Operating a restaurant has always been notoriously risky. Profit margins are usually thin, and unpredictable slow and busy days mean that owners and managers need to keep constant tabs on their books. When you couple this with the supply chain issues posed by the novel coronavirus pandemic, things get even trickier. How did this happen, and what can restaurant operators do to stay on top of things?
WHAT CAUSED THE CURRENT SUPPLY CHAIN CRISIS?
When the pandemic first hit, nobody was really sure how to respond. Social distancing mandates closed a lot of restaurants and bars, which raised concerns about what was going to happen to all of the food they wouldn't be buying, and employees who wouldn't have any work to do. Unfortunately, the pandemic's reach extended far beyond just restaurants — the House Select Subcommittee on the Coronavirus Crisis found that there were three times as many COVID-19 infections and deaths among employees in the United States five largest meatpacking plants. At one plant in Utah, over half of the employees contracted COVID. This resulted in an estimated $11 billion in economic damages.
Taking that into consideration, it's pretty easy to extrapolate this to other industries that supply restaurants. Some manufacturers, anticipating waste and operating under lockdown restrictions, scaled back their operations. Others were simply unable to operate safely. Changes in buying patterns caused shortages in some areas and surplus in others. For example, as customers shifted to getting takeout versus dining in, the US saw a shortage of single-use condiment packets.
Food and other supplies aren't the only areas experiencing shortages, either. Restaurants and manufacturers are also struggling with a lack of workers. This means that products that are more labor-intensive to produce are hit particularly hard. Even in industries where there aren't supply shortages, a lack of drivers means that these products just can't make it from point A to point B. Even if they could, many restaurants don't have enough employees to meet customer demand.
WHEN WILL THE INGREDIENTS AND FOOD SERVICE SUPPLY SHORTAGE END?
Now that restaurants have recouped some of their lost business, they're still facing supply chain problems. KFC, which formerly advertised its boneless chicken products, has pivoted to emphasize their bone-in chicken instead. They aren't discontinuing their boneless chicken — there just isn't enough to go around, forcing them to try to draw customers with what they do have. Restaurants all over the US have put up signs informing guests that they may be out of regular menu items and apologizing for the inconvenience.
This leaves restaurant operators with one pressing concern: How long is it going to be like this? Unfortunately, some experts think that these shortages might be with us for a while.
One factor to blame might be e-commerce. The early pandemic saw consumer demand drop, but it has since increased. People still aren't going out to eat or shop the way they used to — instead, more and more are ordering online, including meals and groceries. This means that supply lines that are already stretched thin have had to stretch even further to fill online orders. These changes in demand and employee shortages have created strictures in key areas. Ports and post offices alike are full of undelivered goods.
If this sounds like a complicated problem, it's because it is. Global supply chains are very complex, and the novel coronavirus has impacted virtually every facet of them — from production to delivery, to sales. There's no simple solution, which means that the supply chain crisis may need to work itself out.
WHAT CAN RESTAURANT OPERATORS DO IN THE MEANTIME?
Restaurant owners and managers who are navigating through the current supply chain crisis have several things they can do to survive. Here are some creative strategies to help get your foodservice business through these difficult times:
Right now, restaurant owners and managers should try to work with what they have available. KFC's example is a good one. By pivoting to products they have an abundance of, and away from menu items that are affected by shortages, they can still manage to draw in customers. Their advertising and promotions reflect this shift, too.
Automation can also help. When ketchup packets were in short supply, Heinz responded by opening new plants to help meet the higher demand. This isn't really an option for restaurant owners, but they can still use automation to help them better manage what they have. Fast-food chain White Castle decreased waste and improved employee efficiency by installing an automated napkin system in select locations. This didn't just cut down on wasted paper products, it meant that employees didn't have to refill dispensers as often. That reduced White Castle's demand for napkins and helped their workers focus on higher priority tasks.
REDUCING OPERATING HOURS
Some restaurants have also begun reducing their hours of operation, turning their slowest open days into production days instead. This allows workers to focus on menu items that can be made ahead of time, which lets restaurants get a jump on demand. This strategy won't work for every restaurant but may be helpful for those experiencing serious staffing and supply issues.
SOURCE LOCAL GOODS
It's also a good idea to work with local producers whenever possible. The closer goods are, the less time and labor are required to deliver them. Supporting nearby farms, bakeries, and brewing companies also helps stimulate the local economy and can provide a draw to millennial consumers who prefer an environmentally-conscious, "locavore" lifestyle.
The unfortunate fact is that the current supply chain crisis is likely to be with us for a while. There are simply too many choke points and shortages across multiple industries for there to be an easy solution. Restaurant operators who are willing to adjust their menu items, see where they can reduce waste, and be flexible with their hours of operation may have an easier time weathering the storm.