Making Sense of the Broker Side of the Business: A Conversation with Julie Swift

Julie Swift is a foodservice industry veteran who’s seen the broker relationship up close from all angles, first as a manufacturer and later as an executive at a national broker. Now, she advises manufacturers on how to build successful, mutually beneficial relationships with brokers. In this interview with First Bite founder and CEO Reed McCord, she shares detailed insights into the inner workings of the industry. From how consolidation is reshaping the broker landscape to what manufacturers can do to find an aligned broker partner and nurture a fruitful relationship, there’s no topic that’s off-limits in this wide-ranging conversation.

Reed McCord: First off, thanks, Julie, for taking the time to chat. To get started, it would be great to hear briefly about your background and what you do for brands.

Julie Swift: I started out on the manufacturer side, and looking back, I realized I didn't know what the heck I was doing in managing the broker. I made lots of mistakes that I didn't realize until I got to executive leadership at a national broker. I started to understand from both of those experiences that a lot of manufacturers were really confused by the broker side of the business. 

‍Reed McCord: And how does your consulting business and model work — the overall broker effectiveness coach?

Julie Swift: There is no one-size-fits-all for what I do. What I really do is tuck into exactly where you are in the process of either being represented by some type of a third-party agent or deciding to set up your own direct model that you're gonna navigate. 

Sometimes that is someone coming off of the broker representation side and wanting to explore direct, or someone who's direct wanting to get to the broker space. But more commonly, it is someone who says, “Hey, we tried the broker thing, it didn't work.” That’s like throwing it all away because one element didn’t work, and operating from the idea that all brokers are the same. They’re definitely not. So, as I start to peel that back, I help find the right solution.

Reed McCord: The landscape of brokers is almost an inside baseball thing for major manufacturers. I don't know that a lot of smaller manufacturers are aware of the seismic shifts in the broker landscape. What's going on?

Julie Swift: The last five years have really been fraught with change. Folks knew for a long time that five national brokers couldn't exist long-term. So, that came down to four, and now it's down to three. 

There are three types of brokers out there in the foodservice space. One is the most traditional, the national foodservice brokers: Affinity Group, CORE, Action. 

Then, there are the national non-traditional, which are more of a co-op, like Sales One that would consist of Portillo and Food Sales East and others that, together, make a national footprint.

There are also the fractional selling models, some of which are also national — someone like Rooted or Green Nature Marketing — that have a very limited sales force and only take certain lines within their wheelhouse.

Ideally, any one of those models could work for just about any manufacturer, depending on the category and what you're trying to get done. 

And the last piece is there are still some really great regional brokers out there that are absolutely killing it in their regions and have not jumped on the consolidation happening in the market. They're making big waves for their brands and making good profit along the way.

Reed McCord: How big do you need to be to work with a national broker? And how do you advise folks to think about strategy in terms of national, regional, specialty?

Julie Swift: No one really wants to talk about this out loud, so I'm glad you asked the question. Back in the day, when there were five nationals, it was pretty standard that if you were paying up to $250,000 in commissions, you could attract the attention of a national broker.

Now that it's consolidated, it's almost double that to really have a runway to be able to get your brand in. And that's where some of these non-traditional models come in that would elevate your brand, and you'd be a much bigger fish in a smaller pond. 

But the success factor is different for every manufacturer, and it's rare to see retainer-type things work. Most people end up disappointed in the end — both the broker and the manufacturer. The runway there is so short, because someone who's paying a retainer needs to get a quick return. There is no hard and fast rule, but I can tell you with the hundreds of lines that I've seen, I can point to one that's had success with a retainer.

Reed McCord: So, you mentioned there’s a commission model. If you're working with a national broker, it's $500,000 in commissions. Is it fair to assume that, starting point, that’s 5% of your business? So, you're looking at a $10 million business in the territory they’re owning? Is that a fair rule of thumb?

Julie Swift: Everybody wants to put rules around it, and there really are no hard and fast rules. There are exceptions and situations where it just makes perfect sense to bring on a certain line. And I've seen this time and time again where it's like, “Wow, this is the missing link in the portfolio that we're out there presenting. It’s very easy to add this to the bag.”

But you bring up an important question about how brokers make their money. Brokers work off of a cost-to-serve model. In situations with the highest synergy — the perfectly matched-up product line — the cost to serve, to add that extra item to the bag, is very low. However, if the broker has to think, What else is here that I can present while I'm in there?, that is a very high cost to serve. 

So when you think about, let's even say for a mid-size manufacturer that’s paying a million dollars in brokerage, where are you gonna get more runway? Where you've got the other items that fit the bag.

So, to answer the second part of your question, it's not necessarily 5%. It might be 8.5% or 9% to get started, with the sliding scale moving down as the revenue moves up. The important thing is to build the partnership upfront, where the broker can make more every year, and that has to be based on selling more.

I think there's also this attitude from manufacturers sometimes of, “Well, I'm paying you this much and this is a big percentage of my sales, what are you gonna do for me?” Rather than saying, “Hey, if we were to partner, what would this look like so it could be good for both of us?”

Reed McCord: I've heard this figure of $600 or $700 per stop. If you're a broker, that’s what it costs to get product in a bag, travel somewhere, spend time with the operator. And the way they make those numbers work is to split it across several brands that are all appropriate for that stop. Is that the right model for manufacturers to have in mind when they're talking to their broker: Are they able to fit into existing stops that the broker's already covering?

