Restaurants continue to face significant pandemic-related challenges. From supply chain disruptions to staffing shortages, companies are heading into a third calendar year of difficulties that continue to change, leaving restaurateurs scrambling for solutions. The additional impact of inflation on many core food commodities, is predicting 2022 to be yet another tumultuous year.
Despite those daunting realities of COVID-19 variants, lockdowns, and mask mandates, the outlook continues to be promising and customers are coming back. The International Foodservice Manufacturers Association (IFMA) predicts 4.9 percent growth in the foodservice industry, which would return it to nearly pre-pandemic (2019) levels by the end of the year. How can the industry meet those predictions despite the ongoing complexities? Here is a look at those challenges and how to navigate them.
Shortages Persist for Food and Supplies
In the early days of the pandemic, restaurants saw dramatic declines in business, resulting in massive amounts of spoilage for foods with a short shelf life such as produce, dairy, and meat. In addition, restaurants were purchasing less items, cutting menu offerings, and operational hours. Many restaurants already operating on slim margins, closed.
Today, it’s nearly the opposite. In many cases, food and other restaurant supplies are hard to come by, worsened by supply chain issues that have hamstrung offerings. Some challenges are unique to specific geographic regions or store types and ingredients (e.g., the great potato shortage of early 2022). Transportation costs have risen, and port congestion has stalled shipments, with costs resulting in higher prices. There’s also great uncertainty and variability in what products may be available at a particular time of need.
Even restaurants that have shifted to primarily carry out and delivery options, face challenges. Paper bags, plastic utensils, to-go containers, and straws are in short supply. Major fast-food franchises such as McDonald’s, Subway, and Taco Bell have had to pull popular items as shortages have proven unresolvable.
Offering fewer menu items will not necessarily solve the supply chain challenges. Even a smaller menu is likely to face availability challenges. There are longer lead times for deliveries. Trucking companies face workforce challenges themselves, and getting space on a truck is not easy or cheap, especially as many trucking companies have also gone out of business.
Supply Chain Solutions Require Creativity
As restaurant traffic rebounds most operators are asking, what can be done? The good news is that there are some viable solutions and most have come in the form of evolved operational structures that rely on creative options and thinking, including:
- Forming partnerships. Restaurants are developing new partnerships to reduce the risks and the added pressures faced by supply chain uncertainty. Many suppliers have increased the minimum ordering thresholds and by forming a partnership, smaller operators can still take advantage of preferential pricing by combining orders with other operators. Partnerships can also allow for shared staff workloads, better employee retention, and combined resources.
- Creating ghost kitchens. With losses in foot traffic, restaurants have had to rely more on delivery (which can be expensive using third-party delivery platforms) and carryout. Ghost kitchens provide flexible ordering options, new menu options, and food production that can maximize efficiencies with ordering and overall kitchen management.
- New perspectives on ordering. Relying more on non-perishable foods and supplies, and ordering more from local providers can alleviate delivery gaps, reduce lead times, and provide reliable sourcing for crucial ingredients. It also is a way to support local providers.
- Technology solutions. Tools available today can provide operators with a vast amount of quality datathat can lead to more intelligent decisions. Using technologies like data analytics and artificial intelligence helps make data-driven decisions that can help drive profits while solving problems. These tools allow for the analysis of data in real-time and the development of what-if simulations that help restaurants gauge decisions about inventory, menu development, ingredients, pricing, and supply needs. At the same time, they allow for the tracking of key performance indicators.
Workforce Challenges Persist
The restaurant industry has struggled to maintain aviable workforce since the start of the pandemic. In fact, many laid-off workers have yet to return. Many factors such as having to cope with unruly customers, perceived health risks, the stress of working in an uncertain economy and low pay have all made it difficult for operators to keep and recruit new talent.
In response, restaurants have changed the way they operate by raising wages, increasing efforts around changing the company culture, and focusing on employee satisfaction issues in ways they’ve never had before. Restaurants are offering more benefits and incentives, including signing bonuses and scheduling flexibility to attract and retain talent. They’ve also increased curbside and drive-through ordering options, closed dining rooms, and reduced hours of operation to make sure staff are not overwhelmed.
While these are challenging times, most restaurants have been able to pivot and respond to operational challenges that have never been experienced before. However, critical thinking and some creativity along the way have helped sustain operations for most operators. In addition, operators should also consider making many of the strategies and measures implemented during the pandemic to increase productivity and reduce costs permanent, even as COIVD-19 eases its grip on the World.
For more information or to discuss how these strategies may help your organization, please contact Tim Reynolds at tim@dhw.net or at 828.322.2070.