First, the COVID-19 pandemic shuttered New York City’s restaurants and bars. Then, the virus came for the suppliers, too.
In early April, one of the butchers at Master Purveyors, which normally supplies meat to restaurants like Pastis, Veronika, and Cote Korean Steakhouse, called his manager. He could barely breathe. Two of the team members that he had driven to work a few days earlier were also starting to feel symptoms of COVID-19. It was the kind of rapidly spreading illness that has shut down entire slaughterhouses in the Midwest, and as a USDA-inspected meat processor, Master Purveyors had no other choice but to send everyone home and close.
But the company was open again the next day, despite the COVID-19 cases. Management had prepared for this scenario weeks earlier in early March, when the entire staff was split into three teams that would never see each other for the duration of the crisis, from the upper-level executives to the guys taking out the garbage. The teams would continue to be paid in full, but only work every third day, at least at first. If someone started feeling sick, the entire unit would quarantine.
After two weeks of recovery, the three butchers were back to work at full strength. The business, however, has retained just 15 percent of its regular revenue, a result of the restaurant shutdowns during the COVID-19 crisis.
Master Purveyors is just one of the many essential food supply chain businesses facing these challenges in the South Bronx, in the poorest congressional district in the country, with a median income well below the poverty line. It’s a part of the Hunts Point Food Distribution Center, the largest hub of its type in the world.
The distribution center itself is made up of three main sections: The Hunts Point Cooperative Market, with its 52 member companies, focuses mainly on meat. The New Fulton Fish Market, relocated from downtown Manhattan in 2005, trades in seafood and globally is second in size only to Tokyo’s Toyosu Market. Finally, there’s the Terminal Produce Market, which by some estimates accounts for more than 60 percent of the fresh fruits and vegetables consumed daily in New York City. It is the interchange of all the elements of the food supply chain, where products from all over the world connect with processors, wholesalers, and vendors. It is the single most important food hub in New York.
While hundreds of COVID-19 infections forced the closure of Smithfield meat plants in the Midwest and the company is being sued for inadequately protecting its employees, the distribution center’s some 150 businesses have, for the most part, avoided a similar fate. Owners moved quickly to silo their staffs into smaller teams that never crossed paths with each other, handed out thousands of face masks and gloves on a daily basis, and mounted hand sanitizer stations all over the facilities. As a result, the cases are relatively contained despite many employees working in close proximity as part of the front line of the food supply chain: Of the 1,860 people working at the Terminal Produce Market, for example, 52 (or 2.8 percent) have tested positive for the virus as of April 21. No businesses there have closed due to COVID-19.
“Hunts Point is the engine that feeds the city,” says Vinny Pacifico, CEO of Vista Food Exchange, which distributes poultry, pork, beef, produce, and seafood out of the Cooperative Market. “We’ve been very fortunate in Hunts Point and the meat market because we took early precautions.”
But the Hunts Point businesses staying open have had to make dramatic changes, with many selling directly to consumers instead of restaurants or increasing the amount of food that they send to grocery stores. The poster boy for success during the crisis has been specialty food supplier Baldor, which has a 300,000-square-foot warehouse wedged between the Cooperative Market and the Produce Market. “Baldor is like Star Wars; they have a fleet of ships,” says Mac Murdock, a salesman at butcher DeBragga and Spitler. “They sell everything under the sun.”
In mid-March, Baldor began the process of making changes: It moved all non-warehouse personnel off-site, staggered other teams, and used A/B scheduling to minimize infection. As a result, there have been no fatalities, and of the handful of COVID-19 cases that occurred, half of those employees have already returned to work after a 14-day quarantine.
“There are challenges when you’re working in a warehouse setting, but all of our people are super geared up,” says Benjamin Walker, vice president of sales and marketing at Baldor. “We’re always at a high sanitation level regardless. We have to be. We’re dealing with food for the best restaurants in the world.”
When those restaurants initially shut down, Baldor’s revenue crashed 85 percent. But the company’s sales to retail stores like supermarkets and gourmet shops saw an immediate spike of 300 percent, which gave it time to build up its direct-to-consumer sales business. “We’re used to being 12 percent retail, 88 percent food service,” says Walker. “Now we’re seeing 30 percent-plus on retail, 30 percent-plus on home delivery, and food service is now the smallest, when it used to be the lion’s share.”
