As winter fades into spring, restaurants across the country are reflecting on the hard decisions they faced this year: to stay open or hibernate? For those who stayed open, an additional revenue stream was not a nice to have - but a necessity to survival.
A marketplace model, where pantry items like pasta and canned tomatoes are sold along with prepared foods and take out, is one way restaurants are keeping doors open and staff employed. But pivoting from restaurant to grocery takes a lot more than just repackaging goods.
To learn what is required for such a shift in operations, we interviewed two of the very first restauranteurs to switch in Cambridge, Massachusetts. Chef-Owner Tracy Chang of Pagu, a Spanish and Japanese tapas restaurant home to Project Restore Us, a pandemic initiative employing and feeding essential worker families in the greater Boston area, and Evan Harrison, Owner of Vincent’s Corner Grocery at Café-du-Pays, explain how they were able to build a marketplace in under a week (hint: a lot of hard work).
“It was as hard as opening a new restaurant and we did it with basically no budget and no staff..."
Gain a little grit.
Restaurant folk are problem solvers by design but setting up a brand-new operation requires a different kind of resilience. For both Tracy and Evan, securing a retail license in the middle of a pandemic was the easy part.
“It took about four days for us to take stock of what we had, repackage items, apply for and receive a new grocery permit, make necessary adjustments to the space, set up the online shop, prep for a new menu, change physical signage, and get the doors open again,” says Evan. “It was as hard as opening a new restaurant and we did it with basically no budget and no staff. There were just two owners on site for the first two weeks before we brought on one more staff member.”
Tracy employed the help of her friend Marena Lin to get Pagu’s marketplace up and running in three days. “We had no experience in retail grocery prior to May 2020, so the learning curve to understand how to manage Squarespace, inventory, and order fulfillment was steep,” she says.
Start with safety first.
Cleanliness and proper hygiene practices are critical to any business during Covid-19, but food service requires an even greater level of care. Tracy spent the first few weeks of the state-mandated lockdown writing dozens of standard operating procedures (SOPs) for Off Their Plate, James Beard Foundation, and The Aspen Institute outlining safety protocols on how best to minimize exposure risk for employees and diners.
The SOPs are intended to be shared with other food service operations. Use her Covid-19 safety guide to establish clear safety guidelines with your staff.
“One of the hardest parts was learning how to run a retail-oriented operation. The markups are completely different and so are guest expectations,”
Cost with the customer in mind.
Grocery stores and restaurants both operate on extremely slim margins after rent, labor, utilities, and other operating expenses are factored in. During the pandemic, those margins might be even thinner. Yet operators should keep in mind perceived value and competitors’ prices when pricing products. “One of the hardest parts was learning how to run a retail-oriented operation. The markups are completely different and so are guest expectations,” says Evan.
Establishing different markups for different product categories can help prevent sticker shock and make your products price competitive to larger supermarkets.
Stay away from products with extremely short shelf life.
Restaurant operators are no stranger to FIFO—first in, first out—but avoiding highly perishable retail items altogether can help prevent food waste in the marketplace. “In the beginning, we wanted to offer as much interesting variety as possible, such as our housemade sauces, baos, and ramen kits, while including staples like flour, eggs, yeast, apples, bananas, etc.,” says Tracy. “Along the way, however, we realized offering certain perishables like bananas was neither profitable nor sensible. We made a lot of banana bread for Project Restore Us.”
Simplify and centralize ordering.
With cashflow tighter than ever, extreme visibility will afford you significantly greater control of your books. “I work with one liquor vendor, two breweries and one beer vendor, three wine vendors, and three food vendors. Having a tight handle on terms with vendors helps keep everything in balance and budgets clear,” says Evan.
Centralized ordering on one platform can boost financial transparency and simplify procurement and receiving. Ordering apps like Mable enable buyers to do all of their ordering in one place—even from vendors that aren’t on Mable—while keeping existing pricing, terms and arrangements with vendors intact.
Trim inventory without trimming options.
Maintaining a lean inventory maximizes cashflow, but it also increases ordering frequency. Cut down on ordering time by using an ordering app that allows you to scan, tap, and reorder products instantly.
Adding a little variety to your retail options keeps a small inventory from becoming stale to shoppers. Using an all-in-one ordering platform with flexible payment terms and a simple sign-up process eliminates the hassle of credit apps or setting up individual vendor accounts while making the discovery process of local and emerging brands easy—even fun!
“If we can keep our current staff employed and tread water without going too far into debt, I'll mark that as a win,”
Measure success differently.
As the world continues to wait out the pandemic, “survive, not thrive” remains the motto of many restauranteurs. To keep motivation high during trying times, set realistic expectations for sales and use other aspects of the business to gauge success. “If we can keep our current staff employed and tread water without going too far into debt, I'll mark that as a win,” says Evan.
Tracy emphasizes the importance of a safe grocery experience. “We want to continue offering this service to our regulars we have built relationships with,” says Tracy. “Acting as a marketplace for our community keeps our supply chains intact, and most importantly, keeps our essential workers, essential.”