What Brooklyn grocer Kareem Dolah calls “Styrofoam, white eggs” used to cost him between 75 cents to $1.10 a dozen wholesale. Now, he said, that price has gone up about 300 to 400 percent, hovering around $4.
Still, the conventional eggs fly off the shelves, even though in some cases they’re more costly than their organic counterparts. Dolah’s markup on what he pays today is what it was before COVID-19 hit, about 40 percent above the wholesale price.
“People will remember you for price gouging,” he warned. “When things go back to normal, they’ll know you weren’t there for them. I believe in keeping it fair, especially in times like this.”
Dolah took over running the Met Grocery Store on Nostrand Avenue from his father, who started the business in 1973. The community he serves in Crown Heights, he said, is “mostly West Indian." In the past, Dolah said he has donated food to churches and police precincts—whoever needs it. “It’s about community, you always give,” he emphasized. But now, they’re not really asking and he’s also not giving. “I don’t have much of anything to give,” he admits.
Like other grocers interviewed, Dolah said that shipments from wholesalers are coming in incomplete and to adjust he’s expanded his portfolio of suppliers. That hasn’t been a problem, Dolah said, it has just meant more work. Everything is flying off his shelves (except for baby food), and keeping bottled water, cleaning supplies, bread, canned goods, eggs, chicken, and meat in stock requires around-the-clock attention. For now, it’s getting done, he said, but Dolah’s wife is worried about him and he’s worried about his employees. “Thank God, no one has gotten sick,” he said.
The Met Food on Nostrand Avenue in Crown Heights
New York City has a more complex food system than other major cities, said Michael Ruhlman, author of “Grocery: The Buying and Selling of Food in America.”
”New York has one of the densest populations so it developed a different form of food purchasing. You walk to stores, you don’t drive. There’s a lot more places and many more distributors,” Ruhlman said. Still, he explained, all grocers typically operate on similarly thin margins: with net profits hovering between 1 and 1.5 percent.
A large commercial produce grower, who didn’t want to be named, broke down New York’s complicated food distribution system: There are the wholesalers at Hunts Point, many of whom service restaurants and hospitality (a massive market in New York). And then there are the wholesalers, some outside New York, that service the independent grocery stores; bigger businesses like Amazon (which owns Whole Foods), often have their own warehouses.
“Since restaurants disappeared, the wholesale orders dropped like a stone,” the grower said, referencing the suppliers that service restaurants, schools and hotels.
The net effect is that one system is being stretched thin, while the other has lost its client base altogether.
Now, wholesalers who normally do business with restaurants are figuring out how to package their food for individual consumers in grocery stores.
“Egg farmers have transitioned eggs that normally would go to restaurants and hotels toward grocery partners," said Jamey Payne, the director of sales and marketing for Kreher’s Family Farms, an egg distributor that serves mostly western New York and counts Brooklyn’s Wegmans as its sole client in the city.
Like all commodities, Payne said, egg prices fluctuate, but the current demand for eggs across the country has skyrocketed. According to the firm Urner Barry, the normally cheap protein had an unprecedented spike in March, with wholesale prices shooting up from $1.03 per dozen to $3.09, and they're currently hovering just below the $3 mark.
“Egg production is planned out well over a year and a half in advance,” Payne explained. “So unexpected spikes require farmers to secure additional eggs.”
Before March 16th, when Governor Andrew Cuomo ordered that restaurants must either close or serve take-out only, 70 percent of Baldor Specialty Foods' business came from the hospitality industry. Now the Bronx-based wholesaler is delivering food direct-to-consumers (at a $250 minimum order), something they’ve never done before.
“In order to make the economics work, we’re forced to charge more of a premium now,” said Ben Walker, Baldor's vice president of sales and marketing. “Restaurant and wholesale deliveries just took large pallets directly. Now we’re driving down dead-end streets, making deliveries to people we’ve never met, and packing up boxes.”
Prices for many of their proteins have gone up, too. Chicken parts, Walker said, are up 25 percent, and prices are especially high for boneless breasts and thighs.
Grocer Amy Bennett, owner of the Greene Grape in Fort Greene, said that her meat prices have jumped too, because her producer now has to do the butchery on site. Still, she hasn’t passed that extra cost along to shoppers. “We’re now a critical link in the food chain," she said.
