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Christian knew something wasn’t working. As the purchasing manager at Foodbank of Southeastern Virginia and the Eastern Shore, he was fielding calls from partner agencies who’d found better prices at Walmart. They were polite about it (food bank agencies usually are), but the message was clear: we love supporting you, but we can’t justify the cost difference.
Then agencies started sending him receipts. Actual register receipts from Food Lion, Wegmans, and Aldi, showing what they’d paid for items the food bank also stocked. “They were literally sending me receipts,” Christian recalls. “They were going everywhere.”
The food bank had an existing co-op purchasing program. It generated $72,000 annually in shared maintenance revenue. But “existing” isn’t the same as “optimized,” and the gap between those two states was costing them hundreds of thousands of dollars in unrestricted revenue and forcing their agencies to waste time and money shopping at retail and, more importantly, getting less food to people in their community.
Now, the same food bank generates over $600,000 in annual co-op revenue from a $1.6 million program. Agencies stopped shopping around. Warehouse turns increased from 5x to 14.3x annually. And they accomplished all of this without adding warehouse space, hiring additional staff, or investing in major operational infrastructure. The transformation came from rethinking how they priced and sourced their inventory.
Box 1: The Before/After Snapshot
| Metric | Before | After |
|---|---|---|
| Items Offered | 20 | 90 |
| Generated Revenue in non-discretionary funds | $72,000 | $600,000+ |
| Agency Behavior | Shopping multiple vendors including retail | Consolidated purchasing with food bank |
| Pricing Model | Flat 10% markup | Variable rate retail competitive pricing |
| Warehouse Turns/Year | 5 | 14.3 |
| Truckload Orders | 90% FTL | 90% mixed truckloads |
The Real Problem: Good Operations, Wrong Strategy
The food bank’s challenge wasn’t operational incompetence. Their team could receive, warehouse, and distribute food efficiently. The problem was strategic misalignment, specifically their pricing model, which actively undermined their competitive position.
They were using a flat 10% markup across all products. They used the model because it was simple to administer and easy to explain. But it created two fatal problems simultaneously: it overpriced commodity items (losing to retail) while leaving massive margin on the table for high-value products.
When Christian started visiting the stores where his agencies shopped, the scale of the problem became clear. Agencies weren’t just occasionally comparison shopping; they were systematically sourcing elsewhere because the food bank’s prices weren’t competitive.
“They were going everywhere,” he says. “We are one stop shop for agencies now. Our agencies are having to run around less, and that’s a benefit for them, because they see cost savings and things like fuel, volunteers…The improved agency convenience has been huge.”
The Diagnostic: Understanding True Agency Demand
Before changing anything, they needed data. Christian knew he needed a better solution and reached out to the team at Value-Added Food Sales. The VAFS team has a proven program honed from working with food banks for 30 years that helps food banks optimize their agency purchasing. Christian enlisted the VAFS team to help him understand what agencies were actually buying and where they were purchasing. That process started with a survey of their agencies.
The reality was stark. Agencies wanted to buy from the food bank, but the pricing made it financially impossible to justify. They were purchasing the same types of products the food bank offered, just from Food Lion, Wegmans, Aldi, and other retail competitors where prices were lower.
“They were sending me the receipts too, literally,” Christian recalls. “Dead serious. When I first started, I would get from partner agencies… a handful of receipts. And this is where Larry went this week, and he told us he found this deal there.”
The agencies weren’t trying to undermine the food bank. They were trying to help by showing Christian exactly where the pricing gaps existed. The message was clear: we want to consolidate our purchasing with you, but we need competitive pricing to justify it.
Armed with this intelligence, Christian began his own competitive price checking. He visited Food Lion, Wegmans, and other retailers where agencies shopped, documenting actual shelf prices across categories. “We went in there. Food Lion, Wegmans, anywhere our agencies were going, we did our research.”
When agencies would report finding better deals, he could verify the claims with his own data. “That helped me understand prices better, right? Because now, when I get a call from partner agency services, and they say, Hey, this guy found eggs for 97 cents at Aldi… I can just say that’s not true… I just checked that price, and they’re not… it gave us a lot more credibility when we spoke pricing.”
The competitive intelligence gave him the ammunition he needed to advocate for change internally and the market data to inform a new pricing strategy.
The Strategy: Variable Rate Pricing Matched to Competition
The solution required minimal operational changes, just a different approach to pricing. Instead of applying a flat percentage markup, they implemented variable rate pricing: (Competitive retail price minus delivered cost equals per-unit margin).
Take spaghetti sauce as an example. At $0.99 retail and $0.45 delivered cost, there’s $0.54 of margin opportunity per unit. Under the old 10% flat fee model, they captured only $0.05 per unit, leaving $0.49 on the table. Meanwhile, on canned corn ($0.49 retail, $0.46 cost), the same 10% markup priced them above retail at $0.51.
Variable rate pricing inverted this: meet or beat retail on every item while capturing appropriate margin on higher-value products. The food bank could now price corn at $0.49 (competitive) while capturing a larger portion of the margin, while still offering significant value to agency shoppers on spaghetti sauce.
