Rick Holland believes fervently in controlling costs. Holland is a restaurant franchise owner who operates more than 90 locations in the western US, including Hawaii. In particular, he owns 70 Wendy's restaurants and 10 Golden Corral locations. Forty-two of the Wendy's and five Golden Corrals are located in Colorado and New Mexico.
To serve these 47 restaurants located along the Front Range of the Rocky Mountains in Colorado Springs and Pueblo, Colorado and across the continental divide in Cortez, Durango, Grand Junction, and Montrose, Colorado, and Farmington, New Mexico, he formed Harvest Distribution Inc in Colorado Springs in 1994. Serving as a commissary to the restaurants in Colorado and New Mexico, the mission at Harvest is to drive down the costs of food, supplies, and delivery while providing a higher level of service than is available through conventional foodservice channels. The cost savings generated by Harvest are passed on to the restaurants, resulting in more efficient operations throughout Holland's holdings. “We are here to break even as a cost center and to allow our owner to serve his restaurants on his own terms,” says Tim Gallagher, president of Harvest Distribution. “Obviously fast food and casual dining restaurants can buy through the national accounts of major foodservice wholesalers, but our restaurants cannot expect the same costs or service levels from those wholesalers that Harvest provides.”
The operation amounts to vertical integration for the restaurant business in a sense. Harvest provides 98% of everything used by the Wendy's restaurants, including new furniture from time to time. Although the company calls itself a commissary, it does not preparation or processing. It does, however, buy directly from the same suppliers used by wholesalers. Produce is purchased directly from the growers, and fresh ground meat for Wendy's is delivered daily from a packing plant in Texas. “We supply the Wendy's restaurants with everything but buns,” Gallagher says. “That includes soft drinks and the mix for their ice cream-based malts.”
Long distance routes
Providing service to these restaurants falls into two widely different categories. Roughly half the restaurants — 24 in actual number — are spread down the Front Range from Castle Rock, about halfway between Colorado Springs and Denver, to Pueblo, not quite 50 miles south of Colorado Springs. Harvest serves no restaurants in Denver. The remaining restaurants are across the mountains, an average of 300 miles away across federal primary highways. Using the only east/west Interstate highway across Colorado to reach restaurants in Grand Junction is impractical, because it involves traveling through Denver and cross the continental divide through the Eisenhower tunnel, says Woody Woods, traffic manager at Harvest.
The alternative routes require fewer miles, but still involve climbing Monarch Pass at 11,312 ft on the Northern route to Montrose and Grand Junction or Wolf Creek Pass at 10,850 ft on the Southern route to Durango, Cortez, and Farmington. In either case, trucks are on the road six to eight hours in good weather and can be out much longer if slowed by snow in the mountains. Harvest serves restaurants in Durango and the rest of the Four Corners region twice a week. Restaurants in Montrose, Grand Junction, and the Front Range locations all get three deliveries a week.
Within the next few months, service from Harvest Distribution will expand to the East when the company begins serving four of its owner's Wendy's and one Golden Corral in Rapid City, South Dakota. The trip from Colorado Springs to those locations will require eight hours in each direction plus time for delivery.
Sales to the 47 restaurants currently in the system totaled $17.5 million in 2002. With the additional restaurants in South Dakota, sales should be more than $20 million in 2003.
Resident driver in Grand Junction
The company already has a solution to the lengthy drive to reach restaurants in Colorado. After reaching Durango, the Harvest driver picks up a helper for assistance with delivery. On the Montrose/Grand Junction run, the driver gets a hotel room for the required break and a driver who lives in the area takes the truck to make deliveries.
All deliveries are scheduled to avoid interfering with heavy customer demand. In fact, delivery to restaurants along the Front Range is done at night while they are closed. All Harvest drivers are bonded and have keys to the restaurants on their routes. Those routes are scheduled to leave Colorado Springs so that they arrive at the first stop around midnight. Drivers have a map of the inside of each restaurant and put product away, rotating stock as they do so. Night delivery is not as practical for the mountain locations, but routes are scheduled to reach their destinations around 5 pm with continuing deliveries through the early evening hours.
Most routes are built around five stops with 150 to 200 pieces delivered at each restaurant. With each delivery consisting of everything from meat to soda straws, loads are extremely bulky. Woods says that 48/102 trailers cube out long before they reach maximum weight. In fact, average gross weight for a fully loaded Harvest Distribution tractor and trailer is 70,000 pounds.
The high cube loads help dictate trailer specifications. Trailers are built for multi-temperature operation with frozen foods in the front compartment and chilled products and dry groceries behind a bulkhead in a second compartment. The second compartment is held at 38° F. “For instance, mayonnaise comes to us refrigerated, so we make sure to keep it that way,” Gallagher says.
Loading to use the most possible cube requires the use of wall-mounted rather than ceiling-mounted evaporators in the second compartment, Woods says. The fork truck used for loading is a factor as well. “Our forklift has an extremely tall mast,” he says. “It fits in the trailers as long as nothing is hanging from the ceiling. We don't even have enough clearance to allow use of the new thin profile ceiling-mounted evaporators.”
A big part of cost control at Harvest Distribution is making delivery to every restaurant on time within a specified budget. Sourcing the fleet from MHC Truck Leasing, the PacLease franchise holder in Colorado helps with both goals. The five-year lease on five tractors and two straight trucks provides a stable, predictable cost of operation for everything in the fleet, including six trailers covered by a maintenance contract and one new trailer under lease from MHC. “We have always leased the fleet, and MHC has been our supplier since the company started,” Gallagher says. “One particularly useful part of the leasing relationship is the network of service outlets they maintain throughout Colorado. If we have a problem on the road, they can get us moving again in just a few hours.”
Shorter than normal wheelbase
Tractors are built to specifications that meet Harvest Distribution's operational needs while remaining attractive to second buyers following the lease term. For instance, Kenworth T600 tractors are equipped with C15 Caterpillar engines rated at 435/500 horsepower and Eaton Roadranger Super 10 transmissions to meet the anticipated needs of second owners. At the same time, tractor wheelbase is limited to 227 inches, shorter than usual for a tractor with a 120-inch BBC cab with a 50-inch flattop sleeper, so that the tractor and 48-ft trailer can be maneuvered in the relatively small confines of a Wendy's restaurant parking area.
MHC Truck Leasing provides Harvest with two T600 tractors, two T800s, and one T2000. In addition, Harvest leases one T800 straight truck with a 28/102 refrigerated body from Alfred Industries in Denver and one truck with a 14-ft body. The T800 straight truck is powered by a Caterpillar C12 rated at 355/410 hp.
Equipment makes a stop by the MHC facility before returning to the distribution center after each route. This ensures that trucks are fueled before each departure. The stop also helps ensure that oil and coolant levels are checked on a consistent basis. MHC takes care of all preventive maintenance and builds the schedule around Harvest's delivery requirements.
For a fleet running so many mountain miles, Harvest Distribution can boast of better than average fuel economy. Most equipment gets about six miles per gallon when operating in the mountains. Better economy from operation along the Front Range boosts the fleet average to near 7.25 mpg. “Fuel economy in the mountains works two ways,” Woods says. “We burn a lot of fuel going up hill, but then we get to save some fuel going downhill.”