From Grocerants to Ghost Kitchens

How the Pandemic changed the food industry

If we could only use one word to describe the business of food during the pandemic, that word would probably be “pivot.” It didn’t matter if it was a small, artisan jam maker selling products at a farmers’ market or a multi-province chain restaurant, everybody had to pivot their core business model to survive such a drastic change in the market spurred on by COVID-19 restrictions and lockdowns. It also created new meaning to Ghost Kitchens and created new words: grocerant.

The rise of the grocerant

Some small, independent restaurants pivoted to “grocerants” (a hybrid of grocery store and restaurant) overnight, re-vamping their dining rooms into specialty grocery stores, stocking pantry staples and specialty items that their food suppliers (also in “pivot-mode”) were more than happy to provide. These neighbourhood grocerants became another option for consumers wanting to avoid big, grocery store lineups and crowds and support a small business at the same time.

Going digital

Restaurants, bakeries, and farmer’s market merchants that previously had no online presence went digital by launching websites, complete with e-commerce, offering curbside and delivery options that complied with physical distancing restrictions. London Drugs got in on the pivot game by transforming shelves into “locally produced” sections, giving those small, food industry operators another way to sell their shelf-stable goods.

The increase in SAAS (software as a service)

For some establishments though, going digital on their own was a tall order, so they signed up with popular delivery apps like Uber Eats, Skip the Dishes, and Door Dash. This move would come at a cost, as those established delivery apps’ commission rates really took a bite out of a small restaurant’s earnings. One Vancouver restauranteur took their pivot to another level by creating a “community first” low-cost delivery app to help small businesses save on delivery commissions and to help keep more of the delivery fee in the delivery driver’s pocket. Brandon Grossutti, owner of Pidgin in Gastown, used his background in coding and software to launch Fromto, an app that’s ” building a more sustainable industry by creating an equitable and transparent delivery platform.”

Canada ranks in the top 4 for food delivery

Canada ranks in the top four countries in the world that are the most seasoned home delivery markets (the USA, the UK, and Australia are the other three) even before the pandemic started, and there’s still room for more growth and evolution. It’s a wide-open market filled with a myriad of delivery apps and consumers have grown very fond of them. With all this opportunity and competition, there will always be change and innovation to keep everyone on their toes. How delivery drivers are classified continues to be an issue; are they just gig workers, or should they be full-fledged employees? How the job designation evolves may have an impact on the business model. Everyone be prepared to pivot! Though next time it should be easier. Why?

The pandemic taught restaurant operators to think even more quickly on their feet than before; whether establishing an online menu for the first time, or modifying existing menus, they whittled down the number of items, eliminated dishes with the smallest margins, chose more delivery-friendly items, and shopped for better packaging. Martin Vezina, a spokesman for the Quebec Restaurant Association put it simply, “Less is more.” Even though diners have returned to in-person dining, things could easily change on a dime. If the last two years have taught us anything, is that anything can happen. One thing is for sure: food delivery is here to stay.

Easing of restrictions for zoning and alcohol

Governments even pulled off the occasional pivot. Just as they had to implement pandemic restrictions affecting everyone, which hit the food and beverage industry particularly hard, they also took some other restrictions away. One vital area of income for a restaurant is liquor sales. The Government of British Columbia authorized the sale of packaged liquor of all types with take-out and delivery food orders early on in the pandemic. This is now a permanent policy. Back in the late spring of 2020, the Government of BC also pivoted on restaurant/bar patios by authorizing the expansion of service areas in order to better accommodate physical distancing, safer service, and an opportunity to increase sales.

Probably the most populated group of people that joined the pivot revolution during the pandemic were the consumers themselves. Especially urban dwellers and senior citizens.

Online demographic shifts

Probably the most populated group of people that joined the pivot revolution during the pandemic were the consumers themselves. Especially urban dwellers and senior citizens, the people that typically shopped for food in-store and filled restaurants and coffee shops’ seating areas. Many of them pivoted to setting up online accounts and navigating virtual shopping carts for the first time during the pandemic. Who doesn’t have a story about teaching a parent or grandparent over the phone no less, the finer points of creating a secure password and clicking on the “add to cart” buttons? UBC Okanagan School of Engineering is now studying our post-pandemic shopping habits by examining the data from a 2020/21 transportation survey and is already concluding consumers will still be placing online delivery orders rather than brave the crowds and the elements, however cold or hot.

What the heck is a ghost kitchen?

One of the most fascinating pivots in food has to be the rise of the “ghost kitchen.” Also known as a dark kitchen, a ghost kitchen has everything a restaurant has, but without a dining room or diners. It’s just a kitchen filled with chefs cooking food orders for delivery. Often communal spaces, ghost kitchens are an excellent opportunity for budding chefs to create, cook, and sell their dishes without all the extra baggage and risk that comes with running a restaurant.

Vancouver is home to several ghost kitchens, and they are a remarkable example of how a group of people can come together and share knowledge and resources that help small businesses survive and thrive. It’s important to note that for a new chef about to pivot into business at a ghost kitchen with their Tacos de Pescado or some other delectable treat, protecting the venture will be necessary and Reliance Insurance is innovative in finding insurance coverage for niche markets.

Fifteen minute grocery delivery arrives

Hot on the heels of the ghost kitchen is the “dark” grocery store that only delivers. New to Canada, Tiggy offers speedy delivery without a delivery fee, so go ahead and order just one banana, a loaf of bread, and a jar of peanut butter. That’s always been one of the challenges with online grocery shopping; putting together an order large enough to avoid a fee. One thing that also makes a difference? An app like Tiggy prioritizes local suppliers and local brands. The Tiggy concept works because they design, own, and operates micro fulfillment centers which are compact warehouses that allow us to provide fast delivery, consistently.

Learning to live with supply chain issues

Oh, how we learned to pivot when the supply chain was breaking. When face masks were hard to find during the early days of the pandemic, we pivoted to making our own and then pivoted again to producing a million YouTube videos on how to make them. When there was no hand sanitizer anywhere, microbreweries literally said, “hold my beer” and pivoted to producing it. When we were locked down, bored at home, we pivoted to baking until there was a yeast shortage.

The challenges faced by food producers, suppliers, and logistics came fast and frequent during the pandemic; lockdowns prevented migrant workers from traveling to their jobs in agriculture, so fruit and vegetable farms struggled to get their yields to market. Entire countries were shut down, making importing/exporting difficult. Staffing shortages due to illness and lockdowns slowed down production facilities the world over. What’s concerning is things are still not back to pre-pandemic conditions. And with Russia’s invasion of Ukraine, we should be mindful that more global supply issues are developing. We are not done with pivoting just yet. But we do know that all these pivots lead to innovation and better ways to do things.

Resources
London Drugs clearing shelf space

CTV: Less is more. Restaurants pandemic-proofing menus to survive the second wave
Restaurants Canada: BC allows alcohol to be sold with take-out and delivery
BC Government: Patio expansions
UBC News: Covid-19 changed the way we grocery shop
Montecristo Magazine: Ghost kitchens change the face of Vancouver’s restaurant industry
Retail Insider: 15-minute grocer