August 2020 Impact Assessment
About NFSN
The NICK is a free, private group of kitchen professionals who exchange best practices, share frustrations, offer encouragement, and solve problems together.
Impacts of COVID-19
Positives –
- Increased direct to consumer and delivery food production in kitchens,
- Increased interest from new food entrepreneurs looking to start businesses,
- Increased awareness of each other and the value of community
Negatives –
- Shock to the system and business model
- Halting of kitchen rentals and revenues completely
- Unknown timeline or trajectory and inability to plan accordingly
- Uncertainly around health regulation and food safety changes
- Catering and food trucks (event-based) are still being hit hard
Obstacles to Sector Response
Knowing what to do and how to safely reopen in a shared facility. Severe decreases to revenue. Managing their own operations while at the same time providing guidance and support to their food business operators. Are the adjustments being made sustainable in the long term? Many local health departments are unable to or refused to go out and do their licensing, causing a bottleneck in onboarding new operators. Sending food businesses to platforms that take 20-30% in fees.
Successful Marketing Adaptations in Response to COVID-19
Incorporating products into direct to consumer sales, delivery, or online farmers markets. Teamed with other local food entrepreneurs to provide online ordering and every other week home delivery of packaged items. Using local grant money to support emergency food programs. Increased, take out, family meals, and frozen dinners. Contracts with hospital accounts to perform Food Service Partnerships. Online platforms (Mercato, Market2Day, etc.) and curbside pick-up. Food trucks setting up in neighborhoods. Serving agencies who are providing aid to the hungry & unemployed.
Economic Impact on Sector
For our clients, we saw a 30% reduction in overall bookings and revenue. Once the stay at home orders lifted and folks had more line of sight on their businesses we saw a return. Many food businesses did decide to close operations completely. Others entered the sector with kitchens reporting increased interest and pipeline of users. The biggest new revenue stream is “ghost” or “cloud” kitchen opportunities, which are essentially delivery-only restaurants. Existing operators need technical assistance to adapt their current systems and new operators need consultants with experience in a completely new model.
Impact on Sector Members
Smaller operations had a harder time. The mom-and-pop kitchens that offer less technical assistance had a harder time guiding their clients through the crisis. Older clients had a hard time adapting or adopting technology solutions or pivoting their models. Those who had yet to see cash flows match expenses ran out of operational runway to survive. Non-profits stopped taking rental and saw huge hits to their operating budgets and shifted focus from survival to fundraising.
Desired Data and Technical Assistance
Data:
Monitoring revenues over time, number of clients.
Technical Assistance:
“Kitchen School” for operators wanting to start or grow shared kitchen businesses. We have a core group of folks interested in developing this but don’t have the funding.
Additional Information
Their go-to resources to ensure cash flows were: being underwritten by a non-prof, CPG food producers, storage, meal prep companies, Prepared meals SBTDC, SBA, NCDA, Private funding, Accion and other governmental loans, approaching landlord for any consideration for rent, Line of credit and pre paid sales on all home deliveries, hour rentals, offering ServSafe classes, local grant $, donations and community goodwill, federal stimulus programs, and lenders suspending mortgage payments.
Contact Information for NFSN:
Ashley Colpaart ashley@thefoodcorridor.com
