Restaurants turn to grocery sales to help offset losses

Restaurants turn to grocery sales to help offset losses

(AP) – The coronavirus has restaurants, as well as individuals, in survival mode. From large chains to mom-and-pop eateries, restaurants around the U.S. are increasingly turning to grocery sales.

Stay-at-home and social distancing orders meant to slow the spread of COVID-19 have put restaurant dining on hold, forcing many to close and leaving others barely surviving. The new income source makes up for some of the lost dine-in business, while also filling a need as traditional grocers struggle to keep up with demand.

St. Louis-based Panera, with headquarters at 3630 S. Geyer Rd. in Sunset Hills, has launched Panera Grocery, offering not only the chain’s popular breads, bagels and sweets but items such as milk, eggs and fresh produce that its 2,100 U.S. stores normally use to make meals. Grocery items can be delivered or picked up.

Subway is selling groceries at 250 of its stores in five states – California, Connecticut, Oregon, Tennessee and Washington. Potbelly Sandwich Shop franchises launched Potbelly Pantry, offering mostly foods that the chain uses to make its sandwiches, such as meats, cheeses and breads.

Panera’s vice president of wellness and food policy, Sara Burnett, said the decision to sell groceries was a reaction to “the unprecedented crisis our country’s going through right now.” She wouldn’t disclose how much the pandemic had cost Panera, but she said 30 percent of its business typically came from in-restaurant dining, “and that obviously is completely gone.”

The National Restaurant Association says the industry has lost 3 million jobs and $25 billion in sales since March 1. Spokeswoman Vanessa Sink said 3 percent of restaurants had closed permanently and another 11 percent expected to do so by the end of the month.

The move to grocery sales has been swift. Panera would typically spend months on a new business proposal, doing research, conducting surveys and opening test markets. Not this time. Panera Grocery went from an idea to launch in two weeks, Burnett said.

Grocery items sold by restaurants vary greatly. Some offer mostly the types of things already in their pantries, such as meats, vegetables, fruit, cheese, milk and eggs. Others offer a much broader selection.

Union Loafers, 1629 Tower Grove Ave. in St. Louis’ Botanical Heights neighborhood, is opting for quality, even if it means a higher price. The restaurant began selling locally produced goods such as eggs, milk, jams and meats on March 31. Co-owner Sean Netzer said patrons didn’t mind the higher price — most items are selling out daily.

The chain restaurants, which buy in extraordinary bulk, can afford to sell at a lower cost. Subway and Panera Grocery prices are comparable to grocery store prices, the companies said.

Many of the restaurants-turned-grocery stores are offering “contact-free” service in which the customer place orders by phone or online and the goods are delivered straight to the trunk or backseat of the car.

Restaurant operators aren’t sure if grocery sales will continue once the pandemic passes. Panera sees this as “kind of a tipping point to see what our customers need,” Burnett said.

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