Eat your feelings: Salt & Straw struggles back to its feet
Ice cream brand Salt & Straw went from being an Alberta Street food cart to a 21-store brand across three states. The coronavirus shutdown caused Salt & Straw to shutter their counter service on March 16, then all stores closed completely on March 23.
Having laid off over 600 of its staff, Salt & Straw resumed official takeout service at its Division, Northwest 23rd, Alberta and Lake Oswego shops on May 1. The struggle was in figuring out how to serve shoppers one-at-a-time in a business whose longlines were as much a part of the brand as its kooky flavors and high prices. Customers can now order online and pick up (or have it delivered by DoorDash) pints only.
If filling ice cream tubs by hand, one pint at a time, isn't already a money losing recipe, then trucking them to Los Angeles isn't going to help. But that's what founder and CEO Kim Malek says Salt & Straw has been doing. It's easier to make all the ice cream in its Portland kitchen than by reopening its L.A. kitchen.
"With the limited quantities and the safety protocols being so strict It doesn't make sense to do it any other way for now. We're just reinventing every part of our business model," she told the Business Tribune by phone. She found a silver lining in the pandemic, however: "Gas is very cheap right now."
The stark truth of survival is on the line, even for a brand that is the darling of celebrities (actor and former pro wrestler, the Rock, is an investor and has a flavor), the media (New York and L.A. Times foodies compete to mention them https://www.latimes.com/food/dailydish/la-fo-0528-salt-straw-20160523-snap-story.html
and private equity (KarpReilly, Union Square). Malek estimates business is down 50 to 70%.
Here comes the sun
On a recent warm Thursday afternoon in Portland on Northwest 23rd Avenue, there was a trickle of visitors to the makeshift service hatch, which was just a door with a table blocking it, and one server behind it.
"We have a lot of customers strolling around, they'll just walk up to the store because they're surprised to see it open," says Malek. "And they can just pop on our website right there. It takes a couple minutes and we'll just give them our pints right there. We're not having people lined up to place orders or anything, so it's really safe."
The company still uses Square as its POS (point of sale) system but it took two weeks to get a new system up for ordering directly from the website.
"We've seen customers who have never really ordered anything online before, and they get on their phones and order through our website. People are learning new ways to transact. That's been good to see."
Chatting and tasting from metal spoons at the counter, without being hurried along, is a huge part of the retail experience.
Malek says when everything opens up completely, they expect to offer both the social experience standing in line and talking to their neighbors, with tasting, cones and pints, and the new online order for pint pick up. She expects that to increase the number of customers and increase sales, rather than one channel cannibalizing the other.
"We always want to get people where they are. I'm not at all worried about which way people choose to get their ice cream."
Hand made tale
With 95% of the staff gone, Salt & Straw had to reengineer the way they make ice cream, using social distancing protocols in the kitchen and in the office. They used to make it in three gallon tubs for scooping in the shops. Now it's just pints. Adding flavors and other elements such as fruit,
cookie dough, brownie bits, caramel sauce and flowers does not work in some of the machines so they have to be done by hand. This also slows down the process. Known for having made over 400 flavors, they have limited themselves to just eight flavors at all of the stores.
There are five Salt & Straw stores in Portland, two in Seattle and 14 in California.
The management team is still in Portland.
"We're literally every day meeting and figuring this out as a team as we add people and make sure it works and it's safe. We want to see firsthand that it's working. We want it to be a very controlled safe environment. We just take it very seriously."
With business down so much, Malek knows the business model is not profitable or sustainable.
"We're burning, burning through (money) quickly."
The team has been looking into getting a government-backed, forgivable Payroll Protection Program loan.
"Those loans are not going to be silver bullets because we aren't able to hire people back at the rate that they require us to, because we're not allowed to be open. So it's not really a very viable solution."
Pick-up service is the first step toward bringing the business back.
"I know it won't look like it did before but our team is really energized to figure out how our company will look. Because it's going to be different."
Ice cream is a luxury that can sometimes become a necessity.
"I know for sure that people, as they go through this horrible experience (the coronavirus pandemic), they want to have little moments of joy, where they can take care of themselves and their family in a special way. And we would love to be part of that."
How long can Salt & Straw last on diminished revenues?
"We don't know yet, but it's not infinite. We're scrambling to figure out other solutions. Like, really soon."
There is much they don't know right now.
"It's almost like we're brand new. Every day, every week, we have to figure out what our new business model is and what the economics are surrounding that. I believe we can get there. It's just the demand is going to look different. The volumes are going to look different. I feel like I've been put in some kind of torture game show where they give me this limited number of resources and you try to figure out how to survive to the other side. It's like Groundhog Day. It's like the COVID Apprentice."
They are not looking for help from a management consultant. They have their team.
"There's a finance person, a head of operations, a marketing person and her cousin, who started the company with me is running our manufacturing right now."
"Nobody in this new world knows the answer. We know where we want to get. Our job has become pulling that broader group from the stores and central kitchen together and inspiring them to figure this out, because nobody has the answer."
She says after working to build the brand over 10 years, then letting go so many people, they feel like the walking wounded.
"We're always going to have a place for restaurants and our great chefs will find a way to bring people together and serve them in community, that's what they love. The reason I started Salt & Straw was I wanted to create a community gathering place. I think we'll find a way to be safe again and see that again. I think it's gonna be really hard in the meantime."
They have taken private equity before but she doesn't want to sell any more of the company. IF she needs money she can go to private funding, she says. (The Rock is an investor, but she wasn't talking about him.)
Malek remains optimistic about emerging from the rubble of this Depression.
"From this moment of complete despair, the comeback! We're looking at all these different channels and it's a great time for our customers to learn new habits. If we can execute these ideas, I think we're going to be so much stronger."
Reporter, The Business Tribune
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