Buying a food distribution business in South Florida

• Exclusive or long-standing supplier agreements, in writing, with brands customers ask for by name.
• Many customers, careful credit checks and little bad debt.
• Tight, well-planned delivery routes, so each truck makes many stops a day.
• A well-run cold chain (keeping food cold door to door): temperature monitoring and logs, reliable refrigeration, and backup power for hurricanes.
• A clean inspection history with the state and the FDA, and no recalls.
• Low spoilage and shrink (product lost to damage, theft or errors), tracked by product, with slow sellers dropped.
• Buyers and salespeople who know the customers and suppliers.
• Some customers on standing orders that go out weekly without a sales call.

• Supplier agreements: exclusivity, territory, termination and consent to a sale. Many can be ended on short notice, so talk to the main suppliers before you commit.
• How much rides on the biggest customers, and how many are restaurants that could close or switch suppliers.
• Overdue customer bills and past bad debts. Small restaurants and stores can be slow to pay.
• Inspection reports, recalls, customer complaints, and temperature logs for the coolers and trucks.
• Age and condition of coolers, freezers, trucks and their refrigeration units, and what breaks most often.
• An inventory count, with expired or nearly expired stock written off before the price is set.
• Fuel, insurance and driver costs, and driver turnover.
• For importers, customs records, tariffs and how long goods take to arrive.
• For produce, whether growers and shippers have been paid. Under PACA, unpaid sellers hold trust rights over a dealer's produce, inventory and receivables (money customers owe).

• Which brands are exclusive to you, and can those agreements be transferred?
• How much of your business comes from your top ten customers?
• What happens if a cooler fails, or the power goes out after a hurricane?
• What did your last state and FDA inspections find?
• How much product do you throw away each month?
• How do you decide which customers get credit?
• Do any of your suppliers sell directly to your customers?

South Florida covers Miami-Dade, Broward, Palm Beach and Monroe counties: Miami, Hialeah, Doral, Fort Lauderdale, Hollywood, Pompano Beach, West Palm Beach, Boca Raton, Jupiter, and the Florida Keys down to Key West. It's the state's largest metro area and its most international. PortMiami, Port Everglades and Miami International Airport tie the region to Latin America and the Caribbean, which supports a deep base of wholesalers, freight forwarders and logistics firms, many of them near the airport. Tourism and cruises, finance and wealth management, health care, real estate and construction carry much of the rest. Palm Beach County adds wealthy seasonal residents and, out west near Lake Okeechobee, sugarcane and vegetable farms. In the Keys, nearly everything turns on visitors, fishing and boating.

Companies that serve homes, condo buildings and other businesses do well here: the building trades, property services, insurance agencies, medical and dental practices, and professional firms.

Costs run high: commercial rent, wages and, above all, property and windstorm insurance. Price the insurance before you make an offer, not after. Miami-Dade and Broward make up the Florida Building Code's High-Velocity Hurricane Zone, with stricter rules for roofs, windows and structures. That raises building costs, and it also gives steady work to the contractors who know those rules well.

Much of the workforce and many customers speak Spanish as well as English, and a company that works well in both languages has an edge. The winter season matters more in Palm Beach County and the Keys than in Miami. In the Keys, the cost of housing makes hiring and keeping staff one of the hardest parts of running a company. Ask any seller there how they find workers and where those workers live.