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D'Artagnan CEO on how stimulus package will help business

D’Artagnan CEO Ariane Daguin joins Yahoo Finance’s Alexis Christoforous, Brian Sozzi, Heidi Chung and Dan Roberts to discuss how D’Artagnan is faring amid the coronavirus pandemic.

Video Transcript

BRIAN SOZZI: Welcome back to "Yahoo Finance Live." All week we've been talking to a lot of big names in the food industry to see how they're navigating the coronavirus. I want to bring in the CEO of D'Artagnan, Ariane Daguin. Ariane, good to see you here again.

Now I was on your website, and you sell a lot of top-notch food, a lot of farm-to-table ingredients. Are you having problems getting supplies to your customers at this point?

ARIANE DAGUIN: No. The supply is not the problem. The problem is the clients. You know, we at D'Artagnan, 70% to 75% of our business is to restaurants, to the best restaurants in America, and so right now they are closed. So we had to reinvent ourselves totally and gear our products totally towards retail and e-commerce.

But we have-- you know, we are D'Artagnan. We have musketeers. We have not lay off one person. It's an all for one and one for all spirit here, and I can't thank our team enough to show, you know, how spirited they are. And all the team that was dedicated to the restaurant sales is going into retail. All the picker/packers that were specialized are going and learning another way of doing things. I mean, it's being-- reinventing our company totally.

But all that to do two things-- one, to protect the farmers and the ranchers because the food is there. You know, the animals have being raised. They were born already. They have been raised. The logistic chain is fine. We do have 75 refrigerated trucks. So that thing is going fine.

The difficulty is to find the new avenues, new clients to replace the chefs, and meanwhile to take care of our friends, the chefs. They are in dire straits.

ALEXIS CHRISTOFOROUS: Ariane, I know the company has been around since 1985, so you've lived through other economic downturns. And all the small-business folks we talk to say this is like something they've never seen before. You see this $2 trillion stimulus package trying to make its way through Congress. Is what's in that package enough for businesses like yours? What more do you want to see local and federal governments do?

ARIANE DAGUIN: So a couple of things. One, for us, I think it all depends on how long this is going to last. You know, this package I think is geared for three months. It's going to be fine and it's going to help us keep the employees for three months no matter what-- you know, no matter if our sales continue to tank on one side. Then we try to make it up on the e-commerce. We are not right now, and that package is certainly going to help. The big question is how long because this is good for three months, basically, helping us with loans on the payroll when we are reinventing ourselves.

On the restaurant side, I think this will have a long-term effect that we have no idea yet the amplitude of it. I think we're going to have to reinvent the-- totally the restaurant industry, the hospitality industry, the way we compensate employees, the way we give them health benefits or not, and the way we bill for the-- and we make, you know, the client pay for it.

HEIDI CHUNG: Hi, Ariane. It's Heidi Chung here. So it's a very challenging time, but it seems like your company is doing a pretty good job navigating these challenges. That being said, you haven't had to lay off any employees yet, but at what point do you have to start thinking about that, especially given the rise in commodity prices for a lot of these agricultural purchases? When do you have to start thinking about other options?

ARIANE DAGUIN: So two things. One, we thought about it two weeks ago. We've been looking at it every day. The only reason why we haven't done anything yet is because that package that we are waiting for could help us weather the next three months. And there is still a huge question mark, which is are we going to be able to generate enough sales from retail and e-commerce to compensate for the loss of sales?

Right now we are not. Right now we've been going down. We are waiting for that package. We are very hopeful because that package looks good and looks like we're going to weather the next three months-- three months.

The other question is no, there is no commodity at D'Artagnan. We do only sustainable meat, and we use only groups of farmers that we put together to have our supply. So it's not about commodity prices. It's about the real cost of raising the animals.

So on that side, our job is to protect what we have created. It's to make sure that we have the output and the volume on those very, very perishable items that are meat and poultry and mushroom so that the ranchers and the farmers behind us are protected.

DAN ROBERTS: Hi, Ariane. Dan Roberts here. Let me just ask you, in terms of restaurants, you know, in so many states, even where people have been told, you know, stay at home, restaurants have mostly remained open for takeout or delivery or both. You know, in New York, the most recent data we saw was that some 70% of restaurants are still offering takeout.

And interestingly, earlier this week on the show we had Chef Tom Colicchio who was talking about the kind of stimulus package that he hopes the restaurant industry will get and relief. He also said he doesn't think that restaurants should be open for takeout during this time because you're probably losing money anyway even by doing takeout on a given night. And in places like New York, they're putting workers at risk by having them take public transportation to get to the restaurant.

Obviously for you guys better if some of these restaurants are open, you know, as a wholesaler. But what do you make of that comment, and what do you think moving forward? I mean, if this lasts, you know, many more weeks or months than people think, what can and should restaurants do? Because obviously they want to get some kind of revenue.

ARIANE DAGUIN: So I'm with Tom. It's a question of math also, and I really, truly believe that, you know, talking to all the chefs, my friends-- and I'm a little bit of a mother, a babysitter. You know, we Zoom all the way. But the ones who are open is because they can afford it because basically they are so small mom and pop that their costs are not that huge, and that's why they are offering for deliveries.

But the major ones, they are not. They made their calculation, and they understand that all that payroll is not going to compensate for-- those pickup and delivery sales are never going to compensate for all their fixed and variable expenses.

So sanitation-wise, I'm not a specialist. I know that everybody is doing their best and is, you know, using gloves, washing their hands constantly, being careful about not contaminating the outside of the containers. I know that consumers have still to be careful anyway and to actually decontaminate. But, you know, when the food arrives at home, you should take it out of the outer package. You should get rid of the outer package and then wash your hands again. I mean, that's just basic principles.

But I really, really believe that-- I don't know about your 70%. It seems very high to me. But big chains like [INAUDIBLE], Maison Kayser, Pret a Manger, those organizations that were really geared towards takeout, they have closed, so it didn't make sense for them economically. Tom, his Craft Group, they have closed.

BRIAN SOZZI: Yeah. Ariane, yesterday I talked to Grubhub founder Matt Maloney, and he suggested that 30% of US restaurants won't reopen after-- or as a result of this coronavirus. Does that number sound too high to you?

ARIANE DAGUIN: We're going to have to reinvent the hospitality business. That's for sure. Business as we know it-- when you look at what's happening in Europe and how employees are being covered-- health insurance is being covered, and there is a minimum wage, and there is unemployment that is pretty secure. And the way to pay for that, it's simply that the meals are more expensive in restaurants.

When you travel, you see that in Europe, you eat for-- you need more money to eat than when you go to a restaurant in the United States-- than we're used to. I think this will have to change. People will have to understand on two-- on several levels that we cannot continue to produce food at the wrong costs. It's not the right cost when you don't take care of your employees.

So yes, they're probably going to be not as much of a consumer reason, not as much of a clientele if that price goes up at the restaurant level. In the same vein, then producing commodity factory-farm beef at the very low level is polluting and is creating more costs on the other side. It is kind of the same problem. We're going to really have to reinvent, between reinventing is one thing. But having the consumer understand that and not going after the $1 burger just because it's cheapest because it is not-- it's cheaper for the end user, but it's not cheaper for the rest of the chain.

BRIAN SOZZI: Well, we'll leave it there. Ariane Daguin, the CEO of D'Artagnan, really wishing you well. Keep us updated on your progress with this situation.