Success in produce distribution to upscale restaurants and hotels resembles a three-legged stool with the legs labeled service, quality, and price. All three are required to keep the stool level. More importantly, if a distributor can't provide service and quality, price becomes inconsequential, says Peter Testa, president of Testa Produce in Chicago.
That formula has been at work for 88 years. The company was formed in 1912 as Dominick Testa & Sons. “My grandfather started out walking down the street selling celery from a hand basket,” Testa says. “After a while, he got a horse and wagon. The business grew and he got two horses — the usual hard work success story: work, grow, work harder, grow more. My father and uncle were the sons in the company name. My uncle is no longer active, but my father is 76 and comes to the office almost daily.”
Located on the southwestern edge of downtown Chicago, Testa Produce is adjacent to the old city produce terminal known as the South Water Market. Business owners in those 16 acres recently sold the property to Enterprise Cos for a total of $35 million, largely through the efforts of Peter Testa and Gene Ruffolo of Ruffolo Corp. Property holders on the market, which will be converted into upscale housing, were paid individually for their units contained in six block-long buildings. Although Testa Produce owned a market unit, the company does not operate from that building. The Testa warehouse is off the market property facing away from the planned residential area and was not affected by the sale. The result of the sale is that a previously blighted area will rapidly turn into an extremely nice part of town, Testa says.
The central location places Testa Produce in proximity to a large number of its best customers in downtown Chicago. One result is that trucks on routes into the city center generate very little mileage. “We have trucks that run multiple routes downtown six days a week and still don't add up 10,000 miles a year,” Testa says.
However, Testa's trade area takes in more than Chicago and its western suburbs. The company delivers within a 100-mile radius including parts of Milwaukee and other communities along the Wisconsin shore of Lake Michigan, also the northwestern part of Indiana, and cities in Illinois such as Rockford and Kankakee. Business is all foodservice to upscale and chain restaurants and hotels. Retail and fast food outlets are not served.
Testa Produce operates from a totally remodeled 40,000-sq-ft warehouse that it has occupied for the past 2½ years. The building is divided into five temperature zones, including 9,000 sq ft held at -1° F for frozen product. Most of the produce rooms, separated according to desired humidity levels, are held at 36° to 38° F. A separate dairy cooler is kept at 34° F. The product mix is roughly 85% fresh produce with the remainder made up of frozen foods — mostly frozen fruit, french fries, and frozen bread — canned goods, and other dry products. In particular among its dry product line, Testa Produce carries an assortment of high quality olive oils that sell in such small quantities that other foodservice houses are reluctant to stock them, Testa says.
Frozen loaded last
On the inner city routes, frozen product is loaded just before the truck leaves the yard and is delivered in a relatively short time. For longer routes, frozen goods are packed under insulated blankets, and for the out-of-town routes, frozen products are placed in closed, insulated containers. In every case, the frozen is loaded last.
With the exception of the specialized dry items, Testa Produce carries the same basic inventory as all its competitors. “Our top items are the same as the top items from our competitors,” he says. “The difference is that we move a lot more high quality product than most of them do. People know that they can get almost anything they want from us, so we get orders from a lot of cherry pickers — customers that are not regular accounts who want special items or particular prices at certain times of the year. We service those customers as well as we can, but when supplies are short, our regular accounts get first choice.”
Those regular accounts amount to 900 to 1,000 customers and include some of the big hotel chains such as Hyatt and Hilton. Most of the regular customers, at least 80% of the total, get daily delivery. Smaller and more distant customers are serviced less frequently — usually two to three times a week. “Although we probably should, we have no minimum order,” Testa says. “Sometimes our level of service is tough to maintain, but in the end, the customers get what they ask for. Everybody in the company is capable of making a delivery. Sales personnel are especially likely to make deliveries on the way home from work.”
