Booker/Tesco makes foodservice logistics acquisition

Date : 02 October 2019

Tesco has announced the acquisition of Best Foods Logistics, the leading logistics operator in the UK foodservice sector, previously part of the Bidcorp (Bidfood) wholesale group.  This brings significant incremental scale and reach to the Booker foodservice business.  As well as adding some £1.1bn of turnover, Best Foods boasts a portfolio of major national business customers from the UK out-of-home sector including KFC, Pret A Manger and Burger King.

Offers unique capability within the UK foodservice market

As a sector in which wholesale remains the majority route-to-market for customer facing operators, Best Foods Logistics has evolved as the principle service provider for national operators in the out-of-home sector looking for a central distribution ('wheels-only') solution for their supply chain.  While some logistics generalists (such as DHL with Wetherspoons) have made some inroads in the foodservice sector, Best Foods Logistics' long tenure with contracts such as KFC has made it almost an almost indispensable partner in managing the specific dynamics and complexities of fast-food and casual dining supply chains. 

Loss-making in last reported year

However, as a 'wheels-only' operation (i.e. without the benefit of wholesale margin) the profitability of Best Foods Logistics has proved problematic for its previous parent, Bidcorp.  With a gross margin of 8% (compared to 23% for its core UK wholesaling business) and growing operating costs Bidcorp has struggled to keep Best Foods profitable.  In the last reported year (to June 2018) Best Foods Logistics fell to an operating loss of £38m (following a loss of £5m in 2017).  The core, wholesale-focused, UK Bidfood business is now seeking to specialise in targeting the more margin-rich business in small and mid-sized foodservice customers. 

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