Seafood distributors feel the pinch

Published on
March 5, 2009

Many grocery and restaurant chains struggling financially are hurting the performance of seafood suppliers and distributors, many of which are simply supplying less product to their customers or looking at expanding their business overseas.
In recent weeks, many major grocery club store chains have reported a steep decline in profits, including Publix Super Markets of Lakeland, Fla., and Costco Wholesale of Issaquah, Wash., which saw profits drop 27 percent in its second fiscal quarter.
However, financial results are mixed, as income at Safeway in Pleasanton, Calif., rose 12 percent for its fourth quarter, while sales at BJ's Wholesale Club grew 11.5 percent for fiscal year 2008.
Still, grocery chain's cost savings' initiatives and bankruptcies are hard on the seafood industry since payment to suppliers may be delayed or not made at all.
The most recent example is Bruno's Supermarkets, a 164-store chain based in Birmingham, Ala., which filed for Chapter 11 bankruptcy in February. In March, the company said it would close four stores in central Alabama. It is not clear yet how and when Bruno's vendors will be paid, but its landlords asked a bankruptcy judge to reject the chain's requests to defer rent for 60 days.
The supermarket industry's problems have led to a decline in sales of premium seafood items such as crab and lobster, say distributors.
"Sales are way down on more of our dollar items such as live crab. Grocery stores are buying cheaper stuff and staying away from high dollar items," said Marvin Warman, owner of Starvin Marvin's Seafoods of Charleston, Ore.
As a result, Starvin Marvin's is focusing on its export business - shipping live eels to Korea - and Internet mail order sales.
"Our internet sales are really good. We love selling directly to people," said Warman.
Meanwhile, restaurant chain profits have seen a steeper decline than grocery chains', and many operators have closed their doors in recent months.
OSI Restaurant Partners of Tampa, Fla., the parent company of Outback Steakhouse, Bonefish Grill and Fleming's Prime Steakhouse & Wine Bar, recently reported a net loss of USD 739.4 million (EUR 584.8 million) for fiscal 2008.
While sales slid due to a "challenging environment for the restaurant industry," according to OSI, the company is focusing on boosting revenue in 2009.
For example, Bonefish Grill rolled out a new menu in November, featuring smaller portion sizes, new sandwiches and new daily specials. Outback Steakhouse is also launching a new menu of entrées priced under USD 15 (EUR 11.86).

Contributing Editor



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