Guides / Operations
Food broker vs. distributor: who does what, and what each costs
The short answer: a broker is your outsourced sales force - they get buyer meetings and manage accounts for a 3-10% commission. A distributor is your logistics and credit layer - they warehouse, deliver, and invoice retailers for a 20-30% margin, and they become your actual customer of record. Brokers create demand; distributors fulfill it. Most brands in retail eventually need both.
Founders use these words interchangeably, and the confusion gets expensive: brands hire a distributor expecting sales growth, or hire a broker expecting logistics help, and both mistakes burn quarters. The roles are complements, not substitutes.
What a broker actually does
A broker is a commissioned sales representative with existing buyer relationships. They pitch your line at category reviews, manage the retailer relationship, coordinate promotions, and chase compliance issues. They own no trucks, hold no inventory, and issue no invoices. Established brands in conventional channels commonly pay 3-5% of net sales; emerging natural and specialty brands more often see 5-10%, and many brokers charge a monthly retainer during a launch phase before commissions carry the relationship.
What a distributor actually does
A distributor (UNFI and KeHE dominate natural and specialty) warehouses your product, delivers it to retailers, extends the retailer credit, and consolidates thousands of brands into one truck and one invoice. For that they take a 20-30% margin on their selling price - and they become your customer of record: they buy from you, the retailer buys from them, and your money arrives as their check, minus deductions. The cardinal rule: distributors fulfill demand; they do not create it. Getting into a distributor's catalog puts you on 20,000 retailers' order screens - it does not make a single buyer order you.
Side by side
| Broker | Distributor | |
|---|---|---|
| Job | Sell in, manage accounts | Warehouse, deliver, invoice |
| Cost structure | 3-10% commission (+ possible retainer) | 20-30% margin on their selling price |
| Your relationship | Agent working for you | Customer buying from you |
| Creates demand? | Yes - that is the job | No |
| Touches product? | Never | Always |
The order to hire them in
Early: be your own broker - founders win early accounts better than anyone paid ever will, and direct-to-store delivery works at small door counts. Add a distributor when chains require one or delivery logistics break you - typically the moment a real chain authorization lands. Add a broker when the constraint is meetings, not logistics: you have velocity proof and a review calendar you cannot cover yourself. Hiring a broker before you have a story for them to tell just buys you a retainer.
Red flags, both kinds
Brokers: pay-to-pitch retainers with no account list, vague principals-per-rep numbers, no presence in your target channel. Distributors: chargeback schedules they will not put in writing, mandatory promo programs sized before your first PO, and any pitch implying catalog placement equals sales.
Frequently asked questions
Do I need both a broker and a distributor?
Eventually, usually yes for retail at scale: the broker sells your line into buyers, the distributor gets it onto shelves. They solve different constraints - meetings versus logistics - and neither does the other's job.
What does a food broker cost?
Commonly 3-5% of net sales for established brands in conventional channels, 5-10% for emerging natural/specialty brands, often with a monthly retainer during the launch phase.
Why is my distributor check smaller than my invoice?
Deductions: promotions, free fills, spoilage allowances, freight claims, and program fees come out of distributor payments, often with minimal documentation. Reconciling them monthly is a core discipline.
Get partner strategy matched to your stage
CPG Canary's strategy engine gives co-packer, broker, and distributor guidance grounded in your channels, margins, and velocity - the sequencing, not just the definitions.
Start your 14-day free trial