Roger O’Brien, the president and CEO of independent seafood distributor Santa Monica Seafood, believes there’s only one way for his company to compete with heavyweight broadliners like Sysco and US Foods: get bigger.
In an interview with SeafoodSource, O’Brien said his goal is to grow Santa Monica Seafood into a USD 1 billion (EUR 877 million) company.
“It’s about surviving,” he said. “For us to survive, we have to have a national footprint so we can go to national retailers and buying groups, and say, ‘We know you want to consolidate your suppliers. Well, we can do it.’ I’d love to tell them we can serve 40 out of 50 states of the union. That’s my goal – to color as many states in the union as we can Santa Monica Seafood blue.”
Even with growth, seafood will remain the focus of the Rancho Dominguez, California U.S.A.-based company, O’Brien said.
“I focus Santa Monica just on seafood,” he said. “I believe some other larger seafood distribution groups have lost their way a bit, getting into gourmet products or having to sell a larger line of non-seafood products. Their sales staff don’t love it because it’s tough to know about all the different things they’re selling. I found if you throw too many products at a sales staff, they just can’t handle it from a knowledge perspective. I want Santa Monica to be a seafood company and a seafood company only.”
Despite intense competition from the bigger broadliners, O’Brien said he thinks coexistence is possible.
“The Sysco’s of the world sell such a variety of products. Their salespeople are jack of all trades, experts of none. They rely on us heavily for our expertise because their people don’t have it. And when it comes to fresh seafood, we’re a good source of it for them,” O’Brien said. “On the other hand, for accounts that require going a far distance without many other accounts in the area, we turn those over to Sysco and have for quite some time. So I think we can exist with all the broadliners, and in fact, I think it’s a relationship that is mutually beneficial. But we’ve got to keep moving.”
Acquisitions are a necessary part of that growth, O’Brien said, pointing to Santa Monica’s March 2018 purchase of Seattle Fish Company of New Mexico as an “ideal” example what we would like to keep achieving.
“I would do 20 more Seattle Fish of New Mexico deals if I could find them,” he said. “They were the best acquisition for us – unquestionably the best one we have done.”
O’Brien said integration has gone “great.” Both sides agreed to leave Seattle Fish as a standalone operation and that has worked out, he said, with the company increasing sales from USD 36 million (EUR 31.6 million) in 2017 to USD 42 million (EUR 36.8 million) in 2018, a 17 percent bump.
“I’ll take that any day,” he said. “They have an excellent facility, a great staff, and luckily they were running the same software system,” O’Brien said. “But our involvement has been minimal. Right now, we’re leasing a new fleet of trucks for them, we’re making some improvements to their building, and we’re asking where we can help in the procurement process.”
A benefit of not needing to expend resources to integrate Seattle Fish was that it freed up O’Brien to deploy initially 20 Santa Monica employees to open a new, 23,000-square-foot skin-pack facility in Chicago in April 2018.
“It has been a tremendous success,” O’Brien said. “We already had some larger clients there and we were confident if we opened there, we had a couple that would go with us. And its first year open, it had an excellent year in revenue.”
The company also operates a skin-pack facility in Los Angeles. Revenue from Santa Monica’s overall skin-pack operations doubled in 2018 and will double again in 2019, O’Brien said.
“There are a number of retailers who really like skin-pack. And there are others who are tempted but are hesitating to give up their butcher-block fresh seafood display cases,” O’Brien said. “My goal is to continue to refine and to see with hindsight what we could have done better in Chicago. Then we’ll look to open up another one. We want to get geographic coverage everywhere.”
Despite having an eye toward expansion, O’Brien said he’s “not anxious” to enter the Northwest or East Coast markets.
“Not yet. I want to avoid the bloodbath,” he said. “The Northwest has some really big players up there and I think that’s what would happen. Why do I want to go have that kind of fight? And unless I found just the perfect company, I would probably skip the East Coast, which has a lot of really well-established companies. It’s an attractive area because seafood is popular in that region, but why would I want to go into the hornet’s nest and have a price war, when there are all these other states where I think I can have an easier time. So I’m looking at everything in between.”
