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Hawaii’s food distributors lose customers, cut operations

                                Russell Hata, chairman and CEO of Y. Hata and Co. Ltd., said he is optimistic the company will survive after the pandemic. Y. Hata also owns ChefZone in Kalihi.


    Russell Hata, chairman and CEO of Y. Hata and Co. Ltd., said he is optimistic the company will survive after the pandemic. Y. Hata also owns ChefZone in Kalihi.

Hawaii’s largest food distributors are facing challenges to keep business running due to the COVID-19 pandemic, but many are continuing to buy food and other products from the mainland to serve local customers.

Lauren Zirbel, executive director of the Hawaii Food Industry Association, said distributors have been taking more precautions with handling deliveries to stores.

“Each distributor will face different issues depending on which segments they serv­ice,” she said in an email. “The dramatic decline in tourism has impacted all of Hawaii, including the food sector.”

The head of one distributor, Y. Hata and Co. Ltd., noted that Hawaii’s food chain “is very vulnerable” because of its isolation from producers. “Only a small fraction of food is from Hawaii. The rest is primarily from the mainland and comes over water,” said Russell Hata, chairman and CEO, in an email. “Because the cost of land, warehousing, labor and electricity is so high in Hawaii, there is only about two to three weeks’ supply on the island at any one time.”

The 107-year-old Y. Hata company started as a mom-and-pop shop in Hilo. Founders Yoichi Hata and his wife, Naeko, sold goods to the public from their garage. Russell Hata, their grandson, wants to keep the legacy alive.

In March, Gov. David Ige and Honolulu Mayor Kirk Caldwell restricted dine-in eating at local restaurants, which are still allowed to offer takeout meals. However, some food businesses have shut down temporarily because they couldn’t afford to stay open or due to other concerns.

Y. Hata normally serves over 3,000 customers statewide, but that number has decreased. Hata said 43% of his independent restaurant customers closed their business and 57% are “operating a skeleton crew.”

“These numbers are constantly changing as some customers decide to close and some customers decide to reopen for takeout,” he said.

Hata estimated his business is losing up to $3 million a month. He added the company cut back its 24-hour operations from seven to five days a week, and some Wednesday and Saturday deliveries have stopped.

Two of the seven Y. Hata locations across the state have shut down and the company laid off a quarter of its staff, Hata said. Other employees saw pay cuts of 10% to 20%, and a few executives, including Hata, are taking no pay at all.

Despite the challenges, Hata is optimistic the company will survive after the pandemic.

“I think we can last anywhere from three to six months without relief,” he said. “With relief, five to eight months. But there are many variables such as, will customers be able to pay us? Currently customers are having a difficult time paying us, and I instructed our receivables department not to push for collections because the customers don’t have the money.”

With the company’s warehouses 30% to 40% overstocked with food, Hata said he is working with Pagoda Floating Restaurant, affiliates of Kamehameha Schools, the Hawaii Lodging & Tourism Association and Kauai County to “take food into the communities so families do not have to go into crowded stores.”

Hata said the company will be selling and donating food to people in the Maili, Waipahu, Ala Moana and airport areas and hopes to expand services to more communities.

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