Left with tons of premium food amid coronavirus shutdown, restaurant suppliers turn to consumers to stay afloat

April 1, 2020, 12:00 PM UTC

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.

Sought after by chefs for their high meat-to-shell ratio as well as their sweet, buttery flavor, Orchard Point Oyster Co.’s oysters have been served by Sean Brock of Husk and celebrity chef Wolfgang Puck. Until recently, though, the only way to eat them was at a restaurant. When The Jefferson Hotel’s restaurant Plume slashed their oyster order a few weeks ago, it was the canary in the coal mine for the Chesapeake Bay company. The free fall of room bookings meant fewer diners, and the cut in seafood spending gave the oyster farm a hint of what lay ahead. Within days, Orchard Point had an arrangement set up with The Retriever, a local shop, allowing anyone to purchase harvested-to-order oysters.

Taking advantage of the resources and supply chains already in place, premium restaurant suppliers like Orchard Point have tried to mitigate their losses by quickly pivoting from big-name restaurant customers to any consumer with a credit card. The resulting business, if they can make it work, could keep them afloat as cities shut down, enabling them to keep their staff employed and to make sure that farmers and ranchers can sell the food they’ve grown. Meanwhile, people who used to spend their food budgets on fine dining can now enjoy their Orchard Point oysters from the comfort of their own home for the first time—or get Wagyu steaks and pink radicchio delivered next-day to their home.

Supplying food directly to restaurants rather than consumers makes for more consistent sales and large volumes—normally. But Orchard Point went from selling 4,000 to 5,000 oysters per week to none at all. Last week, in the first week of consumer orders, it sold about 400. Because it harvests oysters to order, labor costs are down. But just to squeak by, partner Scott Budden estimates he’d need to sell 2,000 to 3,000 per week. Having set the consumer-facing business in motion, he’s working on adding more pickup locations, shipping nationwide (pending back-ordered packing materials), and, depending on how long closures last, looking into renting idled vehicle fleets for door-to-door delivery—all while charging less than what diners paid in restaurants. “It’s a unique opportunity,” he says, “where consumers can get the high-quality, fresh product that chefs have for years.”

A community-supported agriculture (CSA) organization or farm share is another affordable way for urban residents to buy local, organic produce.
Courtesy of Natoora

Marx Foods, the retail face of restaurant supplier North American Meats & More, has always been the company’s stepchild, accounting for 5% of its business last month, says CEO Justin Marx. This week, “it became the white knight,” closer to 30%, as people clamor to fill their freezers without leaving their house. Jumping on the chance to keep his team working as the bottom dropped out of the restaurant industry, Marx mobilized the two delivery trucks the company uses in Seattle and the 10 in New York, and sent them on the road to directly deliver organic Shenandoah Valley chicken, ground bison, and Iberico pork to people’s doorsteps. While the company’s premium meats have always been available to the public, the delivery fleet makes access to the product faster and more efficient, allowing the company to pass saved shipping costs on to the customer in the form of a discount.

A sales push last week showed that restaurants offering takeout and delivery were focused on turning current inventory into cash or sticking with a low-end product. At the same time, Marx began to see retail purchasing increase, despite the company’s restaurant-size quantities: The smallest cases are eight pounds and can accommodate up to 40 pounds. “But that’s suddenly what people want,” Marx says. “People are looking for the long run: They want food for months.”

With the ordering mechanisms already in place, and the suddenly idle restaurant delivery and logistics crews at their disposal, Marx Foods was uniquely set up to drop large quantities of grass-fed beef, ground meat, and sausage on people’s doorsteps. (The company sells other food besides meat, but sales show its meat products are what people want right now—rising from 50% to 90% of sales almost overnight.) With just a few snags as the company figured out how to shift deliveries and offer alternative payment options, sales ramped up so fast that Marx is considering leasing additional vehicles.

Pink radicchio delivered by Natoora, a supplier of fruit and vegetables to top-tier chefs.
Courtesy of Natoora

The process was even easier for Natoora, which supplies high-end produce to many of New York City’s top restaurants. Founded in London to deliver fancy fruit to people’s homes, it has since shifted to about 60% restaurant supply and 40% retail storefronts there. When it launched in New York City in 2017, the company chose to stick to the wholesale market in order to drive volume and to establish the brand. While Natoora always planned to add some type of consumer-facing retail, CEO Franco Fubini says, no plans were in place yet. Then, at a meeting in London on March 11, Fubini saw restaurant sales cratering and knew he had to move fast.

The company already had its own app that chefs used to place their orders, developed by an in-house technology team. It quickly pushed the app out to consumers via social media. Like Marx, Natoora had a supply chain, infrastructure, logistics, warehouse, and delivery fleet ready to go. And, like Marx, it sold products that consumers could previously buy, but not readily or speedily. Suddenly, Nagami kumquats, white asparagus, and forced rhubarb were available for next-day delivery. On March 19, eight days after confronting the issue, Natoora launched home delivery. By Saturday, the company earned about 25% to 30% of their usual revenue. But by Monday, it had already matched that of a normal Monday. “We knew that the 50% of food consumption that happened outside of homes had to go somewhere,” Fubini says.

Even though the revenue is equal, consumer orders are smaller and more varied, so even with the same amount of money coming in, Fubini explains, “it’s been a tremendous amount of work.”

Natoora’s situation—like that of Orchard Point and Marx—is more of a temporary patch that only looks like a success when compared with the plight of the restaurants with which they used to work. Selling premium groceries as the restaurant industry collapses can feel like playing in the band on the Titanic, but behind the scenes, Budden, Marx, and Fubini seem more like they’re desperately pumping air into lifeboats, trying to prevent laying off staff.

“It’s about how we maintain ourselves in business,” Fubini says. “How do we help the farmers continue to do the work that they do?”

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