2009 Dealer of the Year: Edward Don & Company - Leading by Example

People recognize Edward Don & Company for its strong street business, but the family-owned enterprise continues to grow through its many other customer service-focused assets.

Edward Don & Company is one of those iconic names within the foodservice industry and rightfully so. With its 2008 sales totaling $614 million, the North Riverside, Ill.- based company easily maintained its position as the leading foodservice equipment and supplies dealership by sales volume. And from 2002 through 2008, Edward Don & Company averaged an impressive 8.2-percent annual growth rate.

The 88-year-old company accomplished this by growing existing sales territories, leveraging its design business and generally investing in the dealership's systems and infrastructure. The net result of these efforts allows Edward Don & Company to maintain its laser-like focus on the company's large and diverse customer base.

For these reasons and many more, FE&S proudly recognizes Edward Don & Company with its 2009 Dealer of the Year Award.

FE&S spent some time discussing with Steve Don his company's evolution to date and its leadership position.

FE&S: When you took over as CEO in 2002, your company's revenues totaled $385 million. Since then, Edward Don & Company has continued to grow and last year totaled $614 million in sales. How have you been able to maintain such a brisk pace?
SD: We took a look at our growth rate and previously we had grown about 4 percent annually. So, the management team set the goal that we wanted to double the size of the company in 10 years. In order to do that, we realized we had to grow at twice the industry growth rate. So, we sat down and had to decide how we would achieve that growth rate. Part of it has been geographic. For example, in 2000 we opened our California distribution center and that was a big part of our growth. Another big aspect has been our design department — the design-build part of our business has been growing steadily for the past seven years. And we also added new territories within the existing geographical areas we serve.

FE&S: Realizing this was going to be a challenging year for business, what are some of the things you did to make sure your sales force was ready for 2009?
SD: We do a lot of national account business, so early in 2008 we saw some of the chain growth slowing down. We certainly imagined it was going to be difficult but we did not imagine things would be this difficult. So, we really focused on our expenses. We've always been really budget-conscious and tight with our expenses — even more so heading into 2009. We tried to protect as many jobs as possible and look at places that did not affect the customer. Then we looked at what are the nice things we can do without. This resulted in our cutting out some tradeshow expenses and travel — cutting out nights in hotels by leaving the same day. And we looked at everything from the cups we use in our cafeteria to recycling in our distribution centers. No expense line was too small.

FE&S: How do you remain flexible and responsive?
SD: I was taught early on that it all starts with the customer. So, we preach that to everyone from our warehouse people to our drivers to our salespeople. We are very customer- focused and our big customers have probably made us what we are today. So, when a national chain approaches us and says they want to do something, we take a "can do" attitude in working with them. Whether it's something to do with implementing technology or different kinds of service, they have really brought us to the next level. Our sales guys go out there to sell it and our operations guys figure out how to execute it.

FE&S: What are some of the key metrics you gauge to measure your progress?
SD: Anything we do we try to append a metric to it. Obviously, the most identifiable one is sales. Everyone has a sales budget and they know what that is down to the day. We manage that on a regular basis. We have weekly meetings to go over the numbers. And then we look at everything including how many boxes our warehouse guys pick an hour, how many deliveries our drivers make, and in our call center we measure how many calls people answer, how much time they spend on the phone with customers, etc. Everybody knows the numbers in real time. So, we share everything we can with our employees. We have quarterly meetings so all our associates know where we stand.

FE&S: Your company is known for making a significant investment in technology. Your company is making an investment in an ERP software application, your sales force is armed with laptops connected back to headquarters and there's even the Don Toolbox. How does this help your company?
SD: When I first started at the company in 1992, we had a bunch of disparate computer systems. So, we put our first ERP system in place in 1998 and we started bar coding everything. What the technology has allowed us to do is double the size of our business without doubling the number of employees. On the sales side, this allows our people out on the street to access information. Nine years ago we first gave our people laptops and today they have wireless cards that give them access to the internet and the ability to connect back with our main computers, allowing them access to their customers' history, invoicing and accounts receivable information. So, it has given our salespeople a chance to be out there selling more instead of being on the phone calling the office or calling factories.

FE&S: How have the systems improved your business?
SD: Part of our investments into systems has allowed us to measure various aspects of our business. For example, in the warehouse we can measure how many labels they pick so we can determine how efficient they are. In the old days, if we had 18,000 labels, those orders got picked in 10 hours. And if we had 10,000 labels, those orders got picked in 10 hours. So, the work was adjusting to the amount of time instead of the other way around. GPS in the trucks has allowed us to do the same thing, namely track the locations of the trucks and account for how many deliveries they can make in a day. With our salespeople, we know how many orders they enter each day and how their business is doing week to week. It's the systems that have allowed us to measure throughout the business.

FE&S: How has this improved the way you interact with your customers?
SD: Our customers now have access to all their own information via the internet. So, we have customers that can see what they have ordered, their accounts payable information and more. So, it really has allowed them to do business when they want to do business. We even see some customers entering their orders at night, when our call center is not in service. This gives them the chance to work when they want to work and not how we want them to want to work.

