WE DELIVER A Comprehensive Economic Impact Study of the U.S. Foodservice Distribution Industry
Introduction The foodservice distribution industry has a significant impact on communities across America. We ensure that restaurants and foodservice outlets have the ingredients and supplies they need to serve millions of meals every day. From foodservice at schools, healthcare facilities and military bases, to coffee shops, national chain restaurants and mom-andpop eateries, we make dining out possible. Understanding the scope and influence of our industry helps us better tell our collective story to educate elected officials on how legislation and regulations affects us; to illustrate our community impact to trading partners and allied industries; and to raise awareness among the general public about who we are and what we do. Therefore, the International Foodservice Distributors Association (IFDA) set out to map the true impact of foodservice distributors. We believe this to be the first publicly available comprehensive economic impact study of the foodservice distribution industry in the United States. The study quantifies the physical presence of warehouses and vehicles, the size of our workforce, the sales and tax revenue we generate, the jobs and sales we help support in other industries and the scope of our charitable giving. This report is based on primary research, multiple public data sources, and industry-leading economic modeling to accurately and objectively document the U.S. foodservice distribution industry. IFDA is the premier trade organization representing the foodservice distribution industry. With an annual sales volume of $280 billion, this industry ensures a safe and efficient supply chain of food and products for more than one million restaurants and foodservice outlets in the U.S. every day. 1
Introduction Scope of Work IFDA engaged FTI Consulting to assess the foodservice distribution industry in the U.S. in 2017. Methodology and Approach FTI collected data from a wide range of sources and directly surveyed IFDA members. Economic modeling was used to estimate broader economic impacts. Physical Footprint Distribution centers Square footage Number of vehicles Miles driven and fuel consumed Collect Desktop Data IFDA and company press releases Consultant/trade association reports SEC Form 10-K reports Bureau of Economic Analysis (BEA) Bureau of Labor Statistics (BLS) Direct Economic Footprint Industry sales Industry employment Projected growth Charitable activities Survey IFDA Members Physical footprint Economic footprint Workforce Vehicular fleet Corporate social responsibility Broader Economic Impact Gross domestic product Supplier/ancillary employment Supplier/ancillary labor income Tax Revenues Conduct Economic Modeling IMPLAN model Total economic impact and tax revenues National and state impacts 2
Table of Contents Page 4 Executive summary Page 12 Physical footprint Page 19 Economic footprint Page 28 Economic impact Page 39 Methodology and approach 3
Key numbers Physical Footprint Economic Footprint 15,000 Distribution centers Texas, California, and Florida are leading states $280 billion Industry annual sales Approximately the GDP of Louisiana 288 million Square feet of distribution space Equivalent to 5,000 football fields 350,000 Employed by industry 5.25 percent of all wholesale jobs 8.7 billion Cases delivered Nearly 24 million cases per day 700,000 Ancillary jobs Industry + ancillary jobs = population of Delaware 3.2 billion Vehicle miles per year 820 million Gallons of fuel per year Around the Earth 330,000 times, or 1,700 roundtrips to the sun More than 1,240 Olympic-size swimming pools $51 billion U.S. GDP 0.25 percent of the total U.S. economy 131,000 Drivers 3.75 percent of all truck drivers in the U.S. $14 billion Federal, state, and local tax revenues $7.2 billion in federal taxes, and $6.9 billion in state and local taxes 4
Economic footprint of the foodservice distribution industry $280 billion Industry annual sales + $51 billion Supply chain and employee spending = $331 billion Total economic impact
