The Hill - America Can't Afford to Ignore the Food Service Distribution Industry

Op-Ed

By Rep. Darin LaHood

The impact of the coronavirus pandemic on the foodservice distribution industry has been devastating. Foodservice distribution is an enormous yet relatively unknown industry, which before the pandemic, totaled more than $300 billion in annual sales and employed 350,000 Americans in all 50 states and the District of Columbia. The industry is bigger than the airline industry, with thinner operating margins. Preserving this essential industry is critical to helping our economy recover. Congress must act now to pass the Providing Liquidity for Uncollectible Sales (PLUS) Act to ensure distributors can continue to provide the support their restaurant customers need to survive this crisis.

Foodservice distributors feed America, delivering 8.7 billion cases of food and food-related products annually. They ensure fresh, safe food produced by America's farmers and manufacturers fills the kitchens, shelves and pantries of our nation's restaurants, schools, hospitals, entertainment venues, military bases and other public service institutions. In Illinois alone, it's an $11 billion industry with 570 distribution centers that employ 13,300 people.

But the uncertainties of coronavirus including state shutdowns and limited re-openings have pushed the foodservice industry to the brink. Four in ten restaurants have closed their doors completely; some may never re-open. Thousands of schools and universities are going virtual for the school year, and professional sports teams are struggling to keep players on the field, never mind fans in the stands.

America cannot fully re-open without a strong foodservice distribution industry. Foodservice distributors serve as the bank for America's restaurants and play a critical role getting our economy up and running again. Restaurants buy their supplies on payment terms that allow them to generate revenue before the bill comes due. Over the last five months restaurant sales have plummeted, and they have not been able to pay their distributors for purchased inventory. This uncollectible debt has created a significant limitation on distributor liquidity when they need it most to extend credit to their customers so they can restart their businesses. Foodservice distributors currently have more than $12 billion in unpaid debt as a result of this crisis.

The PLUS Act would provide tax credits for these uncollectible accounts receivable, ensuring that distributors can continue to provide financing to their customers. With restaurants facing capacity restrictions or renewed shutdowns in many locations, this assistance is even more critical. Reopening America's restaurants begins with foodservice distributors and the PLUS Act will provide distributors with vitally needed assistance.

Foodservice distributors have sustained wars, recessions and natural disasters. But nothing has threatened the livelihood of so many distributors, their employees and customers as much as the current crisis. We need Congress to act now.

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