Case Analysis 2

Coronavirus Pushes Restaurants Into the Grocery Business

New York eateries tap their supply chains to bring customers fresh produce and meat as pandemic puts strain on grocers

Fort Defiance, a restaurant and bar in Red Hook, Brooklyn, has been filling a need for grocery options during the coronavirus crisis.

PHOTO: MARK SHORTLIFFE

By Charles Passy, The Wall Street Journal

April 15, 2020 4:38 pm ET

Soon after St. John Frizell was forced to shut down Fort Defiance, his restaurant and bar in Brooklyn’s Red Hook neighborhood, because of the pandemic, he struggled to figure out a way to bring in any revenue.

A plan to offer takeout fizzled. But Mr. Frizell couldn’t help but note that many in the community were hesitant to visit the local supermarkets and were finding it difficult to get a delivery time slot with online grocers.

So, Mr. Frizell decided to re-christen his dining and drinking spot as a mini grocery for locals, working with some of his key vendors to offer customers fresh produce, meat, fish and select other items on a pickup basis.

“It would be of more value to them then going up to my window and ordering an Irish coffee,” he said.

Mr. Frizell has plenty of company. Several restaurants in New York City, from independent operations to chains, are trying similar efforts, though the size and scope of the offerings varies.

Fort Defiance is working with some of his key vendors to offer customers fresh produce, meat, fish and select other items on a pickup basis.

PHOTO: FORT DEFIANCE

Just Salad, a New York-based salad chain, has launched a robust delivery program that incorporates not only produce and proteins, but also everything from meal kits to toilet paper. The operators of Taiyaki and the Dough Club, two New York-based establishments that specialize in Japanese desserts, have introduced an online grocery, Konveny.com, devoted strictly to Japanese products, from rice crackers to red-bean ice-cream bars.

Business has taken off with the Konveny platform to the point that Jimmy Chen, co-founder of Taiyaki and the Dough Club, is worried about keeping pace with the demand and finding storage space for his items, particularly frozen ones.

“If you know anyone with a freezer, I’m buying,” he said.

Other food-related businesses are forging their own path in the grocery realm as well. Baldor Specialty Foods, a New York-based importer and distributor of produce and other items, is venturing beyond the wholesale market for the first time to deliver food directly to customers, with a $250 minimum.

And Purslane, a Brooklyn-based catering company, is delivering what it calls a weekly “farmers market box” to locals, along with prepared foods. It plans to increase offerings in the coming days to include olive oil, flour, butter and eggs.

While the obvious driving factor for all these businesses is the need to find alternate sources of sales during the pandemic, the effort for restaurants is also about maintaining a connection with customers with an eye on the post-pandemic return to normal. The hope is that patrons will be all the more loyal to these establishments when they fully reopen because of the grocery service each provided.

Some of the produce sold through the Fort Defiance General Store.

PHOTO: FORT DEFIANCE

“There’s a feel-good emotion” that will pay dividends down the road, said John Davie, chief executive of Dining Alliance, a company that works with independent restaurants on purchasing.

Mr. Davie and others in the industry also noted that restaurants are well-positioned at this time because their supply chain isn’t typically the same as that for supermarkets, which means they can sometimes procure hard-to-get items. On top of that, they often have access to high-quality fare, from prime-grade meats to heirloom produce, not found in markets.

That is something that Stacey Douglas Moverley, a resident of Red Hook in Brooklyn, has appreciated about the items she has picked up from Fort Defiance during the pandemic. She pointed to everything from a “lovely pork loin” to “amazing breakfast sausages,” saying such fare has kept her well fed during the health crisis.

“It’s just been a godsend,” she said.

https://www.wsj.com/articles/coronavirus-pushes-restaurants-into-the-grocery-business-11586983087?mod=searchresults&page=2&pos=4