Physical footprint of the foodservice distribution industry National distribution center statistics State distribution center statistics 15,000 Distribution centers 288 million Square feet of distribution space 8.7 billion Cases delivered Texas, California, Florida, Ohio, New York, Illinois, and Pennsylvania have the most DCs. States on the I-75 Corridor, from the Great Lakes to the Southeast, have the highest concentration of distribution centers. 6
Foodservice distribution industry employment National employment statistics State total employment statistics 350,000 employed by industry Sales 12% Other 16% Warehouse 35% Drivers 37% 131,250 drivers 121,500 warehouse staff 41,250 sales staff 56,000 corporate and other CT 10 DC 3 DE 1 MA 21 MD 22 NH 2 NJ 27 RI 2 VT 3 Supply chain Employee Spending 700,000 ancillary jobs through supply chain and employee spending Texas and California have the most jobs, each with approximately 110,000 supported Even states without many distribution centers, such as DE and NH, receive ancillary employment through supply chains and employee spending 7
Total industry employees and sales Projected sales and employment growth for the foodservice distribution industry U.S. foodservice distributors projected employment and sales growth 450 404 400 350 350 350 365 351 354 300 $334 250 $280 $288 200 Legend Survey employment: employment forecast based on survey data. BLS wholesale employment: projected employment growth for the overall wholesale sector. Projected industry sales: sales forecast based on survey data. 150 100 50 0 2017 2018 2023 Survey employment (thousands) Projected industry sales (billions) BLS wholesale employment (thousands) 8
Corporate social responsibility of the foodservice distribution industry 2.9 million Cases donated to charity annually 368,000 Hours donated to charity annually $550 million Annual value of charitable donations 705 million Pounds of recycling annually 9
Vehicles (units) Vehicular fleet of the foodservice distribution industry Vehicles by type Vehicle statistics 100,000 80,000 60,000 40,000 20,000 0 65,000 57,000 31,000 Power units Trailers Trucks 153,000 Total vehicles 3.2 billion Vehicle miles per year 1,700 roundtrips between the earth and the sun 820 million Gallons of fuel per year Definitions Power units: Class 8 heavy trucks, the tractor in a tractor-trailer Trailers: attached to power units, usually without a front axle Trucks: single-frame vehicles, often for shorter deliveries 131,000 Drivers 3.75 percent of all truck drivers in the U.S. 10
Physical footprint Page 4 Executive summary Page 12 Physical footprint Page 19 Physical footprint of the industry Page 28 Direct economic impacts and industry projections Page 39 Economic impacts supported by the industry 11
Total foodservice distribution centers by state Texas, California, Florida, Ohio and New York represent one-third of the total U.S. 15,000 distribution centers CT 148 DC 42 DE 0 MA 274 MD 338 NJ 401 RI 21 253 12
Total square footage of distribution center space by state 288 million square feet of DC space nationally CT 2.8 DC 0.8 DE 0.0 MA 5.3 MD 6.5 NH 0.8 NJ 7.7 RI 0.4 VT 0.8 4.9 13
Total cases delivered by foodservice distributors by state 8.7 billion cases delivered per year nationally CT 86 DC 24 DE 0 MA 159 MD 196 NH 24 NJ 232 RI 12 147 14
Total foodservice distribution vehicles by state The vehicular fleet pattern is similar to distribution centers and square footage CT 1.5 DC 0.4 DE 0.0 MA 2.8 MD 3.4 NH 0.4 NJ 4.1 RI 0.2 VT 0.4 2.6 15
Total gallons of fuel consumed by the foodservice distribution industry by state 820 million gallons of fuel consumption annually CT 8 DC 2 DE 0 MA 15 MD 18 NJ 22 RI 1 14 16
Total vehicle miles traveled by foodservice distributors by state 3.2 billion vehicle miles traveled per year CT 32 DC 9 DE 0 MA 59 MD 72 NJ 86 RI 5 54 17
Economic footprint Page 4 Executive summary Page 12 Physical footprint Page 19 Economic footprint Page 28 Direct economic impacts and industry projections Page 39 Economic impacts supported by the industry 18
