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If it takes three of something to become a trend, then restaurant suppliers now selling directly to consumers is officially a trend.
Over the past month we have covered four different startups who, prior to this global pandemic, created software platforms that allowed restaurants to purchase food from their suppliers. Choco, Cheetah, Pepper and DineMarket all had marketplaces to connect restaurant buyers with food wholesalers. But once COVID-19 forced the closure of restaurants across the country, suppliers no longer had customers and restaurants no longer needed an online supplier marketplace.
So when the going got tough, Choco, Cheetah, Pepper and DineMarket did what startups do — they pivoted. All of them adjusted their platforms to connect consumers with suppliers. Now everyday people can shop for restaurant-quality food and other supplies just as they would shop for groceries from the big chain supermarkets.
These pivots actually solve a number of problems. Shelter-in-place orders have more people than ever shopping for groceries online (plus, they are too scared to actually go into stores). This sudden rush has forced even the biggest food retailers like Amazon and Walmart to struggle with inventory stocks and delivery windows. Shopping from restaurant suppliers gives consumers another avenue for grocery shopping, and helps ease some of the strain on existing retailers. This D2C move also helps restaurant suppliers stay in business, keep people employed and prevents food from going to waste.
The questions now are whether consumers will take to this style of shopping and what will happen once this pandemic recedes. Desperate to find certain items, consumers may be more open to non-traditional retail outlets when it comes to finding things like flour and toilet paper. And even though restaurants are slowly re-opening, they are doing so at a diminished, socially distant capacity, so it’s not like that line of revenue is going to come immediately roaring back.
Interestingly both Choco and Cheetah have recently raised big funding rounds: $30.2 million and $36 million, respectively. We don’t know what stage those term sheets were at during this pandemic, but both startups closed their rounds, so investors at least see some kind of return on the horizon. Whether it’s from restaurants or consumers remains to be seen.
Right now, consumers’ ability to shop from these retailers is pretty limited geographically. DineMarket and Pepper both service the New York area, Cheetah is in the Bay Area, and Choco offers services at a few cities on both coasts. If it takes off though, look for this idea to expand across the country rapidly.
California to Enlist Independent Restaurants to Feed the Elderly
California Governor, Gavin Newsom, announced the “Restaurants Deliver: Home Meals for Seniors” program last Friday. The goal of the program is to pay restaurants to feed the elderly and otherwise vulnerable populations in that state.
As my colleague Jenn Marston reported, what’s even better about the program is that it’s looking to pay independent restaurants to do it. Restaurants Deliver will reimburse participating restaurants for three meals per day, capping at $16 for breakfast, $17 for lunch and $28 for dinner.
Restaurants will be picked by local governments, and meals must meet certain nutritional guidelines and ideally use locally sourced ingredients.
California often leads the country when it comes to regulation. So we’ll see if other states adopt similar measures.
Join our Virtual Fireside Chat Series
Did you catch our Building the Future Kitchen virtual chat with Scott Heimendinger and Larry Jordan Jr. on Crowdcast last week? If you didn’t, you missed out on a fantastic event (though you can still check out the replay).
We’ve lined up a bunch of great food tech talks over the next couple of weeks, so be sure to join in, watch a great discussion and even ask questions!
- Hack-Proofing The Kitchen: Strategies & Tactics for Securing Connected Kitchen Appliances with Riley Eller (April 30 at 10 a.m. Pacific)
- A Conversation About Changing Food Habits in the COVID-19 Era with Susan Schwallie (May 7 at 10 a.m. Pacific)
- The Future of Kitchen Design in a Post COVID-19 World with Johnny Grey (May 14 at 10 a.m. Pacific)
All of these talks are free to watch so register for them today and follow us on CrowdCast to catch up on all virtual events we hold in the future.