Figures vary from year to year and from source to source, but it is estimated that the French commercial catering market is worth around €25 billion, compared with €21 billion for hotels and €5 billion for bars. For food and beverage brands, it's clear that the "CHR" market is full of commercial opportunities.
But there are many challenges awaiting brands wishing to venture into this market: disparate markets, the strength of distributors and major brands, seasonal effects, etc. To succeed in this market, companies must first understand its specific features, in order to implement appropriate sales and marketing strategies.
To help you do just that, Sidely has identified 8 keys to deploying a winning strategy in the on-trade.
The CHR (Cafés, Hôtels, Restaurants) represents a very specific market for brands. There are many variables to consider when defining your marketing and sales strategy, as well as your distribution channels.
To begin with, the sector includes a wide variety of target establishments, ranging from neighborhood cafés to Michelin-starred restaurants and hotel chains. The latter can be found in urban, tourist or rural areas, all with different requirements and customer profiles.
Since few companies can afford to prospect all targets simultaneously, you'll probably want to start by defining priorities. The parameters mentioned above can then be used to establish strategic target groups, known in marketing as segments. This thinking integrates your marketing mix, correlating all marketing factors with each other. For example, supply must meet demand, which means focusing on targets (e.g. purchasing power) that match your products (e.g. range) and vice versa.
If you're specifically targeting tourism-dependent areas, don't overlook economic, geopolitical, health and other events that can impact tourist seasons.
Your distribution policy must also lead you to secure strategic partnerships with your customers and distributors. In fact, CHR establishments need frequent replenishment due to the daily consumption of products, and the quantities purchased can vary considerably depending on the size and type of establishment.There are 3 distribution methods:
→ Find out how to choose your distribution method.
But beware: distributors don't guarantee you exhaustive coverage of your target market: 20% of final points of sale (bars, restaurants etc.) are not under contract with a distributor, and can therefore be freely canvassed. This still represents almost 50,000 targets!
However, if you come from the world of mass retailing, you're no doubt used to negotiating with central purchasing agencies, on highly standardized assortments and offers, whereas the CHR leaves more room for "local" discussions and efforts to adapt products, offers or even partnerships.
However, to avoid dispersion, you may choose to sacrifice a little margin to work with distributors. They "control" 80% of the market, and contracting with them is not without advantages. Working through CHR distributors means benefiting from their commercial and logistical strength. What's more, for a brand with the ambition of deploying an intensive distribution strategy, distributors are a must, not a choice.
Last but not least, your logistical capabilities can also be a determining factor. For example, if you distribute fresh produce, or produce with limited shelf life, the frequency of distribution may increase drastically, and the size of the geographical area could put your logistical capabilities to the test. It goes without saying that avoiding losses from out-of-date or unsold products is imperative to your profitability.
Distributors manage distribution, invoicing and, in theory, promotion. "Theoretically", because in reality, it's often complicated for them to push all their brands, especially if their sales staff are incentivized on certain product references as part of commercial operations.
What's more, you can't leave it to a third party to promote your brand. That's why it's mandatory for any company distributing these products in the on-trade to roll out its own advertising campaigns, whether it's to develop brand awareness, or to communicate on a product launch.
Your communication needs to be differentiated according to target: business partners, distributors, consumers. Ideally, a solid marketing plan pushes all channels simultaneously to maximize contact points. Communication is repetition, and a customer is more likely to order your product in a bar or restaurant if he or she has been confronted with your brand several times in the preceding days, whatever the platforms involved (social networks, radio, billboards, POS, etc.).
Now that you've got a strategy for approaching the CHR, you'll need to optimize sales by making your commercial action profitable.
So you need to focus your efforts on the right targets.
But how do you get there?
Tastings are all very well... but to what end?
In the CHR sector, it's not uncommon for sales reps to take a random tour of an area they've just discovered, and knock on the door at the drop of a hat. Several parameters will determine the quality of the target:
In short, if you take a haphazard approach, the return on investment is far from guaranteed!
