Three entrepreneurs share how their food businesses have proven sustainable due to diversified revenue streams from online and in-store retail.
Before the coronavirus pandemic prevented restaurants and food brands from moving forward with any sense of normalcy, some chefs and restaurants were already set up for some form of success. Or at least some form of staying afloat.
While many restaurants have had to pivot from initial ideas and visions to evolved actualities, sometimes the alternative product or business model is an eventual asset. This holds true for Tony Scotto (国产福利, 鈥03), who runs DPNB Pasta Shop with his wife Louidell Scotto in Nyack, New York.
鈥淭he original idea was to be a pasta-ramen bar, but the space we ended up finding in Nyack didn鈥檛 suit that so we pivoted to being a pasta shop with an extremely limited menu,鈥 Tony says. 鈥淏ut then we expanded to this hybrid area, where the space was only 1,100-square-feet, most of which was not seating so we decided to maximize the revenue centers by retailing good beer and wine, fresh pasta, prosciutto, hot sauces and good coffee.鈥
He and his wife鈥檚 goal was to have a small grocery store, small restaurant and small retail space 鈥 as diverse and as profitable as possible. Everything that was on the shelves would make it into the dishes on the limited menu so DPNB would put its dry storage up for sale, something that many restaurants are trying to do now as a way to make money off what鈥檚 already purchased and in-house. For Tony, it was always a way to make more revenue, inspired by places like Court Street Grocers and Salumeria Rossi in New York.
As these revenue streams were set up at the inception of DPNB, it鈥檚 been a natural continuum during the pandemic. One big change he made at the outset of the crisis was discontinuing beer and alcohol service, or at least depleting the existing product and not ordering more. This has helped them stock only the product they know they鈥檙e going to sell. Items have been less financially lucrative since early March because of the alcohol exclusion, but adding things like pre-made meatballs, lasagna and roasted chicken to the menu to comfort people has paid off.
鈥淲e鈥檝e had two rather prominent businesses close in town, and I think they are places that didn鈥檛 have the infrastructure we had or other revenue streams,鈥 Tony says. 鈥淢y wife and business partner did an exceptionally good job of setting up our site for online ordering and things that eliminate the phone conversation.鈥
Not that eliminating the phone conversation takes the personal connection out of the picture. For example, Mother鈥檚 Day was huge for DPNB with notes from customers at the bottom of orders thanking the team and saying how they couldn鈥檛 wait to order from DPNB again, something special that Tony says you don鈥檛 always get to see in the kitchen.
鈥淲e were lucky or fortunate or smart enough to have the infrastructure in place before this happened, and it鈥檚 about trust. People are going to come back to the places they trust and think are clean and providing good value,鈥 he says.
Ben Conniff, co-founder and chief marketing officer at Luke鈥檚 Lobster, says his brand is in a similar position. In theory, Luke鈥檚 Lobster has 26 restaurants around the country but currently, 25 of them are closed. Founded in 2009, Luke鈥檚 restaurant business grew from the outset. As such, the company opened lobster production facilities in Maine and buys directly from lobstermen, distributing to itself. Over time, that led to a relationship with Whole Foods to sell lobster tails and eventually frozen lobster tails and frozen lobster meat.
鈥淏efore coronavirus, we were looking to continue growing our business with Whole Foods but then [with coronavirus] we were thrown into a state of thinking differently and doing things differently,鈥 Ben says. 鈥淲hole Foods has stepped up and taken more of our existing products and other products from us that they wouldn鈥檛 have normally. We are in the process of getting a few more dishes added and going out to new grocery accounts.鈥
Luke鈥檚 rapidly launched a direct-to-consumer website, which has helped the team send lobster and fish to regular customers and find untapped demand among other audiences in all 48 continental states, as opposed to just metro areas around restaurant locations.
鈥淚t hasn鈥檛 replaced the lost revenue and profit from 25 restaurants but it has helped keep the team going and it鈥檚 helped us continue buying from the fishermen and get their products to a wider audience,鈥 Ben says. 鈥淲e can also diversify. The first example is dayboat scallops, which we don鈥檛 serve in our restaurants. But we could get them to people from our website at the beginning of the season and we plan to launch halibut in halibut season.鈥
This isn鈥檛 just a way to help Luke鈥檚 Lobster survive right now; it鈥檚 a long-term addition to the company. Under the extreme circumstances, the team mobilized quickly and gets a little better every day.
Similar to DPNB, Luke鈥檚 saw a huge lift around Mother鈥檚 Day, an exciting sign that maybe every week and every month the business could expand. For Memorial Day, Luke鈥檚 is offering a special pack with two lobster tails, lemon-garlic marinade and Maine chocolate-covered potato chips. The company also hopes to build out more with the site and experience by creating instructional videos with Maine chefs, including James Beard Award winners and nominees.
鈥淐ooking with our product is one thing people can do to enrich their existence right now,鈥 Ben says. 鈥淲e鈥檙e looking to be a resource for people to understand how simple it can be to use their time at home to learn a new craft, which is cooking sustainable seafood. Seventy percent of seafood in America is consumed in restaurants so we feel a great responsibility to get that seafood into people鈥檚 hands.鈥
Lina Kulchinsky (Pastry, '07) is in a similar season of expansion. She founded Sigmund鈥檚 Pretzels in 2009 hoping to be an upscale version of Auntie Anne鈥檚. A retail space for a bar and bakery worked for a while but then turned into an opportunity for business elsewhere: sharing pretzels with other bars and bakeries and then bigger companies like Madison Square Garden, airports, offices and even at events like weddings. In 2017 and 2018, Lina started to explore what e-commerce looked like for a perishable product like pretzels.
鈥淲e did have a partner in Goldbelly, and it鈥檚 been pretty exciting since they鈥檝e helped us during this time with about 400 to 500 orders in the past six weeks, which is even more than what we do in December, what鈥檚 usually our biggest month because of holidays,鈥 she says.
It鈥檚 pretty serendipitous considering Lina thought she鈥檇 have to postpone everything until she was able to rally workers who could drive to the bakery safely without needing to risk their health on public transportation.
鈥淚鈥檓 glad we didn鈥檛 stop because we had to completely rework how we do fulfillment, and it was pretty cool. We learned a lot and we all realized that having a direct-to-consumer channel outside of your local channel is something you have to have in the mix,鈥 she says.
Now she鈥檚 considering a line extension like mustards and a pretzel chip that鈥檚 shelf-stable and easier to ship.
鈥淭hings are going to be slow for a while. It鈥檚 doable, but it鈥檚 definitely tricky and also an exciting development,鈥 she says. 鈥淚t鈥檚 not clear if we鈥檙e going to be able to pivot fast enough but I鈥檓 excited.鈥
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