Insights on the state of the food service and agribusiness industry
How have the economic impacts of the covid-19 pandemic effected food service and agribusiness? In our 14thSharing Knowledge Series episode, host Kevin Vonderau, chief lending officer at Westfield Bank, is joined by guests Kristyn Henslee, owner of Yellow House Cheese in Seville, and Douglas Katz, chef and owner of Cleveland restaurants including Zhug, Chimi and Amba. Our guests provide their insight on the current state of the food service and agribusiness industry.
Below are some of the key takeaways from the conversation with Kevin, Kristyn, and Douglas. Watch or listen to the full episode here to learn more.
The pandemic’s impact on the food industry
No industry has been spared from the impacts of the pandemic the last two years, but perhaps one of the most effected during this time has been the food industry. Yellow House Cheese had typically sold its meat and cheese products directly to individual buyers, restaurants, or butcher shops at places like farmer’s markets. At the onset of the pandemic, Kristyn’s business pivoted and began delivering to their customers via online orders or arranging for their orders to be picked up. Kristyn says this new approach has been more profitable for Yellow House Cheese.
This shift to online orders is part of a larger trend. According to a study conducted of 42,000 grocery customers across 20 states, 43 percent shopped online in 2020. That’s an 80 percent increase from the 24 percent that did so in 2018.
Adapting to the realities of the pandemic
Like many business owners in 2020, Douglas had to adapt and make tough decisions given the circumstances of the pandemic. One of his restaurants, Fire, an upscale establishment that was located at Cleveland’s Shaker Square for over 20 years, had to permanently close in 2020 due to the pandemic.
On the other hand, Douglas had opened another restaurant, Zhug, about five months prior to the pandemic. Zhug was well equipped for takeout, and when the pandemic began, they added an online delivery option as well. Utilizing social media to inform customers of the online delivery option was an essential tool as Zhug adapted its model.
From loss to opportunity
Fire wasn’t the only business that Douglas had to shut down in 2020. He also operated a catering commissary that he had to close because of the pandemic. While this business was no longer viable, Douglas and his employees used that kitchen space as an incubator to test new ideas and concepts. Out of this, two “ghost kitchens” were launched, which are professional food preparation and cooking facilities that are designed solely to prepare delivery or takeout meals.
Coming out of the pandemic, dining establishments will have to find the right balance between in-person dining and takeout. Douglas takes pride in the hospitality he offers his guests, so he hopes that more customers will return to opting for in-person dining options.
Supply chain issues and inflation hit the food service industry
As supply chain challenges emerged, Kristyn found herself being closed out of butcher dates. It was frustrating not being able to harvest her animals, and ultimately not have meat to sell. “I had animals with no end goal,” Kristyn said. As a result, she’s even considering opening her own butcher plant in the coming years to prevent future issues.
The supply chain wasn’t the only challenge Kristyn has had to deal with. As a result of inflation, last year’s feed costs were 30 percent higher than the previous year for Yellow House Cheese.
Douglas also says that his businesses have been impacted in a major way by supply chain challenges and inflation. He adapted by pivoting his restaurants to the takeout model, which allows for menu curation and invites a thoughtful use of available food inventory. Both Kristyn and Douglas say that rising inflation has trickled down to their customers, but they try to limit this as much as possible.
The use of technology will continue to shape the food service industry. Whether it’s ordering groceries online or placing a takeout order on a smartphone, businesses have to keep up with evolving consumer demand.
Aside from customer service, more and more people are prioritizing their own health, and food is a key factor in that. Local food is a great way to eat healthier and invest in the community, and consumer demands are increasingly heading in this direction.
“If restaurant owners want to be successful going forward, they have to focus on what they’re passionate about and not try to do too many things at once,” Douglas says. This passion must be shared with your community through the dining experience you provide. When it comes to agribusiness, Kristyn says, farmers must be in it for the worst and hardest days. You need to embrace the fact that being a farmer is more of a lifestyle than a job.