Operations

Restaurants and DashMart—The New Grocery Stores

Ever since the pandemic ravaged the U.S. and the world, restaurants have been keenly aware that, to survive, they would have to dig deep into their creativity pool and discover additional streams of revenue. Diversity has become their mainstay. As we reported previously, one of these avenues is grocery stores.

The New Yorker reported on several restaurants that have converted their space into specialized markets selling everything from large plastic jugs of olive oil from Spain to produce, eggs, meat, and bottles of wine and liquor.

Some, such as Archestratus, have worked to include the local farms and specialty shops that surround them. This bookstore and café in Greenpoint sells eggs from an upstate farm as well as smoked ham from a butcher shop in Indiana, grass-fed milk, and produce from the Bodhitree Farm in New Jersey.

Olmsted, in Brooklyn, is now Olmsted Trading Post—a once private dining room that now stocks about 120 items including sourdough sauerkraut loaves, duck breast pastrami, and a host of ready-made cocktails. Café Cancale in Chicago is offering their bestselling mussel and martini kits as well as truffle Dijon mustard.

Many of these restaurants turned specialty shops saw their transformation as a short-term fix to an unforeseeable catastrophe. Now, with states and cities opening and then closing dine-in, and reducing capacity at the speed of light, many are staying in the grocery arena for now, and possibly forever.

The Never-Ending Cycle—Cities and States Reclosing Restaurants

Although in-house dining has opened in most states, capacity restrictions remain. Some states and cities are opening only to close again. Pennsylvania, where restaurants were operating at 50 percent capacity, found themselves back to 25 percent as of July 15. Indiana’s restaurant capacity limits were set to be lifted on July 4…then July 19…then August 1…and now, August 27. Baltimore has once again tightened down, closing indoor dining, and then opening again at only 25 percent capacity. Indoor dining in California is out for now, and Colorado has ruled for 50 percent capacity or 50 people, whichever is fewer. Here is a list of the latest restrictions per state as of August 25.

And now, as if there wasn’t enough competition in the current foodservice world, DoorDash has launched DashMart, an online convenience store. Currently, they are offering about 2,000 grocery products as well as household essentials and local restaurant favorites, as reported by RestaurantDive.

DashMart – an Online Convenience Store

While DoorDash has been delivering for grocery and convenience stores such as 7-Eleven and CircleK for some time, this is their first foray into their own retail outlet. Similar to ghost kitchens, these “dark stores” are 5,000 to 11,000 square-foot warehouses that are located in the cities where DashMart is available. These stores are for the sole purpose of fulfillment of pickup and delivery orders, similar, though smaller in size, to Amazon distribution centers.

The question remains—how will their 2,500 convenience stores in 1,100 markets that they recently added to their new “convenience category” respond to what many may see as competition? And where will this put the growing company, soon to go public, in the quickly changing and highly competitive meal delivery space? With Just Eat Takeaway acquiring Grubhub for $7.3 million and Uber’s deal to buy Postmates for $2.65 billion in stock, nothing is certain except change. Thus far, DoorDash is taking the lead with a 46 percent share of meal delivery sales in July 2020 followed by Uber Eats coming in at 23 percent and Grubhub’s 21 percent.

According to DoorDash, DashMart will offer everything from “ice cream and chips, to cough medicine and dog food, to spice rubs and packaged desserts from the local restaurants you love on DoorDash.” They’ll also be offering specialty retail items from restaurants such as Brothers BBQ made-from-scratch BBQ Sauces and BBQ Seasoning, Nando’s Garlic PERi-PERi Sauce, and The Cheesecake Factory’s Cheesecake Mix. DoorMart will present another sales venue for new retailers including Chicago’s This Little Goat’s global sauces and spices, and Tempe, Arizona’s Noms Bake Shop’s cookies.

DashMart is now open in eight cities including Chicago, Dallas, Phoenix, Minneapolis, Columbus, Cincinnati, Salt Lake City, and Redwood City, CA. It is expected to expand to Baltimore, Denver, Sacramento, Concord, and San Diego in a few months.

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