Foodservice giant 3663 First For Foodservice is feeling the effects of the credit crunch as people cut back on eating out. The wholesaler’s profits have levelled off over the past year and are not expected to improve greatly in the year ahead. Results published this week showed trading profit for the year ending June 2008 flat at £46.7m, despite a 3% increase in turnover to £1.6bn

CEO Fred Barnes told The Grocer his customers were struggling. “The market is tough, and it’s set to be tough for some time. It’s not going to be over by Christmas,” he said. “There’s a huge resistance to taking price increases. The volumes are not disastrous but margins are getting squeezed. Still we’ve got a great market position that we want to defend and we expect a flat year to be the most likely outcome.”

Despite the challenging environment, Barnes was confident he could grow the business by buying smaller rivals, particularly those that offered fresh food, an area that had potential for growth.

“We are looking to buy a company that strengthens our geographical position or our portfolio of products, which could be something in specialist areas,” he said. “We want value, decent people and businesses that enhance our earnings.”

Its wine venture, Vivas, which it jointly owns with supplier Bibendum, was showing promise, he said. The company started trading in May and although it was too early to give any figures, it had been well received, he claimed.

The wholesaler has also been encouraging its customers to order alcohol or non-food in addition to their existing order so they can negotiate better terms. It would not be introducing a fuel surcharge, unlike main rival Brakes, said Barnes, but he admitted prices had gone up in the past year, at a rate that varied with each account.

The company was also reviewing its options with regard to catering butcher Barton Meat, which it bought three years ago but whose profits were “unacceptable”, he said.