Hartford Business Journal

www.HartfordBusiness.com • June 1, 2020 • Hartford Business Journal 21 According to the U.S. Bureau of Labor Statistics, Americans, dur- ing normal times, spend about 44% of their yearly food budget (about $8,000) dining out. If people were to reduce the amount they spent at restaurants by 14% due to COVID-19-related fears and closures, the food service indus- try would lose $178 billion per year, Acosta found. Foot traffic in front of restaurants, a key element in at- tracting customers, was down 91% as of May 7, according to Acosta. In addition to reduced revenue, demand from restaurants, which were allowed to reopen outdoor dining ser- vices on May 20, has changed drasti- cally, making it difficult for distributors to figure out how much food to buy. West Haven's City Line Food Dis- tributors, which sells to about 1,800 independently owned restaurants, has had to throw out some perishables that went unsold, said Robert Berkowitz, the company's president. City Line, which had to reduce its workforce due to the pandemic, currently employs about 211 people, and has seen revenues drop be- tween 30% and 40%, depending on the week. When figuring out what prod- ucts to purchase and how much, City Line uses algorithms based on data the company has amassed over the years on customer buying habits. "The [current] demand is very much different and the projections and algo- rithms aren't useful now," Berkowitz said. "The data that we have is of some value, but it's not as accurate as it was." City Line received funds through the federal Payroll Protection Program, but Berkowitz declined to specify how much. Supply chain disruption Food distributors that serve retail clients face their own challenges, even though demand has increased, said Pesce, the Connecticut Food As- sociation president. Weeks of panic-shopping led to shortages in products like toilet paper and some canned goods, Pesce said. That kind of buying appears to have largely subsided since the be- ginning of May, but now supply chain issues are leading to meat shortages. "Right now there's some supply chain disruption for a couple reasons for [meat]," including some meat-pro- cessing plants being shutdown due to COVID-19 outbreaks, Pesce said. "You may go into the store, and they might not have a particular cut [of meat]." That shortage is driving up prices, Pesce said, and will continue to do so until the supply chain problems are worked out. Grocery store prices grew 2.6% in April, which was the biggest month- ly increase since 1974, according to the Bureau of Labor Statistics. Pesce said he has worked with food-service distributors — includ- ing DeSarbo — on redirecting prod- ucts from restaurants to grocery stores. However, major differences in how food service and retail dis- tributors operate make it difficult to make a seamless transition. For example, restaurants are willing to purchase — and cook with — mis- shapen produce like tomatoes, but grocery stores won't because custom- ers are a lot less likely to buy them. Meantime, other food service distributors, like HPC, have been finding alternate business lines. In an effort to recoup some lost revenue, and provide a grocery-store alternative for those wary of crowded spaces, HPC has started an online service, Charbonneau said. Custom- ers can order food usually sold to restaurants, and pick it up curbside at the company's South Windsor warehouse. Since HPC started the service it has had about 250 weekly customers, Charbonneau said. Distributors are also working closely with restaurant customers on alternate payment plans, Berkow- itz said. City Line has even hosted webinars for restaurants it serves on topics like the federal CARES Act, and how to get loans through the Paycheck Protection Program. "We've been very active, because what happens to our customers af- fects us," Berkowitz said. Even though the current situation is far from ideal, DeSarbo and other food distributors doubt the pan- demic presents an existential threat to the industry. "Fortunately, we sell food, and people need food," DeSarbo said. "I don't see us coming near going out of business." Rising grocery prices The price of groceries grew 2.6% during the month of April, the biggest increase from one month to the next since 1974, according to the Bureau of Labor Statistics. Here's a run down of some goods that have seen the biggest price increases. Breakfast Thinking about making an omelette before you start your work day from your couch? That's going to cost you. Egg prices shot up 16.1% last month. Keeping it simple and switching to cereal won't help. Breakfast ce- real prices rose 1.5%. So did milk, bread and juice, with 1.5%, 3.7% and 3.8% increases, respectively. Treating yourself got more expensive, too. Doughnut prices shot up 5% last month, and muf- fins are 4.7% more expensive. Coffee for your morning com- mute walk to the den? Roasted coffee prices rose 1.2% and in- stant coffee was up 2.5%. Lunch Maybe you want some soup for lunch? Soup will cost you 2.6% more. A soda for a mid-day treat? Car- bonated beverage prices are up 4.5%. Maybe a cookie to get some sugar in you? Cookies cost 5.1% more in April than in March. OK, let's keep it healthy. How about some fruit? Fruit prices were up 1.5%, led by apples (4.9%) and oranges (5.6%). The entire citrus category shot up 4.3%. Dinner Meat prices spiked 3.3%. So maybe you want to try something else? Pork costs 3% more. Chick- en shot up 5.8%. Fresh fish soared 4.2%. And if you want to grill, hot dogs got 5.7% more expensive. The news isn't much better even if you're trying to stay healthy. Vegetables rose by 1.5% and canned vegetable prices soared 3.6%. Feeding your baby got more expensive too. Baby food prices rose 2.7%. David Goldman , CNN Business In an effort to recoup some lost income and provide an alternative to grocery stores, HPC Foodservice began offering online ordering and curbside pickup for individual customers.

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