The government shutdowns of restaurants and other foodservice outlets in 2020 was devastating, and unfortunately, there seems to be no real end in sight.
“A shutdown hitting such a targeted and large sector was unprecedented,” says Kristen Park, extension specialist at Cornell University in Ithaca, NY.
“Then there was the bullwhip effect up the supply chain, causing larger shifts in sales and distribution among suppliers, then it got to the production level, where they had to plow food under.”
Rebecca Catlett, director of marketing and communications at Okanagan Specialty Fruits Inc., in Summerland, British Columbia, says the company did not see an impact on overall sales, but the shutdown of foodservice, a significant channel for the company’s nonbrowning Arctic apple, was difficult.
“When foodservice is challenged, we’re all challenged,” she says.
“Many restaurants in the fast and casual food space have figured out very effective delivery, pick up, and drive-through options,” says Steve Grinstead, CEO of FreshEdge, LLC in Indianapolis, IN.
“But fine dining, hotels, healthcare cafeterias, schools, sports stadiums, and the like will have a much slower comeback.”
“The recovery will be further out for these sectors than for restaurants that can open at least on a modified basis,” agrees Steve Lutz, senior vice president of insights and innovation at Category Partners, LLC in Idaho Falls, ID.
Growers and suppliers to foodservice venues had to find somewhere to sell produce on hand, with many transitioning to direct-to-consumer models, launching websites for consumers to buy boxes of produce or individual items and pick them up.
Don Goodwin, founder and former president of GoldenSun Insights, says a number of clients sought advice about direct-to-consumer sales. “There’s definitely some activity, but it takes commitment and a long-term view.”
FreshEdge, which has several businesses serving the foodservice sector, entered new segments of the industry and had some success with direct-to-consumer programs and innovatively packaged products.
“Pivot has become the word of the year,” says Grinstead. “But people not in the foodservice sector need to understand the magnitude of what has happened—it’s a deep hole to fill. Our company will be different in the new normal.”
As the pandemic dragged on, more and more restaurant closures went from temporary to permanent.
“The effects will definitely continue into 2021 and likely 2022,” Grinstead says.
“At FreshEdge, our foodservice distribution divisions experienced an unimaginable drop in revenue. Fortunately, we have an amazing team, and we were able to make the cuts necessary to survive it, but it has been brutal. A large number of our customers are still closed, and many will never reopen.”
This is a feature from the cover story of the January/February 2021 issue of Produce Blueprints Magazine. Click here to read the full article.