Fred and Gene Clark gobbled up a fifth of the $18 billion industry by following Amazon’s playbook
On a January morning in Lancaster, Pennsylvania, a monitor in a former elementary school displayed the vitals of the WebstaurantStore , which, except for fresh produce, sells everything restaurants could need, from $25,000 freezers to takeout containers. $0.15 cents. Business is thriving. As of 9 a.m., WebstaurantStore, the online store for Clark Associates , a 53-year-old family business, had recorded $800,000 in sales. The previous day, the company had reached US$8.6 million.
In the classroom, which still has a chalkboard on the wall, employees conduct demand projections to ensure that Clark’s warehouses remain well-stocked with peanut butter buckets, boot-shaped beer mugs and the other 420,000 products offered by the website.
It’s a struggle to keep up. Clark Associates’ sales have increased from $80 million in 2009 to $4 billion today, an impressive growth rate of 32% per year. In the same period, the number of employees increased from 350 to 7 thousand. That’s when the purchase of the primary school came about. “We were desperate for space,” says Clark CEO Gene Clark.
Clark, 39, took the reins in 2020 from his father, Fred, a 65-year-old self-taught businessman, a former electrician, direct and with a penchant for challenging conventional wisdom. In particular, everyone felt that restaurant equipment was too complicated to be sold online. A standard two-door refrigerator, for example, can be configured 150 ways, depending on whether you run a busy seafood restaurant or a quiet neighborhood cafe. Fred disagreed – and it paid off.
Before the launch of WebstaurantStore in 2004, Clark Associates was one of hundreds of regional distributors of restaurant equipment and supplies. The company also built commercial kitchens and operated a small chain of brick-and-mortar stores.
E-commerce represented 80% of Clark’s sales in 2023. It also transformed it into an industry giant, with around 20% of the US market, valued at US$18 billion. The means to achieve this was the combination of the virtual store with a network of warehouses and a “selection and packaging” system that allows deliveries across the country in one or two days.
By 2022, Clark’s revenues were approximately $1 billion ahead of its closest competitor, Trimark USA, according to a ranking by the trade magazine Foodservice Equipment & Supplies.
The Clarks claim to have achieved this feat without a penny of outside capital, financing the expansion through reinvestment of profits with a modest $275 million in bank debt.
Like any distribution business, profits were not robust – experts reported a gross margin below 20% – especially given its reliance on e-commerce compared to the value-added design services that make up a larger portion of competitors’ businesses.
However, this was enough to turn the Clarks into a billionaire family. Gene and Fred own most of Clark Associates, conservatively valued at about $1.2 billion. Three other executives hold small stakes.
Strategies
The crucial WebstaurantStore started as a summer project for Gene, a college student at the time, who took photos of some products while home on vacation.
By 2004, of course, Amazon had already transformed the way Americans shop, but the change was much slower in the food world, where restaurant owners often met face-to-face with salespeople from local distributors.
Getting the right equipment in the right configuration is not simple, leading to distributors that specialize in niches like school cafeterias, family restaurants or large venues like stadiums and theme parks.
Does your refrigerator need glass doors so chefs can see inside, or should it be solid, with better insulation? Casters or legs? Is your restaurant in a humid location like Houston? Compressor on top? Or below?
To combat confusion, the Clarks have produced hundreds of detailed buying guides to guide customers through their choices, with high-fidelity images and videos produced in-house. Still have doubts? Pick up the phone. The company has a well-trained support team of 400 people. Another advantage is low prices, as Clark Associates’ scale gives it negotiating power with manufacturers.
For many years, WebstaurantStore’s primary customers have been small-scale restaurants and small-scale operators. But fast-food chains began to notice that franchisees began to buy from the website, as the prices were lower than those from the parent company’s suppliers. “We started getting calls from these networks saying, ‘Can I speak to your national accounts division?’” says Gene Clark. “And at the time I said, ‘Well, we don’t have one.’”
Now they have. Clark Associates is working with Domino’s, Chick-fil-A, Subway and Disney. So far, it’s only providing them with smaller items like kitchen utensils, napkins and cups. But it has already sold equipment to smaller chains, such as Duck Donuts, and the Clarks are eyeing that market.
The top 500 chains represent approximately 60% of U.S. foodservice sales, according to consultancy Technomic. And Gene Clark is looking beyond the kitchen. The company is studying whether it can use WebstaurantStore’s infrastructure to sell some of its products – such as cleaning supplies – to other industries. “We are small compared to Amazon, but we are very good at what we do.”
