Coronavirus: 'We can't be their bank because we're having to be our own bank at the moment'

The  Staff Canteen

The Staff Canteen

Editor 29th April 2020

editor of The Staff Canteen Cara Houchen led an online discussion with top suppliers to the hospitality industry to find out how the coronavirus outbreak has affected their businesses.

We asked them about the inventive ways in which they have switched up their business models to keep their products moving, and what they think the longlasting effects on their businesses will be.

Joining us were Catherine Connor and Aidan Monks of specialist sourdough bakery Lovingly Artisan, John Godden, founder of Flying Fish Seafoods, Nicholas Fowler, co-founder of wholesale fruit and vegetable supplier Smith & Brock and Leonie Fairbairn, who runs Artisan cheese company Thornby Moor Dairy in Cumbria. 

Wholesale to retail

While some have chosen to retract, protect and sit it out, others decided that in the absence of restaurants, they must open themselves up to the consumer market. 

John Godden sold out of fish, furloughed his staff and is currently "sitting riding it out," the couple behind Lovingly Artisan, as did Smith and Brock have taken an entirely different route, which is to sell products directly to the public. 

Nicholas Fowler, explained that because the company's wholesale shot down to 15% of its previous levels, within days it was forced to upend its operations. 

But by its geographical location and the nature of its product, being the type of business that has to keep at least 6 months' stock in at any given time, Thornby Moor Dairy's business predominantly the outbreak felt "like falling cards.

"Everything disappeared", said Leoni. "We can't react quickly. It's been tough."

Athough she has reached out to other small producers and contributed to putting together delivery boxes, Cumbria is a very different landscape to London - in that its population is five times below the national average

Government aid - has it been delivered where it was needed?

While it is undeniable that the government has stepped up to see businesses and individuals through the crisis, reports of delayed payments and uneligibility have marred hopes that help would be given where it was needed.

Our guests reported no such concerns: the couple at the helm of Lovingly Artisan applied for a relief grant at the local authority level - and received it within five days, and their furlough request was approved and paid out within a week. 

Meanwhile John said he thinks the government has handled the situation "brilliantly", as the company's furlough request and business interruption loan applications were honoured within very short timeframes.  

What comes next, however, will be far more important to their survival.

What next?

One issue will be stock management, which is critically important in the selling of cheese, meat, and beer, all of which require time to produce and age.

Leonie said: "Am I going to get eight weeks' notice before hotels and restaurants open? I doubt it. At what point do I risk putting blue cheese back on the shelf? It's a lot of money tied up on the shelf, and if I don't keep it there, my business might still be open but I've got nothing to sell. 

"And the longer it goes on, the more difficult that becomes.

"Not knowing how long we're planning for means it's impossible to plan."

As restaurants are set to be the last to come out of the lockdown, restaurants are looking at ways of reopening whilst respecting social distancing rules. But what of suppliers? 

Some, like Flying Fish, will start up again and sell to restaurants, but complement these sales with a retail offering. 

For Catherine, looking at sales is indisociable from the production side - and what best matches the current and any future restrictions.

Among other considerations, this means that until they are able to safely bring their team of 20 back in (which has currently been whittled down to two), they will be unable to ramp back up and sell to restaurants, and will push on with retail sales.

Has everything changed forever?

The fear, one which is shared by chefs and restaurateurs, is that the hardest has yet to come for the hospitality indistry.

"I think everyone is going to have to diversify in one way shape or form," John said.

When government aid dries up it could be a tipping point for a number of restaurants, which will inevitably fold if their costs rack up but business hasn't resumed. 

"A lot of restaurants in the UK won't be able to withstand this," he added.

Will any good come of this?

Nicholas is hopeful that change will be for the better - at least from a supplier's perspective. 

As retail payments come in immediately, bringing more cashflow to the business, restaurants might need to switch up their practices to maintain their suppliers' confidence. They were all in agreement that long periods of credit had to stop.

"As suppliers we need to stand firm - we shouldn't be financing businesses," explained Nicholas. He says it's probably 'our mistake and our error' for allowing businesses to pay that way previously but it has to change.

John explained that getting the 'money in they are owed is challenging' and this crisis highlights 'how much the restaurant industry is working on a knife edge'.

Aidan agreed, saying they might use prompt payment as a criteria for who they decide to do business with. 

Catherine said: "We can't be their bank because we're having to be our own bank at the moment. It's really going to help us choose who we look after.

"What we can't do is go back to the way we were. We're just not going to do that."

This isn't a viable approach for Thornby Moor Dairy, her outgoings happen up to two years before a product is even sold, let alone paid for. The producer is also aware that there are risks to placing the burden on restaurants, hotels and cafes. 

"In order for them to get back up and running - when you set off in business, which is basically what they're doing - they'll have no larder stores. They've got to fork out for everything.

"In order to have custom, we're going to have to be as kind as we can be. But that's not going to be as kind as we might like to be."

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The  Staff Canteen

The Staff Canteen

Editor 29th April 2020

Coronavirus: 'We can't be their bank because we're having to be our own bank at the moment'