How Foodbomb saved suppliers with a business turnaround

When wholesale online ordering platform, Foodbomb, was first hit with the devastation of COVID-19, the new bleak scenario threatened to destroy 100 food suppliers that serviced restaurants, cafes, hotels and other businesses through the platform. But with some quick thinking to flip the business model from B2B to B2C, now around 40 suppliers have rehired staff and are back to delivering produce – to a different audience of consumers buying at home.

It all happened at enormous speed. Within 24 hours of commercial establishments being shut down in March due to COVID-19 restrictions, Foodbomb, faced with a desperate situation, changed its business plan and flipped it on its head. And now the business is getting 250 orders or more per day.

“Everyone really adapted quickly to transitioning. Within 24 hours we were doing home delivery. And now we have 10,000 registered customers,” says Paul Tory, CEO and one of three directors at Foodbomb.

Within a day of the COVID lockdown, everyone's business was greatly affected, Tory told the AICD in an interview. Wholesale suppliers were asking him how they could survive and he suggested switching from commercial to home delivery as an option because things could be up and running very quickly.

Customers are responding well because Foodbomb is charging its new public customers wholesale prices, which are lower than those offered by supermarkets and free next day delivery as well, says Tory.

“We need to support all these businesses that are struggling,” he says simply. Some restaurants have just dismissed staff, shut the doors and walked away for now. “One of our Sydney fruit and veg suppliers, who supplies all the big pub chains, lost his entire business overnight.”

Foodbomb originally approached 25 existing suppliers that were best suited to home delivery, such as meat, fruit and vegetables, seafood, poultry, dry goods and smallgoods suppliers and that number has grown to 40 in just 2 weeks. They also reduced minimum orders and updated the website which wasn’t previously set up for B2C offerings.

One of his suppliers in Melbourne called to say: "You kept us alive this week. If I hadn't been getting your home deliveries, we wouldn't be here."

“It's really about our suppliers, that's how it started,” says Tory. “But it’s also for our own business too. It's really helped to keep us and our team together.” Luckily, 18 of the original Foodbomb team of 22 are still working, though remaining staff have all taken “a little hit in our wages”.

Sydney supplier survives

One Sydney fruit and vegetable supplier on the Foodbomb platform is MD Provodores based at Homebush. Mouhamad Dib, CEO and a director of the business which employs 80 staff and was previously supplying up to 500 restaurants, cafes and other commercial outlets, has switched his business to 85 per cent home delivery now.

He says it was “gutwrenching” to have to let a number of staff go in March and the “saddest day for the whole company”. But he has rehired most staff due to the Jobkeeper allowance and although he is just breaking-even financially, retaining his staff as a family is what is most important to him. “It’s like playing a game of chess every day,” he says. “It’s not just about me. I know there are 80 families who are depending on me.”

Issues that have been addressed at board level include a strict food safety and hygiene program, a different set of logistics and new levels of risk for drivers servicing houses rather than businesses, and adjusting to orders which are much smaller.

About 40 per cent of his orders in the first week of April were coming from Foodbomb and Dib has also reached out to his own community for support, which has been “overwhelming”. “Restauranteurs who I used to supply…I am supplying them at home now.”

Back to normal in six months?

“We don't know how long it's going to last. I hope it is finished by August. I've been tailoring myself to that,” says Tory. “But we don't know when this is going to end and not only when it's going to end, what it looks like on the other side? Some of the venues are never going to open up again. Some of the suppliers are going to go broke. So, it's going to be a long time before we get back to what was normal again.”

There are many “big unknowns”. Even if restaurants open again, will they have the same amount of traffic coming through if people don't have the money to spend on going out to dinner? And will some suppliers ever get the money they are owed by creditors to allow them to re-open or not?

Investors and the board

Switching to a mostly B2C model (some B2B business remains) was something Tory always had in the back of his mind, but the timing was never right. Wholesale suppliers were also reluctant before because of delivery problems due to people not being home to receive goods. But as Tory points out, now everyone is at home.

“Our investors were really impressed with how quickly we were able to, within 24 hours, get that up and running and start getting orders coming in.”

At a board level, changes have been made to cut costs including pay cuts and adjusting the staff headcount and directors have been happy to see sales come back, says Tory. Foodbomb’s two other directors include investor Justin Lipman of EVP and Chief Operating Officer Josh Goulburn.

“The only other thing we've had to rebuild is our reporting - because we now need to report on consumers versus venues. It's a whole new set of tracking metrics, a whole new way to market. The company's had to really adjust quickly on conversion rates and marketing spends and so on.

“We can now clearly see that B2C is saving us, so we're going to just keep forging on with making adjustments there. A lot of credit has to go to our strong marketing department and amazing team. They have been lifesavers for the company.”