Foodservice distribution industry sales by state U.S. industry sales of $280 billion annually CT $2.8 DC $0.8 DE $0.0 FL $15.4 MA $5.1 MD $6.3 NH $0.8 NJ $7.5 RI $0.4 VT $0.8 $4.7 19
Total net exports of foodservice distribution products by state Midwestern and southern states tend to export product while coastal and urban states tend to import product CT -8% DC -48% DE -100% MA -26% MD 20% NH -34% NJ 18% RI -62% VT 56% WV -34% 0% The numbers above show the percentage that a state exports of foodservice distribution products relative to its own market size. For example, Iowa net exports are 24% of its domestic market; around 6% of the market in Illinois is covered by net imports from the neighboring states. 20
Foodservice distribution industry output by state U.S. industry output (sales less inventories sold) = $33 billion annually CT $327 DC $93 DE $0 FL $1,819 MA $606 MD $746 NH $93 NJ $886 NY $1,306 RI $47 $560 VT $93 21
Foodservice distribution industry capital expenditures by state U.S. industry capital expenditures = $3.6 billion annually CT $35 DC $10 DE $0 FL $196 MA $65 MD $80 NH $10 NJ $95 RI $5 VT $10 $60 22
Foodservice distribution industry employment by state U.S. industry direct employment = 350,000 CT 3.4 DC 1.0 DE 0.0 MA 6.4 MD 7.9 NH 1.0 NJ 9.4 RI 0.5 VT 1.0 5.9 23
Foodservice distribution industry share of wholesale employment by state Foodservice distribution comprises 5.2% of wholesale jobs in the U.S., with the highest concentrations in Hawaii and Alaska CT 5% DC 16% DE 0% MA 5% MD 8% NH 3% NJ 4% RI 3% VT 8% 25% 24
Humanitarianism and environmental stewardship in the foodservice distribution industry Category Value Cases donated to charity 1 2,900,000 Hours donated to charity 2 368,000 Donations to charity 3 $550,000,000 Pounds of recycling 4 705,000,000 Footnotes: 1. Calculated by industry sales by the average $/case reported by the IFDA member survey 2. Calculated by dividing industry sales by $/hr reported from the IFDA member survey 3. Calculated by dividing industry sales by average charity value from the IFDA member survey 4. Calculated by dividing industry sales by $/lb of recycling from the IFDA member survey 25
Projected growth in the foodservice distribution industry: survey responses compared with federal economic projections IFDA member survey respondents Expected 4% growth in employment in 2018 Expected 15% growth in employment by 2023 2.4% CAGR (employment) Federal economic projections BLS projections of industry output and employment 1 All in 2016 dollars Wholesale distribution 2017 = $280 billion sales and 350,000 employment 2023 = $334 billion sales and 354,000 employment 2026 = $365 billion sales and 358,000 employment o 3.0% CAGR (output) 1 o 0.3% CAGR (employment) 2 Food service and drinking places 1 2017 = $737 billion sales 2023 = $824 billion sales 2028 = $889 billion sales o 1.7% CAGR (sales) BLS expects wholesale (as well as retail and foodservice) employment to crest in the 2020s as technology improves and automates many jobs. U.S. gross domestic product ( GDP ) 2017 = $19.2 trillion 2023 = $21.3 trillion 2028 = $23.4 trillion o 1.8% CAGR (GDP) The industry is upbeat about prospects, with the average survey respondent projecting a 2.4% CAGR for employment. Federal projections are more pessimistic, with only a 0.3% CAGR for employment and 3.0% CAGR projection for sales. This is consistent with federal projections for GDP growth and the growth of the underlying restaurant industry. 1 https://www.bls.gov/emp/ep_table_202.htm 2 https://www.bls.gov/emp/ep_table_201.htm 26
Economic impact Page 4 Executive summary Page 12 Physical footprint Page 19 Economic footprint Page 28 Economic impact Page 39 Economic impacts supported by the industry 27
