The restaurant chain has found a new revenue source: grocery.
Most industries are bracing themselves for losses right now, but the restaurant industry is one of the hardest hit by pandemic-induced lockdowns.
The bad news is, if service blocks continue for the next month, it’s expected that 30% of all restaurants in Canada will cease to exist. The good news? Some businesses are giving birth to survival strategies that give them a better chance at making it out on the other side.
Many fast-food and dine-in chains are feeding frontline medical workers and first responders discounted meals to help fight the good fight, while also staying afloat. It’s something that Vancouver-based Earls Kitchen + Bar Restaurants has been offering since the second week of closures. But after days of watching the news, scrolling through social comments, and listening to calls from customers, Earls’ newly-minted “innovation team” landed on a revenue-driving idea that would see the 37-year-old company enter a whole new territory: grocery.
On March 29, an Instagram post popped up in the feeds of Earls followers. “No need to battle the grocery store lineups,” was written in the caption announcing the launch of “Earls Grocery” with an image of eggs and leafy greens, beside a roll of toilet paper and hand sanitizer.
Canadian and U.S. customers call the restaurant and place an order, just as they would take-out. They can either buy individual items – from up to six rolls of toilet paper TP to ingredients like oil and flour – or they can buy “packs” of frozen meats, dairy, eggs, or staple pantry items. The company’s chefs have also devised meal kits for at-home cooks to make Earls’ signature dishes. And the grocery offering is accompanied by a new alcohol service, called Earls Liquor, where people can shop bottles of beer, wine and spirits at a 20% discount.
Earls’ chief brand officer Kristin Vekteris tells strategy the new grocery platform has, over the last week, seen an “overwhelming” response from customers. As a private company, Earls doesn’t report sales, but looking at social media engagement alone, the IG launch post has received almost 400 comments, mostly from people looking for steps on how and where to place an order.
The new revenue stream would not have not seen the light of day if it weren’t for collaboration. The moment restaurants were ordered to close in Vancouver, four heads of Earls’ culinary, marketing, operations and procurement departments came together to assess the “new world order,” says Vekteris.
That meeting became a daily brainstorm session, and once the seed of the grocery idea was planted by the cross-functional team, it was off to the races. It took less than a week from ideation to implementation of the service, she says. To fast-track the process, a new system was created for communication between HQ and restaurant operators, optimizing not just every day, but every hour. “We’ve really just been in innovation mode [since the lockdown],” says Vekteris. “We’re doing things in days that would have taken companies months to do.”
The service also comes at a time when grocery supply chains continue to play catch-up after a wave of panic buying swept the country. Prior to the pandemic, many grocery retailers had built robust delivery and click-and-collect services and systems; however, they were no match for recent bulk buying behaviour and most still have days-long waitlists for collection and delivery, as do stand-alone grocery delivery services, like Instacart.
Vekteris says Earl’s wanted to offer a solution, born out of its own supply chain problem – having an excess of food and wanting to help keep its own suppliers in business. “We thought about what was happening in homes and how people were feeling,” she says. “People don’t want to make a lot of stops. Grocery stores were sold out of certain items and people didn’t want to line up.”
Meeting the demand for grocery delivery has been an approach other companies have pivoted to in order to help keep the lights on. GoJava, an Ontario-based startup that delivers coffee and snacks to offices, used its fleet of vehicles and supplier relationships to launch its own grocery delivery service after offices began closing and orders dried up.
While Vekteris doesn’t have a crystal ball, she says Earls Grocery has future potential. “We know that the industry is going to be different when we can all go back to work… We’re thinking about all the different scenarios and we’re looking at other countries to see what’s happening there. We’re trying to imagine what that could look like and [Earls Grocery] could definitely be a part of that.”
And while the grocery marketplace is a revenue play, there is also an opportunity for brand-building. “This is for the people. And I think it will help us when we come back. Ultimately, when people have a good experience, and when we are able to make their lives a little bit easier, I think it will have a positive impact on the brand.”