Businessmodel of US Foods

Customer Segments

US Foods has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at multi-unit and independent foodservice operations at hospitality, government, healthcare, and educational institutions.

Value Proposition

US Foods offers four primary value propositions: accessibility, cost reduction, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It is able to offer numerous types of foods and food supplies because it is the result of dozens of acquisitions across its history. In late 2016 alone it acquired two food distributors:  Save on Seafood and Jeraci Foods. US Foods’ “Chef’s Store” increases access by providing hundreds of products that cannot be found elsewhere.

The company reduces costs in a variety of ways. It leverages its national buying power to provide deals to its clients, including rebates, trial offers, and PowerBuy promotions, which sell brands offering national brand quality at value pricing. It announces new rebates and offers monthly.

The company reduces risk by maintaining high safety and quality standards. It places a strong emphasis on food safety, as demonstrated by the following:

• It has more Hazard Analysis and Critical Control Points (HACCP) certified workers than any other food distributor in the U.S.
• It was the first distributor to develop food safety training by job function
• It is the sole distributor to conduct external and internal food safety policy compliance oversight
• It pioneered the use of DNA testing to verify species of fish fillets received from suppliers and was the first food distributor to be certified as selling sustainable farm-raised and wild fish The company has established a strong brand due to its success. It employs over 25,000 people in 60 locations nationwide. Its product portfolio includes over 350,000 items, including its exclusive Chef’s Line brand and Rykoff Sexton, a premium line of specialty ingredients sourced globally. Its Culinary Equipment & Supplies division has 13,500 stocked items and ships more than one million orders annually. Lastly, it serves over 250,000 clients and generates $23 billion in annual revenues.

Channels

US Foods’ main channel is its direct sales team. The company promotes its offerings through its website, social media pages, and “Food Fanatics Live”, a series of culinary expos held in major cities.

Customer Relationships

US Foods’ customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website features a “Your Business” section that includes tools and tips for foodservice firms on cost control, effective marketing, and improvement of business operations.

The site also provides helpful resources such as product videos, recipes, restaurant operator profiles, a “Farmer’s Report” discussing food trends, and access to a newsletter with fresh food ideas. Despite this orientation, there is a personal assistance component. Customers have access to Restaurant Operations Consultants, who can work one-on-one with them to enhance their business operations in areas ranging from waitstaff training to facility inspections.

Key Activities

US Foods’ business model entails distributing foods from third-party brands to its foodservice customers and providing associated services.

Key Partners

US Foods’ main partners are the suppliers that provide it with the materials and equipment it needs to manage its operations. It maintains a portal through which its suppliers can submit a claim, submit payment invoices, and complete online documentation.

Key Resources

US Foods’ main resources are its human resources, who include the direct sales staff members that obtain new clients and the consultants that assist customers with their operations.

Cost Structure

US Foods has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely sales/marketing, a fixed expense.

Other major drivers are in the areas of customer support/operations and administration.

Revenue Streams

US Foods has one revenue stream: revenues it generates from the sale of the products it sells to its customers.