Fixing the Trade Spend Problem in Foodservice Sales: Introducing First Bite Rebates

Did you know manufacturers spend $30B+ a year on foodservice trade spend, making it the second-largest expense after cost of goods?

Trade spend aims to make your food products more visible and to drive sales through three primary avenues:

• Group purchase organizations (or GPOs)
• Distributor programs
• Direct-to-operator rebates

That sounds great. But, historically, the process has been incredibly inefficient.

Most manufacturers invest in blanket programs that are slow, manual, expensive, and offer zero attribution. They don’t do it this way because it’s effective or fun. They simply haven’t had a better option.

First Bite envisioned a new way of managing trade spend: One that made it simple to create, launch, and manage a digital operator rebate program that drives ROI (with the data to prove it).

Last week, we introduced our Rebates platform to do just that. We’ve been excited to talk about the product itself elsewhere, but here, we want to share our “why.” 

Why is the system so broken, and why are we certain direct-to-operator rebates can drive real growth? Let’s dive in.

The problems with trade spend today

The foodservice landscape is insanely fragmented. There are over 1.5 million operator locations in the U.S., and 70% of them are independents. 

GPOs and distributors stepped into the middle of this chaotic landscape to build a bridge between the parties. In theory, both avenues give manufacturers like you access to an enormous volume of accounts, and investing in trade spend can help you stand out from your competition. But in reality, the process has flaws:

• GPOs ask you to compete on margin, so you offer similar sweeping discounts to every member location — there’s no room for strategy here. This structure cannibalizes good revenue in favor of more accounts and eats into your bottom line. Most manufacturers sacrifice 12-20% of revenue when selling through a GPO.
• With distributors, you’re managing billions of dollars in incentives through paper forms, PDFs, and spreadsheets, which inhibits your flexibility and requires manual reporting and reconciliation across distributors and operating company locations (maaajor headache!). Plus, distributors keep the sales data to themselves, so you have zero attribution.

Reimagining trade spend with direct-to-operator rebates

The First Bite team is full of foodservice sales vets, so we saw the clear ideal solution: Create a system that makes direct-to-operator rebates easy, where you can build targeted offers, adjust pricing for specific accounts, and measure results.

We know that direct-to-operator rebates can drive business results in two key areas: new customer acquisition and customer retention.

Let’s take an example of a cheese producer expanding into a new market to see how it works. 

When the cheese producer begins their outreach to new operators, they can approach them with a targeted offer. This drives the sales process forward by:

• Piquing the operator’s interest from that first conversation.
• Making it easier for the operator to say “yes” to trying a new product.
• Funding the operator’s first order via rebate, which ensures the product moves through distribution.

Plus, the sales team gets full attribution, a virtual close with minimal lift, and a direct relationship with the buyer. 

Once those operators have made their first few purchases, the cheese brand can use rebates to drive loyalty and account growth:

• Launch rebates to cross-sell additional products, or 
• Introduce always-on loyalty incentives to encourage repeat purchases. 

As you can see, the direct-to-operator rebates benefits are real. But the next hurdle manufacturers face is how to implement them. It’s possible with old-school methods, but it would be way easier with a platform that marries operator data with purpose-built tech.

Meet First Bite Rebates

First Bite Rebates is the first end-to-end digital rebates platform for foodservice.

It empowers you to create targeted offers in minutes, deliver them directly to operators, track redemptions, and get real purchasing data and attribution.

We’re proud to say that it’s:

• The first platform of its kind. No one else is doing this.
• Built on our existing CRM and sales intelligence tools to make implementation even easier.
• Branded and integrated. Add your logo to your rebate offers, and distribute to prospects and customers at trade shows, via digital campaigns, emails, or brokers.
• Lightning fast. You can create a program in minutes and rebates are processed in days — not weeks or months.
• Managed by us. Let your team focus on something else; we’ve got the administration of your rebates on lock.
• Distributor-agnostic, with full visibility into orders and the ability to offer rewards directly to operators.
• Natively data-driven, with attribution metrics that allow you to tie trade spend directly to sales outcomes.

All that makes First Bite Rebates a smarter replacement for the entire legacy playbook, including GPOs and un-targeted trade spend.

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We firmly believe that direct-to-operator rebates represent the future of smarter foodservice sales. If you think we might be onto something, we’d love to show you how our platform works. 

Schedule a demo today!