Binge warns of wholesaler casualties
Fairway Foodservice Managing Director Chris Binge fears a poorly managed response to the coronavirus outbreak could spell terminal danger for smaller wholesalers.
Binge admitted he’s been left frustrating by a perceived lack of understanding by government of how foodservice wholesale works and believes provisions currently in place won’t be enough for some smaller companies to fully recover – even when the pandemic ends.
While furlough options for staff and loans provide glimmers of opportunity for businesses, Binge says neither provide foodservice wholesalers with the support they’ll need and the lack of support will lead to some closing their doors.
“There’s something not right,” said Binge. “I know the situation we’re in and we’re in a really bad place, but these are viable, decent businesses [that are facing closure].
“It just seems crazy that the government are willing to pay 80% of the salary bill for someone to sit at home, but you’re not prepared to say ‘don’t sit at home, stay in the business’ and we’ll pay a bit more money and keep the business alive. If we’ve got trucks and people available, we can deliver products to hospitals, schools and homes.
“This is an exaggerated example but, in theory, the retailers will take a bigger share of the foodservice market and you’ll end up with the whole of food being dominated by maybe 10 big players and some very very very small niche operators. I don’t think that’s a great situation to be in, but I think it’s an inevitable consequence of what’s happening at the moment.
“I’m more concerned that some [wholesalers] will decide to mothball the business, they’ll just decide suppliers can come and take their stock back and they’ll pay as much debt as possible. Then they’ll close for three months and hope things go back to normal and reopen. I’m afraid some people are talking like that – pulling the plug on it, not liquidating, just to close it all down and wait for things to recover.”
Binge believes the foodservice wholesaler industry could need as much as £1 billion to make up for lost revenue caused by failed payment from customers – a cost he says isn’t that high when you consider Chancellor Rishi Sunak has promised more than £300bn to support employees.
While that sort of help isn’t forthcoming, many Fairway members and other foodservice wholesalers are morphing into consumer-facing businesses, with differing levels of success.
But for many of these to be viable, Binge argues that businesses need more clarification on the staff furloughing rules.
“What we’re asking specifically is if we can rotate people on furlough,” Binge explained.
“If you’ve got, say, 10 drivers and you decide you only need five, you’ll put the other five on furlough. But then three days later, three of your existing drivers could be at home with coronavirus symptoms and can’t work. So what do you do?
“We’re asking if we can pull people back out of furloughing in a more flexible way. There has to be some flexibility for us to continue to operate.”
Despite the doom and gloom, Binge is clinging on to the positivity of the wholesalers he’s seeing making a difference with consumer services and hopes the situation will become clearer in the coming weeks.
“It’s heartening that a lot of our guys are doing other things and trying to create an entirely new business model,” he added.
“But it’s also depressing that some of the guys in rural areas are losing money hand over fist and don’t know what to do.
“From my perspective, I’m trying to suggest, without any real evidence, that businesses need to put a little horizon of getting through until June because by then we should have an idea of what’s going to happen.”Chris Binge coronavirus covid-19 Fairway Foodservice Foodservice wholesaler