Ever since the pandemic hit, Bennett said her online grocery orders went from 12 orders a week to 400 a week. “I’m driving deliveries now. I’d rather vulnerable customers stay home.”
As for Dolah, who has worked with many of the same wholesalers for decades, he said he understands why their prices have increased: “They’re trying to get the products from the manufacturers and the manufacturers are scrambling. And then at the warehouses, they’re having trouble getting people in to fill the trucks."
A Greene Grape delivery
Farmers across the country have been devastated by the shift in supply chains. "At the farm level, these orders you thought would be coming in didn’t and plants operate on their own schedule,” the grower said. "Farms just stopped picking because they couldn’t afford the labor and they started mowing down their acres.”
The NY Times reported on Sunday that one farmer is digging “ditches to bury 1 million pounds of onions.” Diverting food from farms to food pantries, especially amid a pandemic when fewer workers show up, is complicated.
Soup kitchens and food pantries “are on the brink,” City Harvest said in a March 29th press release. On Friday, New York City promised to give the system an emergency cash injection of $25 million.
A month ago, when Baldor had trucks of produce with nowhere to go, they donated 1,000 pallets of food to non-profit partners, like City Harvest, Food Bank NYC and others across the city. But donations have slowed to their pre-pandemic levels.
A source who works in a non-profit dedicated to the food insecure said organizations are now buying items at a premium, like everyone else. The situation is dire, the source said, and the costs are “unsustainable.”
Before the pandemic, 70% of Baldor's business in New York was to the hospitality industry.
Meanwhile, getting food on grocery shelves means that essential workers are on the front lines in a locked down city. Their regular contact with the public makes them among the most exposed to the virus. Dozens of supermarket and grocery employees across the country have died from COVID-19, including a Trader Joe’s employee in Westchester County.
At his store in Crown Heights, Dolah said, he’s tried to mitigate the risks. “I’ve hired a professional cleaner to come in and spray down the store once a week. He’s licensed,” he said. “That’s the most important thing.” Bennett also said she’s spent resources on sanitation.
Neither, they said, got any information from the city. They researched online and did due diligence on their own, while frenzied shoppers flooded grocery stores across the city. “The threat and risks are real,” Dolah said. “I’m not taking it lightly. My cousin’s son, he was 30 years old, died [from COVID-19]. He got it at a family gathering, three and a half weeks ago or something. A lot of people got sick and he didn’t make it.”
It all adds up. Dolah said he recently purchased $1,500 worth of masks and $500 worth of face shields for his employees.
Regarding his balance sheets, Dolah said, “It’s pretty much the same, but numbers are higher, expenses are higher and sales are higher.” In addition to the extra cleaning and sanitation, he’s hired three new cashiers (his eldest cashier is staying home). And while he’s happy to invest in enhanced cleaning measures and accepts the higher wholesale prices, some unforeseen overheads, like paper for the receipts or labels for price guns, now suddenly twice as expensive, frustrate him. “Those costs you didn’t even notice before,” he said. “Now you do. Why are they up?”
A worker at the Met Food on Nostrand Avenue in Crown Heights
While people are still buying at a faster pace than before the pandemic, Dolah said the buying has changed since the rush started. Keeping cleaning products, toilet paper, frozen and shelf stable foods in stock remains a challenge. “People are not coming in at the same two hour block. But the flow is constant.”
To make sure everyone gets served, he said, “I limit purchases of Lysol and Clorox wipes. Sometimes, I don’t even put them on the shelves. So when I see the elderly couples, I let them know I have wipes they can purchase if they need.”
Not all food is more expensive. “I’m still able to run some sales,” Dolah said. When he ran one on Pillsbury flour, a woman tried to buy up multiple bags. He told her that she couldn’t, noting that other customers might need some. "She yelled some ugly things at me. Yeah, she was angry.”
While some people have reacted badly to the rationing, Dolah tries to look at the bright side. “Everyone says, 'Thank you. Thank you for being here.' They say it to me, to the cashiers. And that’s nice. For every one person that’s angry, there are 10 to 20 people that are positive.”