Metrics for calculating the broader economic impact of foodservice distribution Sales: total business sales, economy-wide, supported by the industry s activities. Output: net sales, or sales less inventories sold. This government definition only applies to wholesale and retail industries as final goods are transferred. For other sectors, sales and output are equal. Employment: the number of jobs supported by the industry s activities. Labor income: the income for households supported by the industry s activities. Gross domestic product ( GDP ): the sum of incomes related to production. Combination of sales, receipts, operating income, commodity taxes and inventory. changes minus its intermediate inputs (energy, raw materials and semi finished goods and services). Tax revenues: tax payments generated by the economic activity supported by the industry s activities. Includes two subcategories federal taxes and state and local taxes. 28
Economic impact types calculated in the IMPLAN model Direct Impacts Indirect Impacts Induced Impacts Definition: the company or industry being studied. Examples: foodservice distribution companies in the U.S. Definition: industries in the supply chain of the company or industry. Examples: fuel, utilities, vehicle manufacturers, construction, software, materials and parts, etc. Definition: industries affected by the spending of direct and indirect employees. Examples: spending on food, housing, healthcare, education, entertainment, etc. Total The combination of direct, indirect and induced impacts shows the total contribution of the industry to U.S. and state economies. 29
Economic impact of the foodservice distribution industry U.S. Level Direct Impacts Indirect Impacts Induced Impacts Total Impacts Sales (billions) $280.1 $22.7 $29.0 $331.8 Output (billions) $33.2 $22.7 $29.0 $84.9 Employment (thousands) Labor Income (billions) 350 271 435 1,056 $11.5 $7.8 $9.1 $28.4 GDP (billions) $22.2 $12.8 $16.2 $51.2 Total federal tax revenues = $7.2 billion State and local tax revenues = $6.9 billion The maps on the following pages show the results from this column 30
Total jobs supported by the foodservice distribution industry by state The industry supports 1.06 million jobs nationally CT 10 DC 3 DE 1 MA 21 MD 22 NJ 27 RI 2 15 IFDAIFDAIFDAIFDAIFDAIFDAIFDA 31
Percentage of total jobs supported by the foodservice distribution industry by state Foodservice distribution supports 0.5% of all jobs in the U.S. CT 0.4% DC 0.3% DE 0.1% MA 0.5% MD 0.6% NH 0.4% NJ 0.5% RI 0.3% VT 0.6% 1.7% 32
Total output by the foodservice distribution industry by state The industry supports $84.9 billion in output, with CA and TX having the largest impacts CT $0.8 DC $0.2 DE $0.1 MA $1.8 MD $1.7 NH $0.3 NJ $2.1 RI $0.2 VT $0.2 $1.3 33
Total GDP supported by the foodservice distribution industry by state The industry supports 2.75% of U.S. GDP CT $0.5 DC $0.2 DE $0.0 MA $1.1 MD $1.1 NH $0.2 NJ $1.4 RI $0.1 VT $0.1 $0.7 34
Total labor income supported by the foodservice distribution industry by state The industry supports $28.4 billion in U.S. labor income CT $0.3 DC $0.1 DE $0.0 FL $1.7 MA $0.7 MD $0.6 NH $0.1 NJ $0.8 RI $0.1 VT $0.1 $0.4 35
Total federal taxes paid by the foodservice distribution industry by state The industry supports a total of $7.2 billion in federal taxes CT $75 DC $20 DE $6 FL $447 MA $168 MD $152 NH $25 NJ $205 RI $14 $104 VT $16 36
Total state and local taxes paid by the foodservice distribution industry by state The industry supports $6.9 billion in state and local taxes CT $57 DC $15 DE $4 FL $387 MA $130 MD $171 NH $17 NJ $191 RI $13 VT $21 $118 37
Methodology and approach Page 4 Executive summary Page 12 Physical footprint Page 19 Economic footprint Page 28 Economic impact Page 39 Methodology and approach 38
Data sources Methodology Approach and overview IFDA member survey IFDA membership records Previous IFDA research Third-party published studies (consulting firms, trade associations), company reports and trade publication articles. Third-party data from government sources, including SEC, BEA and BLS. Analysis U.S. estimates of physical and economic footprint of distributors whose primary market is foodservice. Sales data by size and market share metrics to estimate the total impact of the industry: Assumption of small, non-ifda member companies for purposes of calculating distribution center locations = average sales $8 million. IMPLAN model calculations of the industry s total economic contribution and tax revenue to U.S. and state economies. 39
