"The Situation Is Unthinkable" - Restaurant Suppliers Give Away Unsold Produce As Industry Freezes

We've noted in recent weeks that OpenTable has shown a collapse in restaurant traffic across the US and in London. Some five to seven million people working in the US restaurant industry are expected to lose their jobs over the next three months. With restaurants shuttered, except for take-out, as per new social distancing rules, food distributors who regularly supply fruit and vegetables are stuck with tons of unsold produce. 

Bloomberg interviews Franco Fubini, the owner of produce seller Natoora Ltd., supplies high-end fruit and vegetable to top restaurants in the US and Europe. 

Fubini said sales have "evaporated" in the last several weeks as restaurants and hotels have been forced to close. 

"The situation is unthinkable," said Fubini. "Here in the US, the situation is very critical for small farmers. Very critical. It's incredibly, incredibly challenging."

Fubini supplies produce to David Chang's Momofuku Ko, London steakhouse Hawksmoor and Gordon Ramsay's restaurants, said food has been piling up in his warehouse with no place to go. He has had to give away food to charities and churches in recent weeks. 

He is also rejiggering how he sells his products, which are sourced from 400 farms in the US and Europe. To recover some of the lost revenue, he's trying to market food directly to customers via a food-delivery app and has also tried selling produce to grocery stores. 

Fubini said it would take a while to restore lost revenue because of the virus crisis crippling the entire restaurant industry. He said it would take a lot of new households to order his produce to recoup losses from restaurants that order 100s of tons of produce per year.

"Our revenue in Paris has gone to zero, our New York revenue has gone pretty much to zero," said Fubini. Restaurant sales account for about two-thirds of Natoora's revenue. 

Bloomberg also spoke with Bravo Italy Gourmet, which exports food to Middle East restaurants and caterers, usually ships three tons of cheese per week. Those shipments have now crashed to zero. 

OpenTable provides a snapshot of just how much foot traffic has declined at restaurants across the world. 

"Demand is decreasing for all the goods, except for supermarket goods," said Federico Tanasi, Bravo's chief executive. "We didn't see this, never before, a problem like this."

Ortaggi Ltd., a wholesale produce distributor at the New Covent Garden Market in London, has lost 70% of its hotel sales because of virus-related shutdowns. 

Jaime Suarez, the co-owner of Ortaggi, said they're now gravitating towards direct-to-consumer sales online to recoup lost revenue from hotels. 

"I have been in the hotel supply business since 1990 and I have never seen anything like this before," Suarez said. "There is no business at all." 

Some restaurants are still offering take-out and delivery to offset the collapse in foot traffic, and according to Statista, more Americans than ever are eating at home. 

With restaurants and some hotels closed across much of the Western world, produce suppliers are quickly adapting to social distancing rules and are attempting to survive by offering products directly to consumers and to supermarkets. Will the restaurant industry ever recover