This approach required ongoing competitive intelligence, but Christian was already doing that work to defend the old pricing model. The difference was that now he had a data-informed pricing strategy to use rather than justifying why agencies were shopping elsewhere.
Christian didn’t need to become a pricing expert overnight. “I don’t think you have to have that complete understanding of retail pricing to get started,” he reflects. “TheVAFS team did a good job… walking us through it. It definitely leaves room for growth and the development of a skill set. That kind of excites me. I am learning new stuff.”
The pricing change alone would have been valuable. But it unlocked a second strategic shift: inventory approach.
The Operational Lever: From Truckloads to Turns
The food bank had been operating on a traditional direct-from-manufacturer (DFM) model: order full truckloads, warehouse everything, turn inventory slowly. It minimized per-unit cost but required significant capital, warehouse space, and carried dating risk.
Christian saw the constraint clearly: “We’re in that weird growth space right where you don’t necessarily need a new building right now, like you can still operate, but we’re right there… And so we had to figure out how can we pack as much into this existing space as possible.”
The mixing center model offered the perfect solution. They inverted their purchasing approach. Instead of buying 90% single item truckloads of a few items and 10% mixed truckloads, they flipped to 10% full truckloads or their most high-demand products and 90% mixed truckloads. These smaller, more frequent orders allowed him to offer a broader product range to his agencies.
The operational impacts were immediate:
- Warehouse turns increased from 5 to 14.3 annually
- Space freed up for other program needs
- Cash outlay per SKU dropped dramatically (mixing center requires roughly 1/8th the cash of DFM for equivalent variety)
- 5-day mixing center lead times replaced 3-4 week manufacturer order cycles
“Basically, the only single-item truckloads I’m getting now are produce,” Christian explains. For everything else, mixed trucks allowed them to expand their portfolio significantly without adding warehouse space.
The food bank started with around 20 items, expanded to roughly 90 as they tested demand, and optimized down to about 70 core items that consistently moved. “We went up to 90, and now it’s falling out at about 70 for consistent ordering from our agencies. And we’re using that growth to enhance the program. We are experimenting with paper supplies and other items now that we have the space.”
The mixing center approach carries a trade-off: roughly 7% higher per-unit cost compared to DFM. This pricing creates a sustainable program for the food bank where acquisition costs are still well below retail pricing on all but baseline commodities. But the margin they captured through variable rate pricing more than offset this premium. And the operational flexibility proved invaluable for a food bank approaching capacity constraints.
Box 2: Why They Chose Breadth Over Depth
Their constraint: Limited warehouse space, minimal cash for inventory
Their goal: Offer comprehensive selection that matched what agencies were buying at retail
Their math:
- DFM approach: 8x cash outlay, 3-4 week lead times, high warehouse demand
- Mixing center: 5-day turns, minimal cash per SKU, full spectrum in single shipments
Their choice: Accept roughly 7% higher unit cost for operational flexibility that enabled portfolio expansion without capital investment
Why this worked: Variable rate pricing margin more than offset the incremental sourcing cost since it is comfortably below retail, so the food bank can still offer all items at a beneficial price to their agencies.
The Results: Revenue, Impact, and Strategic Positioning
The revenue increase (from $72,000 to $600,000+) is dramatic. But Christian frames the success more broadly than just dollars.
The food bank became their top agency vendor: the baseline against which they compare all other options. Agencies stopped sending receipts from competitors because the food bank consistently met or beat retail pricing.
The program’s sustainability has also been tested. When they started, many agencies were getting additional grant funding. “This is where we were concerned,” Christian admits. “Once they spent all that free money, that our program wouldn’t survive. But that was not the case… they kept spending their money with us even after those grants went away.”
The program worked because the value proposition (competitive pricing, good selection, convenient ordering) aligned with what agencies actually needed, not because of temporary funding bumps.
Beyond revenue, the food bank saw operational improvements across the board. Pounds distributed increased: 20 million pounds in fiscal year 2023, 26.6 million in 2024, 24.6 in 2025, and up by 6% so far in fiscal year 2026. All while dollars spent per pound of food went from .59 in 2023, down to .46 in 2024, and dropped again to .38 per pound in 2025. They achieved similar distribution volume with better financial efficiency.
