KANSAS CITY, MO. — Rarely has the proverb “necessity is the mother of invention” been more apropos. The coronavirus (COVID-19) has upended many aspects of food and beverage manufacturing and marketing. In response, companies are innovating with new processing techniques, product applications and services to adapt to the new environment. Some changes implemented today may have lasting effects on business models and future performance.
Niren Chaudary, chief executive officer of Panera Bread, a business unit of JAB Holding Co., sees long-term potential in his company’s new grocery service. Developed in a span of 14 days, the service offers consumer staples like milk, bread and fresh produce as well as soups, salads or sandwiches. Products may be ordered through the chain’s app or website and may be collected via contactless delivery, pickup or drive-thru.
“If we can solve a customer problem, it’s a win,” Chaudary said during an interview on the “Masters of Scale” podcast. “We can potentially get incremental revenue, keep our cafes open longer, keep our associates employed longer and perhaps even generate incremental profit.
“And who knows how this new world shakes out? It might be the beginnings of maybe a new type of business. Maybe this evolves to meal kits in the future.”
Tyson Foods Inc. is facing similar challenges requiring innovative solutions. During the company’s May 4 conference call with analysts to discuss second-quarter results, management discussed how COVID-19 is changing its business. In its processing plants staggered schedules, social distancing, workspace partitions and personal protective equipment are now the norm. Employees also are being tested for the virus and must pass through thermal scanners that measure their temperature before they may go to work. Even after the passes, the scanners will remain to help the company limit the spread of illness when the next flu season comes around.
Samuel Dean Banks, executive president of Tyson Foods, said the company’s shifting of some foodservice production to retail may have a lasting effect.
“We found new (beef) retail applications for products that have traditionally supplied the foodservice channel, which we believe could generate continued demand even in the post-COVID-19 environment,” he said.
Necessity and creativity are at the heart of direct-to-consumer initiatives launched by chicken processor House of Raeford Farms and specialty food purveyor Baldor Specialty Foods. House of Raeford services the foodservice market and with its sudden deceleration management needed to find an outlet for its products.
The company is selling chicken direct to consumers in communities near its processing plants. Attuned to the stock-up mindset vast numbers of consumers have embraced, consumers may buy 40-lb cases of fresh chicken for $45. Baldor Specialty Foods is undertaking a similar effort with its home delivery program. For a $250 minimum order, consumers may choose from the company’s selection of specialty foods. A spokesperson told The Wall Street Journal the company “is struggling to hire enough drivers to keep up with demand.”
The ramifications of COVID-19 will be long lasting and, for many, profoundly negative. But for some companies the lessons learned during the crisis may chart a course with future benefits.