Most workers CDL-qualified
In a total of 105 employees, 70 work in the warehouse or as drivers. Nearly all the order selectors are CDL-qualified so that they can make deliveries during peak sales seasons. If Testa Produce needs to make a delivery and doesn't have a CDL-qualified driver available, the company has two small trucks that can be operated without the requirement for the advanced license. In addition, drivers know how to select orders and do when delivery work is slow. Drivers and order selectors work by the hour. Some drivers are assigned to conventional eight-hour shifts while others work four 10-hour days.
One result is that customers get used to such high levels of service. In addition, product carries a full 100% warranty that it will be exactly what was ordered in the condition specified. In theory, the warranty runs until the product changes ownership from Testa Produce to the customer. Making adjustments several days after a delivery is difficult, but prompt discussion of quality issues usually results in an adjustment by the following day. “We just don't like to talk about quality problems after the customer has had possession for three or four days,” he says.
Guaranteeing product is easy, because everybody in the transaction is properly trained, Testa says. “We deliver a lot of soft fruit, including really delicate stuff like raspberries and blackberries,” he says. “We train our people to handle delicate items carefully, and, though they may not realize it, we work to train our customers as well. Drivers are particularly well-trained. Only 10 drivers in a fleet that runs an average of 28 routes a day have been with us less than four years.
Intensive product training
“When we hire drivers, they have to be CDL-qualified and pass a drug screen. First, we put them to work in the warehouse for a week learning how to recognize the product and how to select orders. Especially important during warehouse training is learning how to work the split table where we build small orders for less than full cartons. Some customers don't order a full box of bananas, or they may specify six grapefruit; so that's what they get.
“After warehouse training, new drivers spend two to three weeks learning a route from a more senior driver. At the same time, they are learning how to deal with customers and more about handling the product. For instance, the cardinal sin in this company is dropping or throwing a carton of any product. We want that product delivered in the same condition it was in when it left the cooler.”
In addition to training, Testa Produce takes other measures to ensure proper product quality at delivery. All products, including split cartons, are well packaged using heavy duty boxes. Although most delivery is by hand truck, product goes in the trucks on pallets. Trucks are loaded in a logical order with heavy, iced products at the bottom. Drivers take as much time as needed to make deliveries. Some stops can be completed in five minutes while other may take an hour, Testa says.
Six day delivery
The company works seven days a week with receiving all seven days and delivery six days a week. Inbound loads average six a day with the largest amounts arriving on the weekends. Inbound produce includes crops grown in the local area. Testa Produce does not pick up these goods; the farmers deliver. Two longhaul carriers based in Chicago — Produce Plus and Cool Running — provide the bulk of transportation services from California, Texas, and Florida. Although Chicago is a major hub for intermodal produce, Testa Produce moves almost nothing by rail — a few potatoes on rare occasions, he says. On the opposite end of the spectrum, air freight is a daily occurrence with trucks dispatched to the airport to pick up inbound shipments constantly.
With so much product coming in, the inventory turns rapidly. The highly perishable items such as field greens or berries often deliver within 24 hours of receipt. Testa Produce holds tomatoes in inventory long enough to ensure that customers get the color and texture ordered. Citrus fruit usually stays in inventory three to five days. The longest inventory cycle is seven to 10 days for hardy produce such as onions and potatoes.
After a period of rapid growth, bagged lettuce, onions, carrots, and other items have become a stable part of the inventory as restaurants learned the advantages of buying preprocessed vegetables. However, unlike some produce houses, Testa Produce buys its processed goods rather than doing the work in house. “We buy from five processing companies daily,” Testa says. “Two are local operations, and three provide service nationwide. We turn that inventory daily. The processors deliver to our dock.”
Processed products include lots of prepared salads and cleaned, sliced mushrooms. “Sliced mushrooms are very delicate, so the inventory needs to turn daily,” he says. “We get mushrooms six times a week from a grower/processor in Pennsylvania. The processor delivers so consistently that we can set our watch by their appointment times. Their drivers are polite and well-trained, just great people.”