To avoid spreading yourself too thinly and maximize the ROI of your sales meetings in the on-trade, it's essential to have a database of on-trade establishments. This enables you to map the territory covered, locate your prospects according to the segments you've defined, or isolate outlets that can buy direct and those that go through distributors (partner or non-partner). This enables you to optimize your prospecting time by organizing rounds in line with your development objectives. Last but not least, it's essential to properly qualify your CHR prospects, to understand their sales potential and whether they really fit your target.
But optimizing sales time doesn't stop there. Once a customer account has been opened, you need to ensure that you are constantly maximizing its value. The notion of timing is central: if you take the order too early, you limit the volume and the customer risks overstocking. If you arrive too late, there may be a shortfall in sales, not to mention your competitors lurking in ambush on your neglected customers!
While there's no substitute for being close to your customers (fresh information is key), a CRM dedicated to the catering industry will enable you to automate reminders so as to encourage recommendations and generate efficient sales actions: the right prospect at the right time with the right strategy.
In the on-trade, the relationship is at the heart of the sale, and the beginning of the collaboration is a crucial moment.
Another absolute necessity for boosting your sales is for your sales staff to accompany the customer through the merchandising installation and share their experience with them. This is the best way to ensure that your brand is the most visible on the premises, as customers tend to order what's in their field of vision! Also, make sure your products are added to the menu where appropriate. And don't forget that a repeat customer is more likely to increase his or her purchase volumes, enabling your sales team to generate additional sales or expand the assortment.
To represent and promote your brand to foodservice professionals, you may want to recruit and train brand ambassadors.
Particularly present in this sector, "brand ambassadors" ensure the visibility and good reputation of the brands they represent.
Their responsibilities are generally as follows:
The CHR brand ambassador also tours with distributors to try to increase order volumes, present innovations and organize tastings. He or she has both a powerful marketing message and in-depth technical knowledge of the products.
Find out all you need to know about the CHR brand ambassador.
According to NielsenIQ, one in three bartenders would like help from their suppliers in developing their menu! When you consider that over 70% of bartenders influence consumer choice through regular recommendations, it's clear that every brand needs to develop its advisory skills.
Especially in the current climate, with owners and managers of CHR under pressure from inflation and changing consumer behaviour, but also emerging trends such as ORGANIC, craft beer and cocktails. For shopkeepers, who are often lovers of the trade or the culinary professions, the rapid and global evolution of the sector can be extremely complex to decipher, especially with long working days that leave little time for taking a step back.
For you, it's a tremendous business opportunity: the need for advice and mutual support has never been greater. Every week, your sales reps and brand ambassadors meet dozens of business leaders and retailers in a fast-moving ecosystem. Their experience, culture and expertise can be invaluable to small businesses.
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Sidely Tip: When you're up against the big distributors, your main asset is - and always will be - people! Be a source of advice and help your CHR customers to improve the performance of their establishments.
🚨 Don't forget POP: placing your advertising devices is a must, and your customer wins too. Here too, it's up to you to educate and help your customers make the right choices.
Which brings us to the crux of the matter: the art of sales!
Many decision-makers (including founders) make two mistakes:
These two beliefs cause many companies to miss out on their development potential.
For starters, no matter how great your product is, you should know that customers also (or even primarily) buy a salesperson. And despite the digitalization of almost every profession, French companies have never been looking for so many salespeople! Yes, people are still at the heart of sales, not chatbots or artificial intelligence. The RHC still operates on the basis of handshakes and "rounds of friends" 👷🧑🍳
Second: you know your industry and the RHC like the back of your hand, very well indeed... But are you really an ace salesman? And if so, does that make you a brilliant trainer? Sales is a highly technical profession, and it takes time to learn. Whatever the personality of your sales staff, having them trained by specialized firms will always have a positive impact on your sales. It's also an excellent way of demonstrating your commitment to developing their skills, rather than letting them run wild without fulfilling your managerial mission.
