Labor shortages are throwing a massive wrench in the entire economy— with restaurants being hugely impacted. “Short-staffed” has become part of our daily vocabulary now in the world of hospitality. And now, supply chain and food shortages are making things more complicated.While current issues with our supply chains started a couple years ago with the Covid-19 lockdowns, the disruptions to U.S. supply chains are expected to worsen this year. According to international trade and global economy expert George Alessandria, the recent lockdowns in Beijing and Shanghai will ripple through the global supply chain and cause further disruptions. In addition, the ongoing Russia-Ukraine war is contributing to the worsening shortages and supply chain issues as trade routes are blocked and sanctions against the Russian economy remain in effect. Unfortunately, supply chain issues are another contributor to higher prices and the increasing probability of a worldwide recession. So, when might the disruptions to the supply chain end? Alessandria forecasts that “we’ll have at least another year of low growth, high prices, and bare shelves.”
Food shortage and hunger issue: what is going on with our supply chains?
The Washington Post says climate change is the reason for the food supply chain shortage, so hunger issues have increased all around the globe. Food shortages are basically in full effect (along with products such as toilet paper). Wholesale companies like Costco are already limiting purchases of various items like water cases and paper products.
While many people rely on canned items throughout the winter, so do many restaurants. According to Today.com, there is also a shortage in aluminum, causing strain on both consumers and businesses. This is not just limited to canned vegetables but also sodas, soups, coffee, tea, and many other canned goods. These are usually larger canned items available in bulk on websites geared toward chefs and restaurants everywhere.
Supply Chain Shortages: food chains and private chefs simply cannot get all ingredients they need
Many restaurants are dealing with substituting different items or changing menu options entirely because they simply cannot get all the food items and various ingredients they need to make their signature and regular dishes for their customers. The hope is that this does not deter customers looking to order out and take a break from cooking this holiday season.
Grocers are also being hit hard
Shipping and delivery issues are not just hitting restaurants, but all regular retailers and grocers, too. Shelves aren’t filing back up as they once were before the Covid-19 pandemic. According to JPG Resources LLC, with food shortages also comes big swings in prices on main ingredients utilized by a variety of foodservice and processing companies.
Limited options on the menu means changes in the dishes offered
A CNN article out of New York discusses restaurants having to deal with the fact that some food options are simply off the table. Restaurants that usually offer finer options are limited, and those cafes and restaurants that always need fresh vegetables have a hard time getting what they need.
Nothing is going to be easy this year. Most restaurants are probably going to offer different food options or be more inventive with their dishes. Many places are already seeing menu changes emerge because of the need to use alternative food options in many different areas of cuisine.
While the food shortage due to supply chain issues has been hard on all restaurants, it certainly has had a big impact on vegetarian operations since they tend to rely on fresh produce. Since 2020, many food industry heads knew things were going to change a bit, and some people even began stocking up on items they could, though that’s not possible for fresh foods, of course.
In addition to shortages in fresh produce, disruptions to the meat and poultry supply chains emerged shortly after the onset of Covid and continue to threaten the capacity of restaurant and food service companies to fulfill consumer demand this year. What’s the cause of these supply chain shortages? Depends who you ask. According to President Biden, multinational meatpacking and processing companies have taken advantage of supply chain issues resulting from the downturn in the post Covid-19 economy to hike up prices. To remedy this supply chain issue, the White House administration rolled out a new aid package supplying $375 million in grants to independent meat processing companies and $275 million in loans at favorable rates to smaller businesses. While it is generally agreed that market concentration among processing companies is the main problem, some contend that the federal administration caused disruptions that led to this situation in the first place. According to John Stossel, testing by the U.S. Department of Agriculture (USDA) is so expensive and cumbersome that smaller processing businesses simply can’t afford it – leaving only a few massive companies that can. Also, the administration’s current remedy to these disruptions (subsidies and regulations) in the meat economy will further increase market concentration and decrease the overall capacity of the industry. According to United States Congress Rep. Thomas Massie (R-Ky.), the domestic supply chains for meat and poultry will recover if the federal administration’s intervention is scaled back and the regulatory power over processing business is given to the state. Thus to address the kink in this supply chain, Rep. Massie introduced the PRIME Act, which would let farmers sell meat processed by state-approved processing businesses. This legislation would ultimately be aimed at eliminating shortages in the domestic meat supply chain and lowering prices for food service companies, restaurants, and consumers.
How can Restaurants Restaurants Respond to Uncertain Supply Chains?
Restaurant operators need to take a very hard look at their menu and all the labor that makes the food and simplify where they can. Synergy can help them systematize, standardize and optimize their menu so that they can have good margins and keep their food cost and menu prices in check. The key to dealing with this new food cost challenge is to develop a strategy around:
- Menu Innovation
- Menu Engineering
- Menu Optimization
Synergy Restaurant Consultants are subject matter experts in this area. It would be wise for operators to deal with this sooner rather than later this year because they will be caught flat-footed during the holidays!