FE&S: When you free up your salespeople from calling the office or factories and give your customers the chance to place orders when they want, it allows both parties to have a different relationship. Is that true?
SD: Yes. When I started on the street, we spent a lot of time taking orders. And the only way salespeople got orders was to see their customers and write the order themselves. Sometimes, you even had to chase them around the storeroom. By allowing the customer to enter their order online or having the salesperson enter it into their computer right there, has really taken our relationships to the next level. Now instead of just taking an order, our salespeople are talking with the foodservice operators about what they can do to help them be more successful. That can include helping them identify ways of merchandising an entrée item on a smaller plate to reduce food costs or identifying opportunities to up-sell beverages by using special glassware.

FE&S: As a result of these changes, it seems your relationship with your customers is more consultative in nature instead of just selling a product for a price.
SD: For us, that began a while back when we started to have real business reviews with our customers, going through our relationship and what we can do to improve our relationship. We also started looking at total cost of customer ownership, which takes into account order size and other ways they interact with us, with an eye toward taking cost out of the supply chain. This got our salespeople to be more of a consultant than the person selling tabletop, smallwares or heavy equipment.

FE&S: A lot of people see foodservice equipment and supplies as a commodity item. If that's the case, why invest all that money in training? Is it necessary to sell commodity items?
SD: I would argue that it's not a true commodity. Things are being commoditized by the internet and technology but when you take a look at true foodservice equipment and supplies salespeople, they have a tough job. They have to be experts on refrigeration, cooking and holding. The distributor sales rep still specifies a lot of product. So if the notion that these are commodities was true, then we would not be here today. What we see is that with times being as difficult as they are, more people are looking to outsource certain aspects of their business. That means they need people who know about the product, that can design kitchens and just help them with their operations. By having a well-trained sales force in the areas of equipment and supplies, we see ourselves as having even more of an opportunity to help foodservice operators than we did even five years ago.

FE&S: Describe your base of commercial customers and how that's evolved.
SD: We have seen the independent operator become more sophisticated. It seems that when an operator opens a restaurant they want to have multiple facilities. So, about 50 percent of our commercial business comes from national chains and the other 50 percent comes from local and regional chains. There are still some independent operators running a single unit, but we are seeing that less and less. The good people out there want to leverage their capabilities. Even the chef-owned restaurants are expanding.

They are trying different concepts and opening different locations throughout the country. We have seen most of our customers go from independents to being multiple location independents. And we do like the mix between national chain and independents. Right now, some of the national chains on the casual-dining side are having a little more of a struggle than some of the local operators. We like having that balance.

FE&S: Your company has this reputation as being a company that sells mostly consumables. But when you look at your sales volume in the area of heavy equipment, that amount alone makes you among the top 10 dealers in the country. And your company sells a lot of tabletop items and works closely with customers to create interesting tabletops. So, it seems that your sales reps have a really unique and in-depth relationship with your customers.
SD: We want to sell all categories to all customers. Some customers we sell tabletop items to but they buy their equipment from somebody else. Others buy their equipment from us but not their tabletop. If someone is strong in tabletop, we will get them equipment training. If they are strong in equipment, we will get them tabletop training. Or if we get an equipment and design job, we will bring in someone with tabletop expertise to help. We've really taken a team approach to selling to ensure that we have as strong a relationship as we can with that customer.

FE&S: You have a very large street sales force. How is that an advantage for you?
SD: We are still a customer-driven business. You still need to know what's going on at the customer level. Getting out there to interact with the customer has allowed us to understand their needs. And the best way to get that information is through a sales force.

FE&S: When a customer deals with Edward Don & Company, what do you want their experience to be?
SD: We talk about the customer experience and what is good customer service. The bottom line is that we want the customer to feel good about doing business with Edward Don & Company. Whether it's the service they receive, the feeling they were treated fairly or the notion that we will do whatever it takes to help them. It's more than just selling products. We want to help make our customers successful. So, if they are successful they will continue to do business with us and we will grow. We are really focused on that long-term relationship and not what can we sell you today.

FE&S: How would you classify your working relationship with your vendors?
SD: Partnership is a word that's often over used today, but it's something that we really strive to form with our key vendors. That's allowed us to do several things. First, it has allowed us to see products they are working on early in the process and show them to some of our key customers. That generated some valuable operator feedback for these factories. Some of our larger customers have actually designed products for the factories in those cases where they had a need but there was no product commercially available for them. That has happened more so on the tabletop side than the equipment side just because of the tooling costs. But on the equipment side, we've been able to get the manufacturers to customize products for them or include some value-added features. This provides value for both the customers and the vendors. Also, we work with our vendors to find ways they can improve their business with us. We have regular meetings to review sales performance, supply chain efficiencies, etc.

