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Redirect to Retail
CSSI Staff Post - April 8, 2020
Most restaurants are feeling the effects of COVID-19 on their business. As many states have mandated that dining rooms close, restaurants that were not in the delivery or take-out business must quickly adjust—or make the hard decision to close their doors. Restaurants that already had a delivery or take-out model are not immune to the impacts of COVID-19, and many are seeing a decrease in their business, as well.
With restaurants closing and serving fewer customers overall, manufacturers have quickly seen a decrease in orders, requests to take back product and changes to volume forecasts. This has left many manufacturers to determine what to do with their manufacturing plants and employees.
One option is to move production volume for foodservice to retail product production. For some manufacturers, doing this is easier than it is for others. For instance, a manufacturer who already produces products for foodservice but in packaging that is conducive to retail (individual portions, bar codes/UPC, relations with retailers, etc.) is able to quickly adjust where to allocate product. The same applies to a manufacturer who produces the same products for retail and foodservice but in different pack sizes. They can now direct all of their product to retail packaging.
However, there are many manufacturers who produce products only for the foodservice channel and have no retail relations or packaging capabilities.
How can manufacturers get started if they want to allocate product into retail?
For manufacturers without an existing retail business, there are several factors to consider before going down the path or trying to redirect product to retail. Questions to ask include:
- Can you package products in portion sizes more conducive to retail? (5+ pounds is not typical for retail consumers)
- Do you have the ability to do inner packaging that has branding, product information, graphics, etc.?
- Do you have the ability to deliver products directly to retailers or DCs?
- Do you have the ability to put a barcode or UPC on inner packages?
- Is your product something that consumers desire and are accustomed to buying at a grocery store? [Example: Chicken batter (typical foodservice item) versus chicken or ground beef (typical retail item)
If a manufacturer is able to meet all or most of the criteria above, then pursuing a retail channel may be a good option. There are several ways to start these conversations:
- Determine if your company or team has any connections in the retail channel
- Ask if your supplier partners have relationships in the retail channel and, if so, if they would be willing to make an introduction
- Contact CSSI for direction and support
What are the benefits of redirecting product to retail?
Short-Term Benefits:
- Sell product that’s already been produced
- Keep production moving forward at manufacturing plants, keeping more staff employed
- Provide consumers with products that are in short supply and high demand
- Improve employee morale
Long-Term Benefits:
- Maintain employees
- Create new relationships in retail
- Ripple effects of continued production for essential workers (truck drivers, ingredient suppliers, restaurant industry workers) who are more likely to visit restaurants when outside the home
Thomas Talbert
VP, Culinary Marketing
VP, Culinary Marketing
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