Jay Porter, the bright, thoughtful owner of The Linkery - a small restauarant in San Diego - wrote the following to illustrate how a Food Service distributor might rethink their Small Business strategy:
Mon, 1 Jan 2007 16:50:59 -0500
To: Fellow YESCO Assocates
From: Jay Porter
Subject: Changes in 2007
Greetings everyone and a Happy New Year as well.
As many of you probably know, our Board of Directors has brought me on as CEO, beginning today, in order to help our company finally establish strength in the Small-to-Medium-Enterprise (aka SME) market.
While our company is the largest and most successful broadline distributor in the foodservice world, all of our business is concentrated in the world of enormous foodservice companies with predictable volume and needs. This puts us in the position of becoming basically a commodity provider — with the attendant trend toward low margins, dubious quality, and uninteresting jobs for all of us except our finance department.
By expanding into the SME market, we will grow out of the commodity market and into services that are difficult for our competitors to match. No longer will we be competing solely on price — instead, we will be doing harder and more interesting work, charging a fair amount for it, and making a difference in the world. With our enormous size and expertise, no other company in the world is equipped to match us at this challenging work.
You may be wondering about our new name. We’re changing it effective today to emphasize that our primary mission is helping the community of individual restaurants obatin anything and everything they need — products, services, and knowhow — to best serve their communities according to *their* mission. No more are we shoehorning businesses into the model that works for us. Our job is, when our customers ask us for anything — we say “Yes” and get the job done. The paint fumes which have been wafting into the building today are from our whole fleet of trucks being repainted as you read this.
Now, I know that this isn’t the first time you’ve been told we’re going to make a splash in the SME market, and you may be wondering why it’s going to work this time. The answer is that this time, we are going to change who we are in order to serve this community of customers.
And we are going to start with changing our values.
The two values that are going to define YESCO from now on are transparency and service. This is non-negotiable. If you don’t want to or can’t live to be transparent and of service, then you will be working elsewhere. Perhaps Maryland.
TRANSPARENCY
Transparency is like integrity, turbocharged. It’s not just doing what you think is right, it’s letting the world see what you’re doing and judge for itself.
The words “company confidential” will cease to exist at YESCO. Everything we do, from below the soil to the paid invoices, will be visible to the public.
We will not be able to juice our margins from some customers by keeping our prices for each account confidential. We won’t be selling any of our items under misleading brands such as “White Marble Farms” in order to make people think they’re getting something they’re not.
We will be able to run a successful business this way because we will, from now on, be offering services of such high value that we can openly charge for them, and in the process build stronger relationships with our community of customers.
SERVICE
When you look out the window at our fleet of newly-painted trucks full of items such as meat, produce and paper goods, it’s easy to think that we’re in the business of selling these products.
We’re not.
Here’s how you can tell we’re in the service business: we don’t make anything.
We’re in the business of connecting restaurants with producers who make the products they need.
There are two kinds of products in the world: products that we already distribute, and products that we will locate and distribute if asked.
That’s it. That’s why we’re YESCO. And because we will find and locate anything in the world that will help our community of customers, and be completely honest and open about it, we can charge a reasonable amount for what we do.
SERVICE SPECIFICS
Let me give an example of the kinds of services we will now provide.
Every restaurant in the world has a goal to serve its community in some way. Our job is to understand what specific service that restaurant provides, and what things that restaurant might want to do its job better. At that point — and only at that point — can we work to find and bring the products useful to that restaurant.
In other words, it’s not about finding the product in our book that best suits the restaurant’s needs. It’s about finding the product in the world that best suits the restaurant’s needs. Our book will grow accordingly.
Somewhere in America is a farmer raising American Guinea Hogs on pasture, and finishing them on whey and acorns. Somewhere else in America is a restaurant that wants to serve succulent pastured heritage pork belly rich in good cholesterol. We will introduce the former to the latter.
Somewhere in America, maybe closer to that restuarant, is a farmer with an avocado orchard and chickens and goats and pasture who is looking for a sustainable way to improve his farm and profits. We will find that farmer, tell him about the restaurant wanting to serve avocado-finished heritage pork, and find the experts he needs to begin a successful heritage pig program.
Does the cafeteria at a local tech firm want to upgrade the nutrition of its offerings and support local businesses? We’ll find all the local farmers and artisan foodmakers we can, see what’s available in what seasons, and put together a well-balanced rotating menu of meals for that cafeteria all year long. Does this cafeteria want to start offering desserts made with real free-range eggs and pastured cows’ milk. We’ll find them. If not, we’ll find farmers who will produce them with our help.
Does a large national fast-food chain want to buy every factory pig that Cargill can produce in two integration plants? Heck, that’s easy. We’ll drive those trucks, though in this case we’ll be competing on price so in the long term this is not a growth business.
VALUE AND GROWTH
Speaking of growth — one last note. Our stock price will fall tomorrow, and that’s a good thing. A lot of very naive people operate under the belief that growth is the reason companies exist.
They’re wrong.
The role of a company is to provide a service to its employees, of organizing and marketing their intelligence and efforts so that they make a difference in the world, and provide enough income for the employees to live happily; all while generating enough profit to justify any capital investment in the company by equity partners. Note that growth is not an essential part of this mission.
Growth will often happen as a company becomes more successful; but it is by no means imperative. Investors who buy stocks in hope of growth, and hire and fire executives based on share price, are at best gamblers and at worst strip-mining your effort, value, and goals as contributing members of this enterprise.
Don’t worry about these stock-players. By providing valuable services and charging for them, we’ll all have good jobs serving society, make a good living, and pay off the money invested in our company at a good rate of return. We don’t need to do anything more.
Thanks for your time everyone, and I can’t wait to work with every one of you in achieving these ambitious goals.