In the early morning hours, long before the sun comes out, Baldor’s fleet of 350 trucks springs to life, pulling into the mothership’s dozens of loading docks to collect the day’s deliveries. The refrigerated trucks, meant to hold up to 12 pallets for bulk orders, do not have internal racking systems for anything smaller.
And the drivers, used to delivering to the same restaurants for 10 years, now find themselves driving their trucks up dirt roads and getting barked at by the family dog as they drop individual boxes onto the porch. Still, Baldor has made the pivot work, and there have been over 100,000 orders for home delivery to help temper the near-collapse of restaurant sales. “We’re lucky that we were able to reinvent ourselves,” says Walker.
Baldor, though, is an outlier, and for every success story, there are dozens of companies that are unable to pivot, have not yet received government assistance, and will be lucky to survive the crisis.
Carlos Sanchez serves food in a communal restaurant within the cooperative and sees everyone: truck drivers, butchers, and warehouse workers who come in for a Jamaican beef patty or hot dog during their break. Recently, he’s had to offer much of the food on credit to drivers that have had their routes slashed and to salesmen who have seen their commissions plummet.
Meat processor Mosner Family Brands notably supplies to Carbone, which goes through 50 cases of veal racks a week, to the tune of over $50,000 in sales of the $69 veal parm dish that many think is worth waiting in a crowd for. But Carbone is one of only a few fine dining clients that remain — like many other companies in Hunts Point, Mosner heavily switched to home deliveries to supplement what was left of its business after most restaurants shuttered.
But it “doesn’t put a dent in making up the sales volume,” says Jessica Mosner, who is an executive director at the company but now spends her days packing boxes for the direct-to-consumer sales that have helped keep her family’s business afloat. Instead, they’ve been able to keep all of their 60 staff employed. “The fact that we didn’t have to lay off or furlough anyone was a huge achievement for us,” she says.
Master Purveyors also tried pivoting to sell directly to consumers, with underwhelming results, according to sales director Mark Solasz. On a normal pre-pandemic week, the company would move 250,000 pounds of meat to restaurants. Now, their direct-to-consumer sales account for just 1,000 pounds, a drop in the bucket necessary to maintain its business. The family keeps the privately owned company running just to preserve the supply chain for what few clients remain.
“We’re losing $150,000 a week,” says Solasz, which lost 85 percent of its revenue stream when restaurants and bars closed. “You can’t get rid of your fixed costs. Insurance, liability, you can’t return the trucks. We have a big nut, how long will we be able to sustain it?”
Fresh seafood supplier F. Rozzo and Sons, which normally sells to restaurants like Le Bernardin, is letting a 10,000-square-foot Hunts Point warehouse sit idle during the crisis because its wholesale business has completely evaporated, according to CEO Louis Rozzo. He still rolls up to the New Fulton Fish Market every day at 3 a.m. to pick up fresh product that goes directly to a seafood market in Chelsea, which he keeps running to employ a third of his staff. It’s not enough to turn a profit, he says.
“The pop-up retail store in Chelsea is busy, but it is not supporting all the guys I have working there,” Rozzo says. “I want to keep people employed, but it is costing me money every day.”
Since the impact of the virus has a cascading effect on various parts of the supply chain, it is not merely enough that Hunts Point Food Distribution Center has skirted disaster. Slaughterhouses and processors in other parts of the country are being shuttered by outbreaks, causing a drop in pork production by 25 percent, and cattle by 10 percent; on Tuesday, President Donald Trump signed an order to keep meat processors open via executive action. Skyrocketing prices and supply are going to be an issue when restaurants come back online, predicts Pacifico of Vista Food Exchange. “At some point in time, food is going to become more important than being treated for the virus,” he says. “It’s a necessity of life.”
As for when restaurants come back online, and with it a return to a semblance of normal business, some are concerned that phasing in restaurants at partial capacity is a recipe for disaster. “The economics barely worked when they were at full scale,” says Walker of Baldor. “A restaurant that was barely making money, now you want them to be at 50 percent capacity? I don’t know if the math is going to work.”
Solasz, though, is committed to keeping Master Purveyors open, no matter what happens in the coming months. He’s prepared to lose up to $4 million by the time the crisis is over.
“We’re front liners. We come to work every day to make sure the food supply chain doesn’t end,” he says. “I’m not concerned about losing money because we’ll make it back. We’re gonna make it back. We’ve been in business for 63 years. If it takes us another 63 years to make it back, then so be it.”