28 daily routes
To deliver all this inventory, Testa Produce runs an average of 28 to 32 routes a day, sometimes reaching a peak load of 37 routes a day. Most routes average 13 to 15 stops per route. The core of the fleet consists of 28 straight trucks and two tractor/trailers. The trailers, one 48 ft and one 53 ft, are used to serve big accounts such as hotels. The company has enough additional older trucks to cover extra routes when needed.
For morning delivery, the official order cut-off is 10 pm. However, personnel are on hand to accept orders after that hour. The first trucks, those delivering in Milwaukee, hit the street at 2 am. Others leave at intervals of about one hour with the last routes working by 6 am.
The first crew of order selectors begins work at 4 pm and another group starts at 9 pm. Selection crews are usually 10 workers. They pick orders by route and stage them on the dock. Completed orders are verified against company paperwork by checkers and loaded on trucks by a separate loading crew.
Second routes daily
“Our basic program is to start early, finish the routes, and start over,” Testa says. “Of the 28 trucks we dispatch early, we probably use 20 of them again the same day for a second route handled by the same driver. Service is the key here. Every customer wants to be first on the route, and figuratively, we try to get to everybody first. As soon as trucks are gone on the first routes, we start taking orders for second routes. Actually, we take orders all day long and deliver as many of them as we can.”
Testa is a big advocate of late night deliveries. “We could be so much more efficient if more customers would take delivery at night when downtown is empty,” he says. “We have a few accounts that work that way. At one big hotel, security lets us in and we put the order in the kitchen. We don't stock the cooler, because kitchen personnel usually arrive for work just as we finish the delivery. Another big customer has a bakery as part of its operation. The bakers let us in.”
In addition to congestion on downtown streets, Chicago is notoriously difficult for delivery trucks, especially because of the city's large number of low overpasses. Those low-clearance bridges have at least two effects on distribution in the city. Fleets that choose conventional trucks and trailers must route around them adding miles and time every day. Alternatively, fleets buy custom equipment sized to fit under the lowest bridges.
Tank-tough truck bodies
Testa Produce has taken the custom equipment approach for its fleet, the bulk of which has been built by Paramount Truck Body Company in Chicago. For instance, most truck bodies in the fleet are only 11 ft 4 in high. Five new ones currently under construction by Paramount for delivery in September will be 11'8". All are built like tanks for congested urban environments — large and heavy. The Paramount bodies are 22 ft long and 99 inches wide, providing an inside width of 90.5 inches between sidewalls with three inches of polyurethane foam insulation. Interior sidewalls are double lined with full height sheets of 3/8-in marine plywood covered with seamless Kemlite fiberglass reinforced plastic sheeting. Floors get the same treatment with 1½-in laminated hardwood covered with 1/8-in steel diamond plate turned up 15 inches at the nose and sidewalls to provide a puncture resistant bathtub.
Sidewalls are built with heavy 0.050 aluminum exterior sheets with heavy duty rub rails at the top and bottom. The floor sits on four-inch crossmembers set on 12-inch centers. Rear doors are Whiting Tempsaver II insulated roll-ups, and the body is served by a 16-ft open grate Todco delivery ramp.
Chassis are kept for seven to 10 years, and bodies are remounted on another chassis at least once. Refrigeration units usually are replaced when the body is remounted. Testa says the Paramount bodies are so tough that some have been remounted on a third new chassis.
In addition to the company-owned Paramount bodies, Testa Produce leases a small portion of its fleet from Carmichael Truck Leasing, a NationaLease franchise in Chicago. These trucks use the same International 4300 chassis with International DT-466 engine and Allison Automatic transmissions as the new trucks on order. The leased trucks are equipped with Kidron truck bodies, Todco overhead rear doors, and Todco delivery ramps.
“The decision to lease or own is based on the financial markets,” Testa says. “Three years ago, it made financial sense to lease trucks. Now, interest rates are so low that owning the fleet is the best solution. Maintaining the fleet is a different matter. Owned or leased, the entire fleet is maintained by Carmichael. If we have to take a truck out of service for a day for maintenance, we get a replacement. The contract also calls for guaranteed road service within two hours.”
