When you sit down at a restaurant, do you ever wonder where your food comes from? Yes, we all know that apples grow on trees and eggs are produced by chickens, but few people are aware of the complex and robust food distribution network that exists to facilitate the process of moving food from the producer to your plate. This network is made up of three main players: manufacturers (producers/brands), distributors, and food service operators (restaurants, caterers, hotels, etc.) The distributors are a critical link in this system, connecting manufacturers and operators, aggregating inventory, and handling transportation and storage as products move down the supply chain.
Distributors operate at a massive scale. In 2022, The U.S. foodservice distribution industry posted $382 billion in sales, operated 17,100 distribution centers, employed 431,000 people, and overall represented a huge slice of our economy, generating $87 billion in total GDP. While some of this industry is dominated by mega conglomerates Sysco Foods, U.S. Foods, and PFG, the majority of activity comes from smaller and mid-sized regional and independent foodservice distributors.
Many of the regional and independent distributors are private businesses that are multi-generational; some have been run by the same families for 100+ years. These industry veterans are expert operators; however, as foodservice distribution begins to trend toward digitization and eCommerce adoption, many of them have struggled to develop productive eCommerce platforms to streamline the customer ordering process and drive growth. This leaves them vulnerable to the mega conglomerates with larger in-house technology budgets.
Interplay is proud to be an investor in Pepper, a complete eCommerce solution built to arm distributors with the tools they need to thrive in a more technology-driven future. Pepper replaces legacy ordering processes like text and email with a software platform designed to streamline internal processes on the back-end while providing an easy to use interface for operator customers on the front-end. With Pepper, distributors can offer their customers a beautiful, highly intuitive shopping experience that is tailored to the specific complexities of food distribution operations while offering the look and feel of a premium consumer eCommerce experience. Pepper also helps distributors grow sales by bringing proven digital growth strategies from the consumer world into the B2B eCommerce context – for example, an innovative suite of marketing and growth tools such as suggestive selling and user targeted promotions. These tools are already driving serious results for their customers, with the average distributor enjoying a 23% lift in same store sales within 6 months of using Pepper.
Prior to launching eCommerce with Pepper in January 2021, Mr. Greens, a foodservice distributor operating throughout Florida and Texas, employed a legacy eCommerce module that was offered by their ERP provider. The company’s online sales did not gain traction until they replatformed to Pepper and experienced rapid eCommerce adoption, growing sales every month for over a year. Average order size grew, as for the first time, customers could browse Mr. Greens’ entire product catalog online and discover items they didn’t even know the distributor offered. We spoke to Mr. Greens’ Chief Operating Officer, Scott Davis, who is now a huge Pepper advocate. In Scott’s words, “Pepper has provided incredible value to our business. The software seamlessly integrates with existing ERP systems, is easy to use on our end and is loved by all our customers. Pepper differentiates us from competitors by giving us a highly professional platform that is unmatched in the current market.”
At Interplay, we’re extremely bullish on the tailwinds driving eCommerce adoption, leading us to invest in companies building B2B eCommerce solutions such as Provi, LeafLink, Chiper, and more. We are confident that Pepper is well positioned to pave the way for foodservice distribution as Pepper has already distinguished itself as the industry leader, currently powering eCommerce for 150+ distributors and 20,000+ operators, processing over $1bn of gross merchandise volume on an annualized basis. They’ve raised >$30M to date from venture funds such as Greylock Partners, Index Ventures, and Imaginary Ventures in addition to strategic investors.
Pepper’s mission is to elevate and empower the independent distributor, and at Interplay, we’re committed to helping them reach this goal. Congratulations to co-founders Bowie Cheung, Chetan Narain, Ivana Tesanovic, and their team of industry veterans on building a market leading company that’s paving the way in their category. We are excited to be along for the journey and share Pepper’s vision of a bright future for distributors.