The foodservice sector has been especially hard-hit, with restaurants limited to carryout and delivery, severely curtailing normal output. This has also impacted the supply chain, with foodservice distributors left with no one to deliver to or reduced deliveries. However, the food is still viable. Foodservice and retail are now partnering in unprecedented ways. Some grocers are selling meals from restaurants in their stores or offering to hire temporary staff that had been employed in the foodservice sector. And now, distribution and app delivery services are making the crossover, proving that we are all in this together.
“We’re working closely with the foodservice industry to identify where we can utilize capacity, where we can utilize drivers and equipment, and also how can we take the inventory surplus that they might have now and start moving that into retail and sell it at retail,” Doug Baker, VP of industry relations for FMI-The Food Industry Association, said in a call last week with WGB. “And we’re working very closely with the federal government in order to be able to accomplish some of those activities as well as the foodservice stakeholders directly.”
Foodservice Distribution Partners
Some of that work is starting to bear fruit. Both Sysco and US Foods are shifting their distribution channels to include grocery stores.
“As the COVID-19 situation continues to evolve, our priority is the health and safety of our associates, customers and communities,” said Pietro Satriano, chairman and CEO of US Foods. “While the full business impact of COVID-19 is not yet known, we are taking immediate action to reduce our costs to match the slowdown we’re seeing in restaurant, hospitality and education case volume. We are also leveraging our supply-chain resources to support the retail industry as they experience unprecedented increases in consumer demand.”
US Foods has secured new opportunities to support and sell to retail outlets such as grocery stores and to contract some of its distribution workforce to companies experiencing increased demand. These actions are expected to partially mitigate the declines currently seen in sales to restaurants, hospitality and education customers.
Sysco also is actively pursuing new sources of revenue by leveraging its supply-chain expertise to provide services to the retail grocery sector. This net new business will help offset some of the declines in the food-away-from-home segment and also position the company well to capitalize on growth opportunities after the COVID-19 crisis subsides.
Examples of growth initiatives that are being implemented include:
- Providing logistics services to retail grocery customers.
- Becoming a supplier of product to retail grocery customers.
- Enabling small restaurants to stand up home delivery operations and online order pickup service.
- Distributing cleaning supplies to keep kitchens safe and virus-free.
“As the largest foodservice distribution company in the industry, we play a significant role in supporting the food supply chain,” said Kevin Hourican, Sysco’s president and CEO. Due to the significant impact on the food-away-from-home business, we are pivoting our business to better support the surge in demand that is being experienced in the retail grocery store setting. We are establishing new customer relationships with retail grocers to provide them with logistics services and much-needed product. We are also advocating for and supporting our customers, who are essential to our future service.”
Third-Party Delivery Shifting Gears
Even app-based, third-party delivery services are shifting to grocery delivery. Waitr Holdings Inc. has expanded into same-day grocery delivery in Baton Rouge, Lafayette and Lake Charles, La., with more cities to come in the near future. In Baton Rouge, Waitr has partnered with Ralph’s Market to help deliver grocery essentials to residents. Customers can shop on the Waitr app, or at waitrapp.com, by searching Ralph’s Market for basic grocery items such as toilet paper, cleaning supplies and personal care products, as well as freshly stocked meat and produce. Waitr is providing personal shoppers, in addition to delivery drivers, to help fulfill grocery orders from Ralph’s Market. Waitr is also offering a no-contact delivery option for grocery just like they do with restaurant deliveries, which allows for distancing between customers and delivery drivers.
“In such a time of need, we felt like it is our duty to utilize our platform in any way possible to support the Baton Rouge community and plan to support more communities like this in the very near future,” said Carl Grimstad, CEO of Waitr. “We want to be a valuable resource for our local communities during these tough times. Like I’ve said before, if there is anything we can do to ensure the safety, health and well-being of our partners, employees and community, we will do it.”