Julie Swift: This goes back to, there's no one-size-fits all. But there is an element of truth that runs through it. With today’s technology and CRMs, brokers should all be geomapping, because the synergy of calling on a certain group of accounts that are close to each other, that number looks so different for a major market than it looks for a smaller market.

It also depends on account type. Is it a college and university campus? Is it a hospital where I have five points of sell and presentation across a whole facility? There are all kinds of ways to bake the synergy in. 

The better brokers know this, and they're baking in the synergies and using a combination of sales tactics. Yes, there are still face-to-face sales, but there is a lot of activity that can happen digitally — through email and text messages and even Instagram instant messaging.

Reed McCord: There are upwards of 800,000 operator decision-makers. If you look at any one national broker’s coverage, how many are getting hit by that broker? 

Julie Swift: Great question. And if I'm being super generous, I would say 30,000 operators a year. If you look at the top ten in a broker’s portfolio, you should be able to see who those are, and that’s going to dictate which operators they're calling on.

That's probably going to include some commercial accounts. There are some that are local leverage operators — they drive distribution because when they say they want an item, the distributor brings it in.

I know some national brokers with customer lists that are more than 40% non-commercial. That's because the top of their portfolio is the major management contracts and GPO contracts and they need the engine to drive all those. Then, you think about K-12, which is a segment in and of itself. Again, look at the top of the portfolio, and you'll be able to see how much is managed there. 

Chains are probably where I see the most diversity, broker to broker. Some really tout the fact that they have relationships tucked up under that top 100. Others represent companies that want to focus on accounts that are 100, 150 units or less. That would include some big super regional operator accounts and emerging accounts. 

If a manufacturer can jump on the emerging chain, then they can have a pretty solid footing in scaling in that emerging space as the chain grows. Almost everybody has a focus on regional and national chains, to some degree, but the brokers who are really winning in the space are super tapped in on the ground floor of those emerging chains.

Reed McCord: The biggest misconception I hear from manufacturers about brokers is that they can send them leads and they will go close them. Can you help shed some light on what's happening?

Julie Swift: It's a total misconception. And the background behind why it's a misconception is the idea that most manufacturers have two go-to-market funnels. Funnel one is their direct sales force, and funnel two is their third-party selling agency. 

Funnel one is the big important accounts, where you need a direct salesperson who's a representative of that company to show up that day with their best game. This funnel over here happens to catch everything that doesn't get plugged into that first one. So, that's the problem.

But here's why the broker is right to not want to mess with lead gen and lead fulfillment. It's not in their glide path. They have their accounts — let's say the 30,000 — that they're going to go after feverishly. They have influence there. That operator knows that the broker has leverage with the distributor, the manufacturer, they can maybe get them a deal — all of those things. That's a really important person in the process. You’re going to put that person making cold calls?

Reed McCord: There's an increasing trend I hear from manufacturers about walking away from a national broker relationship and hiring 40 people to cover the country themselves. What do you think of that?

‍Julie Swift: I think that every brand and every line is completely different. Direct is absolutely good for some folks, but not for others. And the litmus test is your line and what you're trying to do and where you're going with that. The litmus test is not how it worked for Tyson or Blue Bunny or whoever else might have gone direct in that space. 

It's a scary thing for most manufacturers to think about going direct. There is a whole back end of services that brokers don't really talk about that much, because it's just a standard of what they do. And those things are some of the more difficult things to get covered when you pull yourself away from the broker model and move into the direct model.

Reed McCord: We have customers in common, folks that you've helped create their broker strategy and maybe even their go-to-market strategy. A lot of them also use First Bite as a data source, lead gen tool, or CRM. How does First Bite help the broker relationship?

Julie Swift: There are great ways for them to play together. And if we think about going back to the model of the go-to-market funnels and there being two funnels — for most businesses that are of any size at all, there should be a third funnel. And that's a fractional selling model where you want to grab the best data, information, and leads out there and run them through it.

The efficacy of what is going in really dictates what comes out. I'm seeing it work with some of my clients, but it means that you've got to have a fractional closer on the back end to come in and make sure you're able to close those sales without bogging down either of the other two funnels. That's the important piece. 

I'm invigorated by it, because it really does fit into the pivots that the market has made these last years, both coming off of the pandemic and the consolidation at the top with the broker market. The way it all works together is you don't set those three funnels up as independent silos. You set those up as working with and for each other, so that nobody feels like somebody else has taken a piece of business that belongs to them. When it's really set up right, it works beautifully.

Reed McCord: Thanks, that’s awesome. You know, I look to you as a source of clarity and wisdom in the space. So, is there anything I didn't ask about that you'd love to share with manufacturers?

Julie Swift: A last thought that I would share is that brokers really want to win on behalf of manufacturers. But they're also in the business of shaking their heads ‘yes,’ even if what the manufacturer is asking for is outside their real glide path. And because of that, they fail. 

So I encourage manufacturers to go in with the idea of, “Let’s collaborate and figure out together what’s the best foot forward,” because it’s a great model with a big runway for folks who know how to get in there and drive those efficiencies.

Reed McCord: Awesome. Thank you, Julie. I really appreciate the time.

This interview has been edited and condensed for clarity. To learn more about Julie Swift, head to her website. You can watch the full video interview with Julie above, or on our YouTube channel.