13-Hour Rescue Plans and Guts: How One Industry Is Surviving
(Bloomberg) -- Chad Inver used to supply wheels of cheese, 100-pound batches of beef fillets and cases of butter to restaurants, bars and hotels around Philadelphia. Now in the wake of America’s coronavirus shutdown, he’s surviving by selling goods to households via Ziploc bag.
After Pennsylvania issued lockdown orders in mid-March, forcing many customers to close, Inver spread the word on Facebook that he’d be selling items like 5-pound bags of pasta and 1-pound cases of mushrooms—for pickup or home delivery—in a bid to keep afloat Larry Inver Wholesale Foods, which he runs with his parents. A few weeks in, it’s working. Sales are surging, and the company has added two employees to meet demand, while finding new accounts wherever it can—even at police precincts.
“It’s been crazy busy,” said the 26-year-old Inver. “We’ve managed to generate almost the same amount of revenue that we had before the lockdown.”
Inver is part of a growing number of food wholesalers who are pivoting to households to avoid a shutdown and laying off workers amid the COVID-19 outbreak that’s decimated small businesses. Over the past few years, the so-called direct-to-consumer movement has taken hold in categories like clothing and beauty with firms offering lower prices by eliminating the retailer middlemen. Food producers hadn’t been as quick to embrace this model, but are now catching up out of necessity.
What this shift means for the industry’s long-term future remains to be seen. However, it’s not hard to see it helping to push more Americans to embrace cooking. Many are preparing more meals than ever because of the stay-at-home orders, and now they have more options to get high-quality food delivered at what are often lower prices than they are used to paying.
Overall, about 60% of small businesses have temporarily pivoted their operations during the pandemic, according to Hello Alice, which offers advice and resources to small companies. And nearly 10% have made a permanent change.
Out on the west coast, the switch to retail meant that Joe Conte could hire back most of the workers that he’d laid off. He was preparing to close Water2Table Fish Co. after restaurant orders for halibut, black cod and sea bass evaporated when the Bay Area enacted America’s first shelter-in-place order on March 16. But within a week, he started selling seafood to households.
On a typical day at San Francisco’s Pier 45, Conte, who buys from local fishing boats, is putting together more than a hundred home deliveries for the Bay Area. The new program is generating about 60% of the revenue that he did from restaurants. There are other benefits, too.
“Retail pays immediately compared with businesses, so it’s been good for cash flow,” said Conte, 55, whose been running his business for a decade.
Since the lockdowns in the U.S., financially stricken small businesses are enacting a range of measures so they don’t have to close. Restaurant owners have resorted to crowd funding and selling vouchers, fitness instructors are holding classes online and skin care companies are selling hand sanitizers.
Still, the road ahead for them is precarious. Overhauling a business quickly, including revamping supply chains and finding enough new customers, is no doubt difficult. More than 10% of small businesses are on the verge of closing for good within the next month, according a poll released by the U.S. Chamber of Commerce. Their survival is key because as a group they account for almost half of U.S. private employment.
In Atlanta, Kirk Halpern, who supplies restaurants in Georgia and South Carolina, had to quickly change when his business, Farmers & Fishermen Purveyors, collapsed. He reckons that 97% of sales got wiped out in one day last month; what he described as “boom...gone.”
The 56-year-old responded by mapping out a plan over 13 hours to shift from supplying restaurants to delivering to households. His wife provided inspiration by asking friends if they wanted friends-and-family meat and seafood packages. Enough people responded that it gave him confidence to take it to go public.
And so far Halpern is surviving. Gross profit is down about a quarter from before the crisis struck because the big orders from restaurants, which can total $5,000, are gone, and being replaced by purchases that average less than $200. But he’s managed to keep his vans running and employees working. Both Halpern and Inver in Philadelphia said they plan to continue offering home deliveries once the pandemic passes.
“As long as you’re moving, as long as you’re working, good things will happen,” Halpern said.
©2020 Bloomberg L.P.