Box 3: What $600K in Unrestricted Revenue Actually Enables
- ✅ Funding for a free fresh produce program for all agencies
- ✅ Self-sustaining co-op program (no grant dependency required)
- ✅ Freed warehouse space for program expansion (paper goods, health and beauty items)
- ✅ Maintained pounds distributed year-over-year while reducing costs
- ✅ Agencies paying below retail (capturing spend from discount retailers)
- ✅ Strategic flexibility from unrestricted funds
- ✅ Increased warehouse efficiency (5 turns to 14.3 turns annually)
What Made This Replicable: The Core Principles
Every food bank starts from a different place. But the methodology Christian and VAFS applied transfers across contexts:
Box 4: The Replicable Process
Step 1: Understand where agencies are actually purchasing
→ Their finding: Agencies were buying from Food Lion, Wegmans, Aldi, and other retailers because food bank pricing wasn’t competitive
Step 2: Price competitively using variable rate methodology
→ Their finding: Meet or beat retail to capture agency spend and build credibility
Step 3: Optimize sourcing based on constraints
→ Their finding: Mixing center enabled portfolio expansion without capital investment or additional space requirements
Step 4: Test, iterate, and optimize the portfolio
→ Their finding: Started with 20 items, expanded to 90, optimized to 70 core items based on actual demand and continue to experiment based on changing needs of their agencies.
Step 5: Monitor competitive landscape continuously
→ Their finding: Regular retail price checking builds credibility and informs ongoing pricing decisions
The principles matter more than the specific numbers. The program also created room for professional growth while delivering organizational impact. That combination (measurable results plus skill development) helped secure internal buy-in even when leadership was initially skeptical.
The Vendor Relationship That Made It Possible
When asked whether other vendors had offered similar comprehensive support, Christian’s answer was unequivocal:
“Other vendors offer mixed trucks, but it’s nowhere near the comprehensive services we get from VAFS. They consulted with us and helped us launch this agency purchasing optimization program end to end. We’ve used VAFS to supply pre-assembled shelf-stable food boxes when we need them, and they’re the best supplier of pre-built boxes I’ve found. Some vendors might do one type of box, but VAFS handles all of it. We also used them because of quick truck turnarounds. Nobody else is offering that breadth of services. They’re at the top; AND they’re the lead bid on everything. That’s the baseline for everything I’m ordering.”
The relationship extended beyond transactional fulfillment. VAFS provided:
- Strategic consulting on pricing methodology
- Category management expertise
- Flexible sourcing across DFM, mixing center, and pre-built boxes
- Rapid turnaround when needs changed
- Industry knowledge from 30+ years serving exclusively food banks
Christian’s trust in VAFS’s approach came partly from track record: other food banks had successfully implemented similar optimizations. That history was why he reached out to VAFS initially. “If you have worked on something or a project that another organization is still using, then I think you got something there,” he explains.
That trust proved crucial during internal stakeholder conversations. When C-suite leadership expressed concern about an unfamiliar approach, Christian could point to proven results elsewhere. The change carried some internal risk, but leadership eventually recognized the opportunity. As Christian recalls, when the Value-Added Food Sales team showed our leadership the data on how much agencies were spending at retail: “That was when our leadership was like, Oh… they were spending $40,000 a month elsewhere. That’s when I really got that buy-in, and the concerns were put to rest. This was the right decision.”
What This Reveals About Food Bank Business Models
This case demonstrates a broader principle about food bank sustainability: the gap between operational competence and strategic optimization can amount to hundreds of thousands of dollars annually, even without a major operational transformation.
The Foodbank of Southeastern Virginia and the Eastern Shore didn’t invest in major new infrastructure, didn’t need to hire additional staff, and didn’t fundamentally change how they received and distributed food. They changed how they thought about their co-op program and its position in the agency shoppers’ retail landscape. They stopped viewing it as a convenience for agencies and started treating it as a strategic business unit with competitive positioning, portfolio management, and margin optimization.
This matters because food banks face a fundamental tension: mission-driven organizations operating in resource-constrained environments where every dollar counts. The instinct is often to focus on operational efficiency: do more with less, eliminate waste, optimize processes.
Those things matter. But strategic choices (pricing approach, sourcing models, portfolio decisions) can unlock order-of-magnitude more impact than operational efficiency gains alone.
The $528,000 annual revenue increase didn’t come from working harder. It came from working smarter in ways that simultaneously better served their agency partners.
Starting the Conversation
If you’re evaluating your food bank’s co-op program, ask yourself:
- Do we know where our agencies are buying when they don’t buy from us? Do we know WHAT they are buying at these other outlets? (Not guessing; actually know through conversations or the receipts they share)
- Does our pricing reflect competitive retail positioning? (Item by item, not averaged across categories)
- Are we optimizing sourcing based on our actual constraints? (Direct from Manufacturer for some items, mixing center for others, based on space, cash, and demand patterns)
- Is our program self-sustaining? In a perfect world, what would we WANT the CoOp program to deliver financially? (Or dependent on grants, donations, or cross-subsidy from other programs)
- Are agencies consolidating their purchasing with us, or splitting across multiple vendors? (Your answer reveals whether your value proposition is working)
These aren’t rhetorical questions. They’re diagnostic. The gap between $72K and $600K+ was fixed with strategic clarity about what agencies needed and how to profitably deliver it.
Interested in exploring how these principles might apply to your food bank’s co-op program? Christian’s experience demonstrates that transformation doesn’t require unlimited resources. It requires rethinking how you approach pricing, sourcing, and partnership value. Let’s start a conversation about what your agency survey might reveal. Together, we can bring more to the table for your community.