San Francisco Chronicle - (Sunday)

Restaurant suppliers’ smart switch

Distributo­rs adapt by delivering groceries to homes

- By Carolyn Said

When the pandemic hit, Union City’s Daylight Foods, which distribute­s food to restaurant­s, colleges, schools and corporate campuses, went from $90 million annual sales to almost nothing.

CEO Chris Vlahopouli­otis had to lay off threefourt­hs of his 200 workers. “I wanted to bring the employees back, and at the same time got a call from a farmer who said, ‘Chris, I planted all these crops for you; what am I gonna do?’ ” he

Online extra

Where to order Bay Area grocery delivery:

sfchronicl­e.com/ grocery-delivery

recalled.

That sparked a brainstorm: Why not switch to home delivery of groceries from its wellstocke­d warehouse and supply chain?

“Basically overnight, we created a website and started doing hundreds of deliveries a day,” he said. “We’ve been able to help consumers out, support our farmers and bring our employees back to work.”

In the Bay Area and nationwide, scores of restaurant suppliers and other wholesale distributo­rs saw their regular business implode during shelterinp­lace orders, even while homebound families desperatel­y sought grocery deliveries. So they are making similar shifts, from wholesale to direct consumer sales.

“You have to do something to keep the lights on and keep

some employees working,” said Adrian Hoffman, founder of Four Star Seafood & Provisions.

With warehouses packed full of kitchen staples, perishable­s that had to be consumed soon, and suppliers in place for produce, dairy, meat, fish and poultry, food distributo­rs realized that they could find a ready market for their goods among consumers, and offer prices competitiv­e with supermarke­ts. A Chronicle directory of 175 companies offering home delivery of food also includes restaurant­s, farms, butchers, wine shops and specialty stores. “When COVID hit, we were hit very hard in direct correlatio­n to the impact on restaurant­s which lost the majority of their sales,” said Na’ama Moran, CEO of restaurant supplier Cheetah in San Francisco. “We had a warehouse filled with products, many of them perishable.” At the same time, a friend texted her a picture of empty supermarke­t shelves in New York.

“I realized customers would find it hard to get essential groceries here,” she said. “I expected the same panic mode. So we opened the (app) to consumers for contactles­s pickup.”

Cheetah, founded in 2016, aspires to be an Amazon for restaurant­s, a hightech way for them to buy everything they needed, from food to cleaning supplies. Moran said it served more than 10% of Bay Area independen­t restaurant­s. It had recently opened in Los Angeles and was about to open in Dallas; those expansions now had to be postponed.

Even though it already had the food, the warehouse, the trucks and the supply chain, going direct to consumers was still a major endeavor.

“Consumer grocery purchasing is very different from restaurant­s, which buy very large quantities,” Moran said. “The model of how we pick and pack items had to change.”

Adapting from giant sizes was a challenge. Cheetah has added about 300 products in smaller sizes, but still has a lot of bulk items.

“The consumer experience is very much like Costco; access to family sizes at wholesale prices,” she said.

It’s also adding meals and readymade items from some restaurant­s, such as Zero Zero Pizza, Curry Up Now and Hummus Bodega. It expects to continue consumer sales at least through year end.

Rather than home delivery, Cheetah started by setting up 10 pickup locations throughout the Bay Area for consumers to drive to, pop open their trunks and have groceries loaded inside. It is now adding home deliveries, which cost $25 for orders under $250 and are free for those above $250. That fee will decline over the coming weeks, the company said. Pickups are free.

“Cheetah came to our rescue,” said Usha Upadhyayul­a of San Jose. Her family of four, with sons 18 and 25, “eat plenty,” so she appreciate­d the large quantities and the nocontact pickups.

“I can see how the app is being improved; I constantly give feedback and they take it,” she said. She was impressed at the selection of foods, including tamarind concentrat­e “exactly the way we make it at home” in India, she said.

Daylight Foods also had a learning curve. Initially it offered prepackage­d grocery boxes, but consumers made it clear that they wanted to pick and choose their own food, Vlahopouli­otis said.

It is adding products all the time, focusing on local companies. “We don’t want to be Walmart; we want to be where you can get good quality products from local purveyors,” he said.

Still, the selection is more limited than a traditiona­l supermarke­t.

“A grocery store might have upward of 5,000 (items), and we’re around 800,” Vlahopouli­otis said.

Daylight Foods offers free home delivery for orders over $100; $5 for under that. Consumers can order until 3 p.m. for nextday delivery. “I didn’t feel comfortabl­e contractin­g out deliveries,” he said. “We have really high standards for food safety, so I wanted to control the last mile. We’re field to home.”

Less techsavvy customers can call the company directly to place orders.

“We’re definitely going to continue to do (consumer sales); we like it,” Vlahopouli­otis. “We get emails that are really touched; some of the elderly people that are high risk (from going out) are really grateful. People are so happy to get food.”

Some of those making the consumer move are niche players focused on artisanal foods.

Hoffman, a chef his whole life (he ran the Lark Creek Restaurant Group), started Four Star in 2015 to try get seafood to restaurant­s more quickly. It expanded to other gourmet provisions, “curating a few hundred (items) of really boutiquey things we like to cooked with: cheeses; truffles; French, Spanish and Italian oil and vinegars,” he said.

It launched home deliveries the same day San Francisco issued shelterinp­lace orders. At the time, Hoffman was weeks away from opening a brickandmo­rtar market for consumers in Noe Valley, so he spread the word on the local Nextdoor site. Local residents who’d been eagerly anticipati­ng the store quickly became customers.

The company’s 13 trucks make about 75 deliveries a day around the Bay Area. Deliveries are free for orders of more than $100; $35 for those under $100.

Four Star sells fish, meat, produce, dairy and desserts and more — 700 items in all. It’s added lots of local gourmet purveyors, with some offering their wares on consignmen­t so Four Star isn’t taking much risk.

Some serendipit­ies: Among the homedelive­ry customers were top executives of Williams Sonoma, who arranged to start selling Four Star’s seafood boxes on its website.

“We have people who’ve ordered 20 times in the past month and say this is how they want to eat now,” Hoffman said. He definitely wants to continue the home business.

Some companies have even adapted to supporting the middlemen that went direct.

Choco, a 2yearold Berlin startup whose technology simplifies how restaurant­s order from suppliers, has launched Choco Market, an online store to help restaurant suppliers connect to the general public for selling their products. Four Star is among its users, although it also has its own site.

Businessto­business “restaurant deliveries come in largepack sizes, with flexible delivery times, and to an easily accessible storefront, so (have) very different expectatio­ns than those of everyday consumers,” CEO Daniel Khachab said in an email. Moving “towards the very demanding consumer segment is challengin­g for any business. Luckily our partner suppliers took on this challenge incredibly well and delivered to many happy customers.”

Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicl­e.com Twitter: @csaid

 ?? Sarahbeth Maney / The Chronicle ?? Chelsey Yost (left) of Livermore picks up a grocery order in Pleasanton from Byron Eppler of food supplier Cheetah.
Sarahbeth Maney / The Chronicle Chelsey Yost (left) of Livermore picks up a grocery order in Pleasanton from Byron Eppler of food supplier Cheetah.
 ?? Sarahbeth Maney / The Chronicle ?? Byron Eppler, a customer success specialist with Cheetah, prepares orders for pickup in Pleasanton. Cheetah has switched from supplying restaurant­s to selling directly to consumers.
Sarahbeth Maney / The Chronicle Byron Eppler, a customer success specialist with Cheetah, prepares orders for pickup in Pleasanton. Cheetah has switched from supplying restaurant­s to selling directly to consumers.

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