As restaurants, hotels, schools and other big institutions get shuttered by the coronavirus, the food wholesalers that supply them are cooking up fresh tactics to survive.
Sysco, the nation’s biggest food distributor, recently told customers it’s temporarily giving up selling fresh meat and produce amid the COVID-19 crisis, according to a memo obtained by The Post, even as it scrambles to unload its inventory to supermarket chains that it doesn’t normally serve.
The Houston-based giant told some of its clients — which include many of the largest hotel and restaurant chains in the US, as well as schools and other institutions — that it is “essentially focusing on frozen chicken, beef, seafood and vegetables for the interim period,” according to a memo obtained by The Post.
The March 18 memo added that Sysco is also eliminating Saturday deliveries, product returns and warned that delivery times will not be guaranteed as it consolidates shipping routes to cut expenses.
Late Wednesday, a Sysco spokesperson said that the memo was “not an approved communication” and that its contents were “inaccurate,” declining to explain further.
“Importantly, we are and will continue to sell fresh meat and produce as part of the comprehensive foodservice offering you expect from Sysco,” the company said in a statement.
On Monday, Sysco revealed in a filing it has been forced to lay off and furlough workers in its “sales, warehouse, transportation, and functional support teams,” although it didn’t give a headcount.
The frozen-food memo “really startled us,” said one Sysco customer who asked not to be identified.
Sysco is “afraid to bring in too much fresh food, because they don’t know what the need will be,” the source added.
Sysco isn’t alone. Bronx-based Baldor Specialty Foods, which also serves restaurants, institutions and boutique retailers, just launched a home delivery service to consumers. It also scored a deal with 100 Acme stores in the New York metro region to supply staple items like onions and potatoes, Baldor president Michael Muzyk told The Post.
“The food distribution channel is experiencing stress and it doesn’t surprise me that Sysco doesn’t have an outlet for its fresh food right now,” Muzyk said.
“Generally switching to frozen food is less expensive,” said David Bishop, a partner at supermarket consultant Brick Meets Click. “There is also less pressure to sell it quickly and it protects Sysco and the customer from the product going bad.”
But frozen meats also create more work for restaurants, which may not be accustomed to storing meat in their freezers and thawing it later. “There is a process involved in thawing meat and it causes disruption for the operator that is not used to it,” Bishop added.
A spokeswoman for Sysco, Shannon Mutschler, declined to comment on the frozen-foods memo, pointing instead to comments earlier this month by Chief Executive Kevin Hourican, who signaled that Sysco is looking to pivot toward serving supermarkets while most of its clients remain shut down.
“I’ve personally made phone calls to the CEOs of all the major grocers of this country, and they’re interested in how Sysco can help them,” Hourican told CNBC.
Major food suppliers like Tyson Foods and Cargill are focusing more intensively on getting their product to supermarkets as well.
Still, some smaller competitors are wary about the new competition.
Master Purveyors Inc., a Bronx-based meat wholesaler that supplies high-end butchers as well as steakhouses like Peter Luger and Smith & Wollensky, is promoting a Web site to sell its cuts directly to consumers.
“I have $1 million worth of meat in my dry aging room and it will last another 45 days, so I have to sell to consumers,” co-owner Mark Solasz told The Post.
“I have 20 trucks and we sent out six trucks today,” Solasz added about the drop in his business.
But the butcher is also concerned about Sysco throwing its considerable muscle around.
“If Sysco is trying to get rid of prime meats and they have those meats in the freezer,” Solasz said, “they may try to undercut me and others on price once we get out of this.”