Hitting Critical Mass
U-Gas shows the possibilities of a small-scale foodservice commissary.
“We don’t have to do that,” says Springer, “but it’s something we want to do to show we care about food safety.”
U-Gas has also changed the commissary’s operating hours. Initially the facility was producing six days a week, but labor costs mounted with costly overtime pay. As of July, the commissary had switched to five days a week; as a result, labors costs have fallen by 10% or more.
Outside the Box
If your base isn’t big enough to warrant a commissary, consider expanding the base.
“Coming into this business, the plan was not to make money right off the bat—we’d eventually make money,” says Springer. “Now that we’re selling to outside consumers … that is getting us to where we are making money.”
Beyond its 19 sites, U-Gas sells food to nine vending companies, four outside c-stores, a college and a wildlife park. Springer has a background in foodservice sales and distribution, and he has made several contacts from which to build that base. “We’re getting a lot of business by word of mouth. People are starting to get the name and concept from us running the business,” he says.
Nearly 20% of U-Gas’ foodservice sales are from outside customers, a crucial revenue opportunity for small operators looking to turn a profit on their commissaries.
Holand of Food Sense embraces U-Gas’ approach.
“I would absolutely be generating accounts in every direction I could as the commissary manager,” she says. “His [No. 1] focus should be the retailer who owns him, but then his other focus is to make money.
“A lot of commissaries with less than 15 stores to support from one retailer can’t survive without going out and getting other accounts,” she continues, “because their volume hasn’t hit thresholds to support their paid costs of operation.”
Even though it only recently expanded into the larger commissary, U-Gas is leaving itself room for growth. Two suites nearby can accommodate an expansion. But for any retailer, small to large, looking to open a commissary, one central question must be answered: “At the lowest volume going through, will it make money?” Holand says.
“Make sure it can run lean and mean at the base level, and then from there, improve on it.”
Not there yet? Holand recommends partnering with a small caterer.
“Behind the scenes they’re supporting the fresh-food operation,” she says. “When they are not running shifts for catering, can you run three shifts to make sandwiches and salads, cross-dock muffins, cross-dock fresh foods from Sysco, put meal boxes together, and then partner that way where it really looks and feels like the operator’s commissary?”
That’s the best choice until a retailer has control over the distribution chain.