Best,Jay
***
Hey, if Eric Mangini can do it, why not me?
Mon, 1 Jan 2007 16:50:59 -0500
To: Fellow YESCO Assocates
From: Jay Porter
Subject: Changes in 2007
Greetings everyone and a Happy New Year as well.
As many of you probably know, our Board of Directors has brought me on as CEO, beginning today, in order to help our company finally establish strength in the Small-to-Medium-Enterprise (aka SME) market.
While our company is the largest and most successful broadline distributor in the foodservice world, all of our business is concentrated in the world of enormous foodservice companies with predictable volume and needs. This puts us in the position of becoming basically a commodity provider — with the attendant trend toward low margins, dubious quality, and uninteresting jobs for all of us except our finance department.By expanding into the SME market, we will grow out of the commodity market and into services that are difficult for our competitors to match. No longer will we be competing solely on price — instead, we will be doing harder and more interesting work, charging a fair amount for it, and making a difference in the world. With our enormous size and expertise, no other company in the world is equipped to match us at this challenging work.
You may be wondering about our new name. We’re changing it effective today to emphasize that our primary mission is helping the community of individual restaurants obatin anything and everything they need — products, services, and knowhow — to best serve their communities according to *their* mission. No more are we shoehorning businesses into the model that works for us. Our job is, when our customers ask us for anything — we say “Yes” and get the job done. The paint fumes which have been wafting into the building today are from our whole fleet of trucks being repainted as you read this.
Now, I know that this isn’t the first time you’ve been told we’re going to make a splash in the SME market, and you may be wondering why it’s going to work this time. The answer is that this time, we are going to change who we are in order to serve this community of customers.
And we are going to start with changing our values.
The two values that are going to define YESCO from now on are transparency and service. This is non-negotiable. If you don’t want to or can’t live to be transparent and of service, then you will be working elsewhere. Perhaps Maryland.
TRANSPARENCY
Transparency is like integrity, turbocharged. It’s not just doing what you think is right, it’s letting the world see what you’re doing and judge for itself.
The words “company confidential” will cease to exist at YESCO. Everything we do, from below the soil to the paid invoices, will be visible to the public.
We will not be able to juice our margins from some customers by keeping our prices for each account confidential. We won’t be selling any of our items under misleading brands such as “White Marble Farms” in order to make people think they’re getting something they’re not.
We will be able to run a successful business this way because we will, from now on, be offering services of such high value that we can openly charge for them, and in the process build stronger relationships with our community of customers.
SERVICE
When you look out the window at our fleet of newly-painted trucks full of items such as meat, produce and paper goods, it’s easy to think that we’re in the business of selling these products.
We’re not.
Here’s how you can tell we’re in the service business: we don’t make anything.
We’re in the business of connecting restaurants with producers who make the products they need.
There are two kinds of products in the world: products that we already distribute, and products that we will locate and distribute if asked.
That’s it. That’s why we’re YESCO. And because we will find and locate anything in the world that will help our community of customers, and be completely honest and open about it, we can charge a reasonable amount for what we do.
SERVICE SPECIFICS
Let me give an example of the kinds of services we will now provide.
Every restaurant in the world has a goal to serve its community in some way. Our job is to understand what specific service that restaurant provides, and what things that restaurant might want to do its job better. At that point — and only at that point — can we work to find and bring the products useful to that restaurant.
In other words, it’s not about finding the product in our book that best suits the restaurant’s needs. It’s about finding the product in the world that best suits the restaurant’s needs. Our book will grow accordingly.
Somewhere in America is a farmer raising American Guinea Hogs on pasture, and finishing them on whey and acorns. Somewhere else in America is a restaurant that wants to serve succulent pastured heritage pork belly rich in good cholesterol. We will introduce the former to the latter.
Somewhere in America, maybe closer to that restuarant, is a farmer with an avocado orchard and chickens and goats and pasture who is looking for a sustainable way to improve his farm and profits. We will find that farmer, tell him about the restaurant wanting to serve avocado-finished heritage pork, and find the experts he needs to begin a successful heritage pig program.
Does the cafeteria at a local tech firm want to upgrade the nutrition of its offerings and support local businesses? We’ll find all the local farmers and artisan foodmakers we can, see what’s available in what seasons, and put together a well-balanced rotating menu of meals for that cafeteria all year long. Does this cafeteria want to start offering desserts made with real free-range eggs and pastured cows’ milk. We’ll find them. If not, we’ll find farmers who will produce them with our help.
Does a large national fast-food chain want to buy every factory pig that Cargill can produce in two integration plants? Heck, that’s easy. We’ll drive those trucks, though in this case we’ll be competing on price so in the long term this is not a growth business.
VALUE AND GROWTH
Speaking of growth — one last note. Our stock price will fall tomorrow, and that’s a good thing. A lot of very naive people operate under the belief that growth is the reason companies exist.
They’re wrong.
The role of a company is to provide a service to its employees, of organizing and marketing their intelligence and efforts so that they make a difference in the world, and provide enough income for the employees to live happily; all while generating enough profit to justify any capital investment in the company by equity partners. Note that growth is not an essential part of this mission.
Growth will often happen as a company becomes more successful; but it is by no means imperative. Investors who buy stocks in hope of growth, and hire and fire executives based on share price, are at best gamblers and at worst strip-mining your effort, value, and goals as contributing members of this enterprise.
Don’t worry about these stock-players. By providing valuable services and charging for them, we’ll all have good jobs serving society, make a good living, and pay off the money invested in our company at a good rate of return. We don’t need to do anything more.
Thanks for your time everyone, and I can’t wait to work with every one of you in achieving these ambitious goals.
Best,Jay
***
Hey, if Eric Mangini can do it, why not me?
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