Kash Rehman

Founder & CEO at Foodem.com

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Food Distribution Industry Disruption in the US

 “They always say time changes things, but you actually have to change them yourself.” – Andy Warhol.

When you hear the word ‘innovation’, what’s the first thing that comes to mind? For me, the word ‘change’ appears. Per Merriam-Webster, one of the definitions for ‘change’ is to make radically different. Another is to give a different position, course, or direction to. Almost all systems, processes, and methods have the potential to become more efficient with a little ingenuity, innovation, and change. In short, this is how Foodem began.

I simply saw and experienced first-hand an industry that needed a major change; the wholesale food distribution industry.

My first experience came after graduating from University of Maryland, College Park in 2000. I ran a small B2B food distribution company for a few years and grew it quite successfully. While winning commercial kitchen accounts came with a level of ease, restaurants were a different beast. Overall, we had nearly 220 accounts, but it was extremely difficult to get business from restaurants. This led me to rely heavily on sales consultants, which was not financially feasible in the long-term. Of course, the more sales consultants I was able to have in the field, the more accounts we were able to acquire, but we didn’t have the liquid cash to hire a huge sales force. This made competing with food distribution giants, Sysco and US Foods, a task within itself. They have what seems to be endless cash, resulting in a massive sales team that’s able to capture over 60% of the market in any given metropolitan area.

In turn, I began talking with other small food distributors, inquiring about their frustrations, growing our businesses, and competing with the likes of Sysco. By the end of my stint running the company, the wheels started turning. I began brainstorming ideas and searching for solutions that would alleviate or even eliminate some of the hardships I, as well as other small to mid-size distributors suffered. I wanted to find or create a disruptive solution that would help distributors effectively grow their business without the added overhead of a large sales force. This is when the initial concept of an e-commerce food distribution marketplace began to take shape; what is now Foodem.

It was evident that distributors were in need of tools to help them compete with larger distributors, increase their market share, and become or remain relevant in a highly competitive industry, but I still needed validation. Before moving forward with my business concept, I needed to know how restaurants operated and what their most pertinent needs were. After all, wholesale food buyers were the other component. In order to fully experience the other side of the food supply chain, I bought a restaurant, which soon presented a different set of struggles.

To my surprise, restaurant operations were completely antiqued, as well as flawed. Everything was done manually; yes, paper, pen, phone calls, and faxes. Due to the lack of price transparency, wholesale food buyers such as myself, were forced to set aside time to prepare written food orders and call multiple distributors, from multiple categories to price compare or wait for faxed price sheets. Not only was this highly inefficient, it was also very costly in time and money. On average, I was spending nearly 15 hours per month on procurement alone, further letting me know the wholesale food industry was ripe for an innovative change.

Having seen both sides of the spectrum, I was confident in pursuing my idea. I envisioned Foodem as the Amazon.com of the wholesale food industry; a marketplace that would facilitate relationships and connect wholesale food buyers, and smaller food distributors and growers. A marketplace that has the potential to lower the overhead costs for smaller distributors and growers, as far as sales and marketing costs are concerned, and expand their market reach. On the flip-side, restaurants, catering companies, hotels, and other wholesale food buyers would spend less time placing orders and more time running their businesses. Price transparency, food cost analytics and in-depth search capabilities in one centralized location would be of the utmost importance, saving both time and money.

Now live in the Washington, DC Metro area, the Foodem marketplace was four years in the making. Growing rapidly, we launched the second version of the website in May, 2013 which also supports the growing demand for local and sustainably-farmed food by connecting local farmers, in addition to food distributors, with wholesale buyers.

My unique professional experiences allowed me to walk the path of both a food buyer and distributor; giving me the chance to observe the needs of the industry from both perspectives, but with any startup or existing business, there are challenges. The Foodem team had its share of startup stumbling blocks including limited industry contacts, marketing barriers, compiling a diverse tech team, and the task of raising capital and bootstrapping.

Starting a business is no easy feat and we could all use a little help along the way. My personal advice to young entrepreneurs is to 1) brainstorm an idea or product that can be bootstrapped, allowing time for the product/model to be proven 2) know your target audience, seek users for your product, and build a following 3) only seek funds after your model has been proven and buzz worthy and 4) compile a great team with complementary, yet diverse skill sets. Lastly, PASSION is something that I feel very strongly about. Entrepreneurs must be passionate about their idea and their concept. Without passion, why do it in the first place?