FE&S: Describe how you partner with your factories in the field.
SD: If a factory or a manufacturers' rep wants to spend the day with our sales reps, we set that up for them. They will go out to call on customers together. We've also done market blitzes where we pair one of our sales reps with a factory or independent manufacturers' rep and together they call on a targeted group of customers. This approach is good for the factories because it provides them with feedback about their products. Plus, it gives them a chance to see how our people are working on a daily basis, the way they use the factories' training materials and so on.

FE&S: How does that benefit your customer relationships?
SD: They see us as adding value by bringing in someone from the factory, instead of just showing up with a sell sheet or logging on to the internet to pull down some information from somewhere else. The fact that a factory is actually coming to see a customer, makes that operator feel good. By seeing someone from the factory, the customer feels that this manufacturer actually cares about what's going on at the operator level.

FE&S: OK, playing devil's advocate here for a moment, that approach is counter- intuitive to how a lot of dealers go to market these days. It's a church-and-state conversation with these customers. Their philosophy is, "It's my customer so the factory has to stay away." Why are you so secure in your factory relationships?
SD: We see it as if a factory wants to go out to make direct sales calls they can pretty much walk into that operator and make that call. So, we see it as an opportunity for a knowledge transfer to take place. I know that when I started that's the way I learned, by having a factory rep make a sales call with me. At the end of the day, the factories can go to market with you or without you and we feel it's better to be with them.

FE&S: Edward Don & Company has a long and proud family history. What are some of the lessons you learned from your dad and others that came before you?
SD: My dad taught us early on the concept of stewardship. Basically, that means the Don family is there to serve the business and that business is not there to serve the Don family. That was something he started ingraining into us when we were little kids and all the way through the time we joined the business. In some respects, upon joining the business you were almost treated worse if your last name was Don instead of another employee. We are a business owned by a family and not a family-owned business. We earned things based on merit. My dad also instilled in us a sense of honesty and integrity. It's always black or white. There's no gray. The rules are the rules and if you violate them you are out. You only have your word and your reputation. We have a standard of conduct that we universally enforce across all employees. It does not matter if the cost was one penny or $100,000. We treat the issue the same. We brought our family values into our business.

FE&S: What was it like growing up in the business?
SD: It was interesting growing up in the business. We used to be located in a multi-story building in downtown Chicago. This was a loft-style building that was sort of built like a parking garage, with lots of ramps from one level to the next. It was near Chinatown. The big thing was to have grandpa drive you around from one level to another on a cart and then we would go to Chinatown for dinner. As we got older, there was an opportunity for us to have a summer internship in the business between our junior and senior years of college. I started out filling in vacation territories. So when a salesperson went on vacation for a week, I would take that territory, usually working with a sales manager. That was my first opportunity to see what really happens in the business at the customer level. You weren't sitting in a fancy office. Instead, you were walking into customer locations through the back door, getting yelled at by them because their order was not right — all the typical things salespeople experience on an everyday basis.

FE&S: I sort of sense the fact that Edward Don & Company is known as a leader in the industry is something you and your management team seem to take seriously. Is that the case?
SD: Definitely, we talk about being an industry leader and one of our goals is to stay the industry leader. Each year, we watch FE&S' Distribution Giants carefully and we know there are some people coming up behind us. We are conscious of that. As a leader of the industry, we try to keep an eye on what's going on, try to influence things when we can and speak up when we disagree. We try to support those initiatives that we think are good for the industry.

FE&S: When you look back at how much the company has grown since you first joined, what do you think about how far you have come?
SD: We are very proud of what we have accomplished. But when you are the industry leader, there's only one place you can go and that's down. As proud as we are of our accomplishments, we are always looking in our rearview mirror, remaining aware of who is behind us. Our management team is very competitive and we usually set our goals to be pretty high. And we're still focused on doubling the size of the business.

FE&S: Where would you like to see the company in five or 10 years?
SD: One of our driving goals is to be the industry leader. We'd like to stay atop FE&S' Distribution Giants but there are other definitions of leader. We are focused on growth, although right now the industry is not growing and 2009 is going to be a bit of a challenging year. Our original goal was to double the size of the company in 10 years and until this current economic slowdown we were ahead of pace. So, it might take us a little longer than anticipated but we are still focused. We have a lot of room to grow geographically and we can still grow in the regions we already serve. Reaching $1 billion in sales is something we kick around, too. At the end of the day, though, it's all about having a company you feel good about.

FE&S: Would you encourage your children to get into this business?
SD: I would encourage them to seek out their challenge in life and if it turns out to be the restaurant equipment and supplies business, that would be great. One of the things my dad instilled in us is to do what you're passionate about. The door was always open for us to enter the business but we were never pushed to enter the business. One of the requirements was outside work experience and that was the best thing. My children talk about going to work for Edward Don & Company but who knows if they will feel the same way in 20 years. Still, the door will always be open for them.

FE&S: What makes you most proud?
SD: If I don't show up for work for a week, the business runs smoothly. In other words, while the Don family is integral to the business it does not rely on the Don family to run. We have really empowered our people to do their job. The fact that people can take things to the next level is the most gratifying.