Want to sell groceries from your restaurant? We’ve got tips
Source: National Restaurant Association
With coronavirus battering the restaurant business, operators are turning to groceries to help increase sales. They need it: National Restaurant Association research conducted this month reports that 97% of restaurant operators say their total dollar sales volume was lower than it was during the same period in 2019 and those sales, on average, were down 78%.
Innovation is the key
“It’s a wave of innovation that’s happening as people try to adapt to a new reality based on social distancing,” says Fred LeFranc, CEO of Results Thru Strategy. “Restaurateurs who’ve converted to takeout and delivery only are trying to recover some lost sales by offering guests essential items they can’t get at supermarkets.”
Long waits to shop, depleted inventory and difficulty booking deliveries create an opportunity on the foodservice side of the business. Consumers sometimes have to wait a week or more for grocery deliveries, LeFranc says. Restaurants offering basic staples can fill in in between and ring up additional revenues.
Restaurateurs are hearing that message loud and clear. Several are working with their suppliers and distributors to stock their stores with everything from proteins to produce to the ever-elusive hand sanitizer and toilet paper.
Once set up to sell groceries, operators market them on their websites, through social media, and to customers in their email databases and loyalty programs.
But operators tell us there is a learning curve when you begin to stock your empty dining room tables with market items.
10 good tips:
Know the rules regarding the sale of groceries at restaurants. Most areas are allowing restaurants to sell groceries right now, though some health inspectors in Boston and Los Angeles are telling operators they’ll need a special license to do it. But even those rules appear to have been relaxed during the coronavirus crisis. Also, if your restaurant is in close proximity to a grocery store, there could be local regulations prohibiting you from selling groceries.
On the federal level, the FDA requires operators to provide certain information on packaged foods, including statement of identity; ingredients; name and place of the business, manufacturer, packer, or distributor; net quantity of contents; and allergen information.
Get it right from the beginning. Don’t do anything you can’t do well. Make selling groceries as simple or complex as you think you can handle. Will you only sell supplies you usually buy for your own menu and operations, or will you create a grocery inventory of items you think will sell, including items you don’t normally buy? Will your staff assemble online grocery orders and hand them to customers curbside? Or, will customers come in to “shop” in your restaurant — and what would that entail from a safety standpoint?
Figure out what to sell in advance. Work with your suppliers and talk through packaged products that might be available to you. Which items will you have the capacity to store, at ambient temperatures in the dining room and on your cooler and freezer shelves? You’ll need to make room and label items so your employees can assemble grocery orders. Can your supplier break down larger quantities into smaller packs for individual sale?
Make sure pricing is fair but competitive. Know what things cost in traditional grocery stores or on Amazon. “Price your products based on the value adds you provide, ”LeFranc says.
Be aware of the tax ramifications. Talk to your accountant so you understand the tax side of selling groceries. Grocery items can be taxed at different rates by category (fresh vs. shelf-stable, for example), and those rates differ from food you’re selling out of your restaurant. Also, in some states, some staple items are not taxable. You’ll have to take all of that into account. Your distributor can give additional information on how those items are sold and taxed.
Focus on safety. Clean and sanitize your operation frequently. Supply staffers with gloves and make it clear they need to change them after every task. Depending on your local requirements, masks or face coverings might be in order. Adhere to the 6-foot social-distancing standard. If you decide to let customers come in to shop, strategically place sanitizer stations and waste cans around the store and provide paper deli squares for customers to pick up items without touching them barehanded.
Keep items simple. The less-is-more approach works best. Consumers don’t need a wide assortment of flavors and beautiful presentations from your grocery space. Good bets are staples such as eggs, milk, flour, sugar, fresh produce, proteins, soups, pasta and rice. Don’t forget paper goods and cleaning supplies; you might be the only source for these for miles. What else are customers asking for?
Create the right image. Develop signage to let drive-up customers know you have groceries for sale, too. Online, create a website page dedicated to the groceries you’re selling. It should feature accurate, well-lit photos and good descriptions of the products and their prices. Accept orders and payment online and set up for contactless curbside pickup (to load into the trunk) or home-delivery options.
Aggressively promote your grocery inventory. Use social media to your advantage. Facebook is effective because it casts a broad net. Twitter, too, will get your message out to the community. Take pictures of your goods and post them on social channels. Use the community app “Next Door” to let people know what you have available. Update all of your online accounts to reflect your new grocery service.
Use technology to support your grocery side business. First, contact your POS provider. They will have advice for you. You can also create a separate menu listing grocery items that allows you to hit a button displaying all of the items you’re selling. Categorize the menu in the same way you’d see it in a supermarket — produce, dairy, poultry, etc.