2021: A Year of Navigating Shortages
4 Min Read By Melissa Evans
It’s been a tough year for the foodservice industry. Restaurants have faced labor shortages, supply and equipment shortages, and climbing food prices, with no past playbook on how to navigate the crisis. In other words, best practices are being created in-the-moment and shared with others as collaborative ideas.
Even as COVID-19 has gotten under more control, restaurant operators are still struggling with the impact it has had on the industry and on their businesses. In fact, according to the National Restaurant Association, 95% of operators said their restaurant has experienced supply chain delays or shortages in recent months. And that is showing no signs of dissipating or slowing down. Supplies are stuck in the harbor, on trucks or are just non-existent as both national and international supply chain shortages remain.
This leads to the question: When will we see a light at the end of the supply chain tunnel and what can operators do to prepare for the future ahead?
To help operators move forward, let’s take a look at some of the challenges the industry has experienced in 2021 and how they can come out on top in 2022 and beyond.
Restaurateurs are struggling to find staff to support the increase in demand on their business as Americans are returning to restaurant dining rooms. Meanwhile, foodservice employees seem to be searching for pandemic-proof jobs with more money and less stressful environments.
Because of this, operators are being forced to raise their menu prices, cut open hours, place signs on their doors asking customers for patience, and fill-in supply chain gaps, while putting out myriad of other fires. Even at the end of 2021, owners are still struggling to find willing employee candidates, and when they do hire new staff, some of them don’t even show up for their first day of work.
Another area where the labor shortage is impacting foodservice operators is in the area of truck drivers for the transport of goods. Finding enough drivers to haul goods has been a challenge for suppliers, leaving restaurants without the necessary food and supplies they need. With crowded shipping docks and not enough workers to unload the cargo, restaurant owners are having trouble getting what they need to keep their businesses running.
Looking ahead: According to Nasdaq, food processors and government agencies are taking steps to prevent many of these issues from occurring in the New Year. Wal-Mart, Fed-Ex and UPS have promised to increase operations in order to help address supply chain issues and bottlenecks. Meanwhile, more restaurant operators are adding powerful incentives to bring employees back to work. These include sign-on bonuses, higher wages and the offering of health insurance.
The chicken wing shortage was felt all throughout the country, leaving chefs to get creative and come up with substitutions or portion alternatives. They turned to more available products such as cauliflower and chicken thighs, and even used vegetarian-based proteins such as plant-based meat alternatives.
With restaurants still facing some difficulty sourcing their normal ingredients, consistent menu items have fallen through the cracks, and operators have faced the risk of losing their customers. Restaurant operators are getting better at explaining these changes – and the reasons behind them – to customers; however, it may take some time before ingredients such as chicken wings return to their normal supply.
Looking ahead: Operators will continue to consider alternative options if food shortages continue. Flexibility will be key in this area for restaurant operators moving forward. On the plus, guests as a whole are more familiar with ingredient alternatives, hopefully making future menu/ingredient changes a bit easier to navigate.
Not only did restaurants have to manage food and labor shortages, but restaurant equipment also is on back order. Equipment shortages have caused restaurants to delay opening and even slowed down customer traffic due to slower cook times. Without the right equipment, restaurants cannot serve their normal customer base nor can they do it in a timely manner.
The high cost of materials to build restaurant equipment has led to a lower supply, which is causing a slowdown of product delivery. In addition to certain kitchen ware items, parts and supplies needed to fix broken equipment also are on short supply and have become increasingly more expensive to purchase. The price of raw equipment has increased an estimated 10 percent to 20 percent, while a global chip shortage is another known factor playing into the availability of necessary equipment.
Looking ahead: Equipment manufacturers estimate that prices will stop climbing sometime in 2022. For operators in need of new equipment, build-in necessary lead times from day-of-order to delivery. For example, some refrigeration systems are taking 8- to 10-weeks for delivery; order early if you know an item will be needed in the upcoming several months.
Overall, foodservice operators are now required to do more with less and the use of technology has helped many keep their operations profitable. Technology can help operators streamline supply chain management in areas such as distribution agreements, strategic sourcing, and purchasing operations, and outsourced supply chain management support allows operators to reduce fixed payroll costs. Additionally, the use of technology has helped to control rising food costs. There is no clear timeline of when supply chain shortages may come to an end, but with the right solutions in hand, many of the challenges faced in 2021 can be overcome in 2022.