key differentiator for Carolina Food Service is their exemplary customer service, as identified in their Values.
“We give our customers a much-improved experience when compared with our competitors,” Juan stated. They are not burdened with the bureaucracy of some of the larger distribution companies, which translates into quicker response and delivery.
About Carolina Food Service
Carolina Food Service is a food distribution company located in Loris, South Carolina. As a locally and privately owned company, our goal is to provide the best service to all of our customers in North and South Carolina. While we offer our services to all food establishments in the Carolinas, we specialize in food distribution for Hispanic and Latino restaurants throughout the Carolinas. Most of our staff is bilingual with roots in Hispanic and Latino culture, making communication between our team and restaurant operators easy – resulting in smoother operations.
The OpExChange, sponsored by the South Carolina Manufacturing Extension Partnership, is a peer-to-peer network of manufacturers and distributors in South Carolina known for generating success for members through benchmarking and best practice sharing. Member companies host events and share practical examples of industrial automation, lean manufacturing improvements, and leadership development. It is an invaluable resource to South Carolina companies that provides access to others who are on similar improvement journeys. If your company is interested in participating in this collaborative effort to improve both the competitiveness of your operation and South Carolina, contact Mike Demos (Mike@OpExChange.com). More information and upcoming plant visits are available on the OpExChange website www.OpExChange.com.
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