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Food & Beverage Industry Innovation Amid COVID-19

Food & Beverage Industry Innovation Amid COVID-19

Among the most serious concerns when stay-at-home orders were put in place during the pandemic was how people would have access to food. Grocery stores, restaurants, and other food and beverage purveyors were deemed essential businesses, and protocols were put in place allowing them to remain open as other businesses shuttered. And the food and beverage industry came through, serving up pandemic-era innovation.

The food and beverage sector plays a critical role in the U.S. economy. Food service, eating and drinking places, and food and beverage stores accounted for roughly 8 percent of all U.S. jobs in 2018, according to the U.S. Department of Agriculture. And Americans spend about 13 percent of their household budgets on food. Only housing (about 33 percent) and transportation (roughly 16 percent) get more of the average family’s spending.

Creativity for food & beverage on the menu

While movie theaters, concerts, and sporting events all went dark during the pandemic, many of the nation’s restaurants pivoted. From takeout and delivery services to expanding retail options, they found innovative ways to keep serving their patrons. Stone Barns, an upscale group of restaurants throughout southern New York, offers a variety of gourmet meal preparation boxes. They partner with local farms and food purveyors whose sales have been hurt by restaurant closures. A May 8 story in The New Yorker magazine described how restauranteur Nialls Fallon has turned his exclusive New York City restaurants Harts, the Fly, and Cervos into high-end grocery stores, offering exclusive items like She Wolf Bakery sourdough bread, farm-fresh eggs, blood oranges, and sheep’s-milk yogurt. Some regions relaxed alcohol sales regulations and allowed them to serve specialty cocktails to go.

As more restrictions eased, outdoor dining became a welcome addition to the services restaurants were able to provide and put more people back to work. New York City even launched an interactive map that shows which restaurants are offering outdoor dining. As of early July, it had roughly 3,500 listings in Manhattan, which has shut down busy thoroughfares to give restaurants more room for socially distanced tables.

Innovation in store

Grocery stores and food markets also showed their creativity during the pandemic. While salad bars and bulk food offerings were discontinued, supermarkets created new grab-and-go options to replace them. Consumers gravitated to more local food sources, including farmers markets, reasoning that these options may be safer than food traveling long distances with many touch points. This provided a much-needed lifeline to small farms, which proved to be an important part of keeping the overburdened supply chain intact. Some offered prepackaged selections of produce or products that could be ordered online or by phone and picked up the same day.

The pandemic also spurred demand for food delivery and beverage services like DoorDash, GrubHub, and UberEats. Credit card research firm Second Measure reported that, in May 2020, demand for meal delivery services doubled year over year. Convenience and a preference for social distancing and contactless delivery options are driving demand.

However, over time, consumers have become more aware of how much these services cost restaurants, charging 25 percent or more of the order cost and essentially wiping away most or all their profit margins. Plus, many restaurants want to develop the relationship with customers themselves instead of having a delivery service be the go-between. Many establishments will continue to grapple with the choice, weighing whether to opt in to the convenience of a third-party delivery service or establish their own options. Technology provided by 7 Rooms, Bento Box, and GoParrot! to name a few, allow restaurants to own the customer data and build more personal relationships at far less cost.

As the pandemic created new challenges for supermarkets, mass market food retailers, restaurants, farm stands, and other types of food and beverage businesses, many responded with resourcefulness and resilience to preserve their enterprises and serve consumers. As restrictions ease, they will face new challenges and opportunities in deciding which changes they will keep, and which will be discontinued in favor of more traditional operations. And economists will watch consumer spending on food as well as their return to restaurants as yet another measure of economic recovery.

Sources:
USDA ERS: Ag and Food Sectors and The Economy
Second Measure: Which company is winning the restaurant food delivery war?
Experience ArcGIS: NYC Open Restaurants
The New Yorker: The Restaurants Transforming Into Grocery Stores


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