IFDA member survey Methodology IFDA data sources Conducted February-March, 2018, asking for data for the last full fiscal year. Self-reported data from 40 responding firms of varying sizes. For the purposes of this survey, IFDA defined foodservice distribution as the business of delivering products to foodservice establishments. These include commercial restaurants (independent and multi-unit, tableservice and fast food) and foodservice in military, government, travel, entertainment, sports, health care, institutional and educational facilities. Also included are retail establishments where products that the distributor delivers are primarily used for ready-to-eat meals and snacks vs. packaged items. It does not include redistribution volume or sales. Survey data was used as the primary source for analysis. Other IFDA data Estimated average cost per case from multiple previous member surveys. Self-reported membership data from firms on locations and size of distribution centers. 40
Transport Topics Methodology Third-party data sources North American fleet size for distribution firms. Used to establish number of power units, trailers and trucks for firms that did not complete the IFDA member survey. Securities and Exchange Commission (SEC) Sales data for large, publicly-traded firms. Bureau of Economic Analysis (BEA) and Bureau of Labor Statistics (BLS) Regional total employment and wholesale employment. Macroeconomic projections for the U.S. economy. Consulting firm and trade association reports Used for non-public sales and employment estimates for firms that did not complete the IFDA member survey. Food cost as a proportion of restaurant sales (National Restaurant Association s Restaurant Operations Report, 2016 Edition). 41
Summary of IFDA member survey statistics Category Mean Median Minimum Maximum Sales by DC $174,000,000 $121,000,000 $17,000,000 $700,000,000 Sales by SQFT $1,200 $1,000 $300 $4,600 Sales by Employee $800,000 $743,000 $400,000 $1,800,000 Sales per Vehicle $2,200,000 $1,900,000 $1,000,00 $4,500,000 Sales per VMT $100 $80 $40 $460 Sales per Gallon $600 $460 $55 $1,800 Average Cost per Case $34 $33 $8 $70 Notes: descriptive statistics exclude zeros and unentered values 42
Expanded methodology for foodservice distribution sales estimate IMPLAN sales for the following sectors to arrive at $848 billion in total foodservice sales: Full-service restaurants: $284.2 billion Limited-service restaurants: $446.4 billion All other food and drinking places: $117.2 billion IMPLAN uses raw BEA output (sales) for the overall restaurant sector and adds sales from restaurant activities in other sectors to develop a true restaurant sector sales snapshot. IMPLAN includes restaurant activities in amusement parks, bowling alleys, hotel-owned restaurants, schools, military and prisons that are not included in the BEA restaurant sector data. IMPLAN adjusts the BEA data to reflect actual economic activity, not just parent industry classification. National Restaurant Association data for restaurant cost of food and beverage sales: Full-service: 32.5% Limited-service: 33.3% Multiply restaurant sales by sector by cost of food and beverage sales to reach total sales of $280 billion for the foodservice distribution industry: Foodservice Sector Foodservice Sales (Billion $ s) Cost of Food and Beverage Sales Foodservice Distribution Sales (Billion $ s) Full-service restaurants $284.2 32.5% $92.4 Limited-service restaurants $446.4 33.3% $148.7 All other food and drinking places $117.2 33.3% $39.0 Total $847.8 33.0% $280.1 43
Production IFDA engaged FTI Consulting (www.fticonsulting.com) to execute its economic impact study. The core project team included: Ken Ditzel, Managing Director Scott Nystrom, Director Kristy Pultorak, Director The IFDA staff core project team included: Mark Allen, President & CEO Jon Eisen, SVP, Government Relations Brian Lynch, VP, Industry Relations Annika Stensson, Director, Research & Industry Insights International Foodservice Distributors Association 1660 International Drive Suite 550 McLean, VA 22102 www.ifdaonline.org (703) 532-9400 44