I recently learned a secret that I have wanted to know for 20 years. When I was associate editor for Produce Merchandising (now Produce Retailing) magazine, I often heard suppliers bemoan the harsh reality of slotting fees. Many could not get their products onto store shelves because of these unconscionable levies. But for me to write an article on the topic was impossible. No grocery store retailer would agree to an interview on the topic. (What? Confess that gouging suppliers was a common and accepted business practice?) No supplier was willing to talk about it either, because if they badmouthed retailers, they might never get their product on the shelf.
So, a few months ago, I was working on an article for The National Culinary Review about how chefs can bottle their salad dressings or package their spice rubs, etc. and sell them at retail for an additional income stream. And there in the middle of one of my routine interviews, a restaurateur brought up slotting fees and attached an amount to it, and I was shocked.
I was talking to Steve Sazama, owner of Milwaukee-based Saz’s Hospitality Group with its Saz’s State House restaurant and other culinary empires. He described how he has gotten many of his products on Wisconsin store shelves, including three Saz’s BBQ sauces; BBQ baby back ribs; BBQ pork meat, and much more.
But he wasn’t very encouraging to other chefs who might want to do the same thing. He said, “With slotting fees, it’s prohibitive unless you have deep pockets.” He said that in Wisconsin, slotting fee amounts vary—from $5,000 to $10,000. For frozen product, it’s higher, starting at around $16,000!
How does it work? You pay it once to get your product in, and if store muckety-mucks decide after four to six months that they don’t want to carry it any more, your product is out of there. No refund. That fee gets you a product number and into their database. Then you fill the shelves the first time with free product.
That’s criminal.
In my article (Restaurant to Retail, which you can read off to the right) I only spent two sentences talking about slotting fees, since it wasn’t my main point. But I wonder what others have experienced. Maybe someday I will get to write an investigative piece about this highly sensitive and secret topic. Let me know what you think or have experienced.
Jody
