The affiliates referred to in the Marion, Iowa-based company’s name include Rapids Foodservice Contract and Design and Chain Restaurant Solutions. The story of Rapids’ success is the story of Schmitt’s entrepreneurship and leadership, which has guided growth and expansion from a simple catalogue company to a diversified customer-focused business.
How It All Began
Schmitt started his career as a certified public accountant (CPA) and spent roughly a decade in public accounting. “I decided to get out of that world after we had three of our four children, so I went into banking,” he says. He moved the family from Chicago to Dubuque, Iowa, to begin his new career. It wasn’t long before he realized he had made a mistake. He chafed under the strict conventions of the banking world. His entrepreneurial spirit was rising to the surface.
As a CPA and banker, Schmitt had seen many small businesses and realized the people who owned and ran them were doing very well for themselves. “It always had a kind of appeal to me,” he explains. So Schmitt began to think about owning his own business.
In the market to buy a company, Schmitt came across Rapids Wholesale, a catalogue business selling equipment and supplies. The company was a client of his older brother, who was also a CPA. “I had no knowledge of the industry,” Schmitt says. “But I knew the company had been profitable. We put together financing and purchased the company in 1992.”
Schmitt soon realized that selling through a catalogue was limiting. “It’s a numbers game,” he notes. “You mail a hundred catalogues, and you get two orders. You mail two hundred catalogues you get three and a half orders. There is no direct contact with any customer, so your growth is dependent on how well you can produce a compelling offer and a catalog.”
Rapids had been around since 1936 when it began as a supplier to the beer industry. The company still handles the beverage side of the business, in addition to foodservice.
Schmitt shares ownership with his wife, Geri, as well as her brother and his wife, Joe and Diane Dodds. Recently, Schmitt’s son Eric joined the family team.
Growth and Diversification
Soon after Schmitt learned the ropes and wanted to grow, the company hired its first outside salesperson and launched a different way of doing business. Over the years, the company increased the sales force and added a design and consulting business, which helps operators create kitchens for their foodservice operations.
The Rapids Contract and Design team consists of full-time designers, including three interior designers and two LEED-certified designers. The team also includes equipment layout specialists.
Rapids initially focused on independent operators but then expanded the customer base to the multiunit segment in 2005. “We started an affiliated company called Chain Restaurant Solutions,” Schmitt explains. “It’s an equipment and facility management service for multiunit operators across the country.”
Services include asset management, scheduling and tracking of planned maintenance, review and audits for compliance. These services remove operators’ need to worry about equipment issues and lets them concentrate on food and customer service.
Rapids now serves colleges and universities, K-12 schools, stadiums, hotels and convention centers as well as chain and independent restaurants in all segments, from full-serve to quick-serve. It contracts for nearly 700 locations as part of its Chain Restaurant Solutions equipment and facility management program. Several Panera franchisees were among Rapids’ first customers.
The latest Rapids acquisition is a local service agency in Cedar Rapids, Iowa, which came with a cash-and-carry store. Rapids subcontracts with a network of service agents throughout the country to serve its chain customers. The lone exception to that rule applies to any customers the Cedar Falls-based service agency can help. Customers in that area get company-dispatched service agents.
In addition to its Marion headquarters, Rapids has contract and design offices in St. Paul, Minn., Earth City, Mo., and Burlington, N.C. The firm also operates cash-and-carry stores in St. Paul and Cedar Rapids, Iowa.
Training Is Key
Rapids’ leadership team focuses on bringing young people into the company. “We try to focus on young folks who desire to make a difference,” Schmitt says. To foster a spirit of creativity, the company takes team members through “innovation training.” They learn to open their minds to new ways of viewing the business in order to serve customers better.
The company also requires refresher training on basic customer service skill sets; existing employees get refresher courses twice a year. New employees receive customer service training as well. “It gives us some ground rules to play by, with either external or internal customers,” Schmitt explains.
Relationships remain important in foodservice, Schmitt counsels. “I believe over the long haul the relationships you have with folks are critical. If you can deliver what the customer wants and needs, then you can overcome objections, whether it’s price or a competitive bid. Some of those basics — understanding how to interact personally — still go a long way.”
Schmitt credits flexibility for the company’s success. “The element that has allowed us to be able to accomplish what we have is being open-minded enough to be ready for opportunities and to look for change.” This strategy has resulted in multiple revenue streams. “People can shop from our catalog or in our web store. They can go into our cash-and-carry locations. They can use our design services or get repair or maintenance service from one of our technicians.”
Schmitt encourages employees to be ready to discuss all of the services with customers in order to deepen and expand the relationships. “We are training employees to talk about additional services available,” he says.
Thoughts on the Industry
Like most foodservice supply segments, the dealer side has been subject to a lot of consolidation. “It’s much more competitive today than when we bought the company,” Schmitt says. “We just try to offer services above and beyond what our competitors do. We try to meet customers’ needs, and we are small enough to be nimble, able to switch direction or add a service easily.”
Kitchen design is also undergoing change. “Our design team is seeing a shift in the type of kitchens that operators need,” Schmitt says. “They want smaller, more flexible tools in their kitchens. Instead of having a double-stack convection oven, they might have four small, accelerated-cook-speed ovens that they can move around. Instead of a 10-burner saute station that you can’t move because it’s under a hood, you might have induction saute stations.” The goal is to be able to achieve flexibility and not be stuck to the same menu and the same products.
This kind of creativity in the ongoing evolution of the back of the house that will be necessary for the dealer segment to succeed in business, Schmitt believes. “The dealers who will survive long term will have multifaceted revenue streams,” he says.
He adds: “I think that Amazon and that sort of go-to-market strategy will play some role in this industry long term. If, as a dealer, if we are not creating value that the customer appreciates and respects, they will go someplace else for price or convenience. Our challenge is to find the customers who value the services that we provide.”
Quick Facts :Joe Schmitt
- Education: BA, Accounting, University of Northern Iowa; CPA
- Industry involvement: President of FEDA, 11 years as a FEDA board member and convention chair
- Family: Married for 36 years to Geri. Four children: Eric Schmitt, Nick Schmitt, Ali Gansen and Anna Schmitt. Six grandchildren: Lilly, Aurelia, Charlie, Magdalene, Theo and Marianna and No. 7 on the way
- Weekday wakeup time: 4:30 a.m.
- Go-to food when dining out: House specialty
- What do you think about when you are in your car? Family stuff, employees, new ideas to implement and how to improve our business for end users by listening to innovation-type podcasts.
- What one word would your co-workers use to describe you? Fair.
- What one word would your family use to describe you? Thoughtful.
- What’s your superpower? I am not allowed to share this. Sorry.
- What was the last picture you took on your phone? Scanned a photo of Geri and me from 40 years ago when we were first dating. She still looks much the same ... me, not so much!