- Regalis Foods supplies caviar, truffles, Wagyu beef, and other gourmet products to Michelin-starred restaurants including Eleven Madison Park and Le Bernardin in New York City.
- As restaurants shutter across the country due to the coronavirus pandemic, the company has pivoted to delivering straight to people’s homes — at wholesale prices.
- You can get a live king crab for $395, American Wagyu beef bavette for $17 a pound, and a quarter pound of wild black truffles for $130.
- Founder Ian Purkayastha says the company has “a few hundred thousand dollars worth of caviar” to sell in the next several months before it expires.
- “Since we’re basically offering wholesale prices on everything, we’re not too much more expensive on a lot of items than it would be to go to the grocery store,” he told Business Insider.
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Two weeks ago, Regalis Foods was delivering caviar, truffles, live king crabs, and Wagyu beef to the country’s top Michelin-starred restaurants, including Eleven Madison Park and Le Bernardin in New York City.
Then, in under a week, the company lost 99% of its customers as restaurants across the US shut down by government mandate to slow the spread of the coronavirus, according to founder Ian Purkayastha. Now, his company is sitting on hundreds of thousands of dollars worth of caviar and other gourmet products that it needs to sell.
So Purkayastha decided to make a “dramatic pivot”: delivering gourmet goods straight to people’s homes.
Think jars of caviar, boxes of mushrooms, wild black truffles, French white asparagus, Australian tiger prawns, live king crab, Heritage Berkshire Pork, American Wagyu beef, and truffle oil — FedEx-ed in ice-packed boxes right to your door.
“Since we’re basically offering wholesale prices on everything, we’re not too much more expensive on a lot of items than it would be to go to the grocery store,” Purkayastha told Business Insider.
Purkayastha said he hopes home delivery will keep his business afloat until restaurants can reopen.
The National Restaurant Association estimates that the restaurant industry will sustain a $225 billion hit over the next three months and that between 5 and 7 million restaurant workers will lose their jobs. Many establishments have already been forced to turn to mass layoffs.
Purkayastha says he has personally taken a 70% pay cut, and of Regalis Foods’ nearly 50 employees, only four have been laid off so far. But like many others in the industry, the company is facing an uncertain future as it sits on a surplus of pricey, perishable products and more than $1 million in outstanding receivables owed by restaurants.
“We can’t be insensitive and be demanding with our customers to try to collect on that money, especially when restaurants are shut down,” Purkayastha said. “But at the same time, we fear when all this goes away that we’re going to be screwed long term because we have so much money that is probably not going to be paid back to us.”
Wagyu beef at a bargain, a surplus of caviar, and $395 live king crabs
Regalis Foods has been promoting its new home-delivery business solely on Instagram, posting daily menus and offering free FedEx delivery (with a $100 minimum) in New York City, Chicago, and Texas, where the company has offices, and overnight shipping nationwide for $60.
Those who have the means to shell out on Regalis’ high-end products can get quite the bargain.
“We have a bunch of perishable inventory that we’ve been trying to fire sale to push out the door,” Purkayastha said. “So we dropped pricing on all of our items — basically wholesale pricing for home consumers on some items, or just selling at a loss to try to get them out the door before it expires.”
They’re selling American Wagyu beef for between $15 and $18 per pound, when it would typically retail for between $40 and $60 per pound, according to Purkayastha.
A live king crab, which is “pretty much the most expensive thing we are selling at the moment,” says Purkayastha, will run you about $395 for a large 8.5-pound crab.
The company’s live crustaceans are kept in a live tank in their New York warehouse in Queens, and then shipped to customers in a special box that oxygen is pumped into. The company also has warehouses in Chicago and Dallas, Texas.
“They arrive alive,” Purkayastha. “A lot of king crab that’s frozen is precooked and pasteurized and there’s lots of preserving agents that are added, so buying a live king crab has a completely different flavor profile than your typical frozen crab leg. “
And then there’s the caviar.
“We’re currently sitting on a few hundred thousand dollars worth of caviar that is set to expire in several months,” Purkayastha said. “I know caviar is not something that people are really thinking about now, but we’re going to be in deep s–t if we can’t start selling a lot of caviar to home consumers.”
Regalis has been running promotions where they throw in a free ounce of caviar for every $250 to try to get through their stockpile, “even if we’re just basically giving it away,” Purkayastha said.
Most customers, however, are making orders in the $75 to $100 range, buying items like mushrooms, meats, and oils and vinegars, Purkayastha says, all of which are boxed up in perishable shipping containers with ice packs.
A recession on the horizon and $1 million in outstanding receivables
So far, Regalis has been averaging 50 home delivery orders per day, Purkayastha says, despite a tedious order process which entails the customer emailing an order and Regalis responding with a credit card authorization form, which the customer then has to fill out and send back.
But coincidentally, the company has been working for the past six months to revamp its e-commerce website, which should launch in the next week and streamline the ordering process.
“When the website launches, since it’ll be a lot easier for home consumers to just put in their payment information on our website, our orders will start to increase — or at least that’s the hope,” Purkayastha said.
Still, how Regalis’ home delivery model would work long-term is uncertain, Purkayastha says.
To try to keep employees safe during the outbreak, the company has been using a system where half its staff works from home while the other group is at the warehouse. The groups rotate each week.
And with entire countries virtually locked down because of the coronavirus, the logistics of restocking items once they get through their supply could be a major challenge, according to Purkayastha.
If the US falls into a recession, which many economists say is likely, will people still be shelling out for caviar and truffle home delivery?
“We’re catering to a very specific socioeconomic demographic and, you know, a month from now, I don’t know if that demographic is going to withhold what they’re currently purchasing,” Purkayastha said. “I don’t know if people are going to shift toward buying pure essentials or if they’re going to continue buying higher-end ingredients. I don’t know what’s going to happen.”