Food & Beverage

6 ways to battle supply chain issues

Supply chain issues continue to plague foodservice operators. Here are tips to ease the pain.

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July 18, 2022 by Mandy Wolf Detwiler — Editor, Networld Media Group

When asked what issues plague operators the most, among the answers are supply chain disruptions, which affect suppliers and distributors, too, according to Brian Warrener, an associate professor at Johnson and Wales University.

In fact 96% of foodservice operators are reporting delays in supply chains.

Warrener, who teaches food & beverage hospitality and management, shared his insight at the recent National Restaurant Association annual conference.

During a panel presentation, Warrener stated food costs are up 13%, industry wages are up 11% and industry prices are up 8%.

When it comes to food costs, beef is up 23%, eggs 31%, chicken 27% and cooking oil 44%. Many factors go into those price increases, from inflation to supply chain issues and customer demand, he said.

"Everyone is pivoting and being flexible," Warrener said.

What's causing the supply chain bottleneck? Warrener cited COVID, a lack of available workers at the distribution level and low unemployment rates.

Potential solutions for foodservice operators include:

Increasing prices. "Demand for restaurants remains strong despite inflation," Warrener said.
Consider the price elasticity of demand. The middle class is feeling squeezed, with 57% considering cutting back on dining out. Warrener said he talked to operators who have increased their prices, but the quality of food and service had to be maintained to be successful.
Focus on the most profitable methods of distribution. Warrener said that 54% of all adults and 72% of Millennials say that delivery is essential to their ordering, but some customers don't mind curbside and pickup. Domino's offers a $3 "tip" coupon for customers who pick up their own orders to reduce delivery drivers on the road.
Consider smaller menus and simpler preparations to streamline operations. Warrener said menus have 13% fewer items, with the focus on most popular items. A smaller menu will streamline staffing and training challenges.
Strengthen the supply chain. Warrener cited Wingstop as exploring the idea of operating their own chicken farms to supply chicken, a costly ingredient. If that's not feasible, build a good relationship with the vendors in your supply chain.
Manage inventory more actively. Getting ingredients in the same day as usage might not be practical anymore, but if you run out of something during a busy weekend, you've shot yourself in the foot. Stock up when prices are low or on sale. Consider cash, space and spoilage, including paper goods. "Buy more stuff if you can afford it," Warrener said, "if you can store it and you can turn it over."
Invest in technology. "Good help is hard to find and if you can find ordering technology, payment technology, you can eliminate about 25% of what your employees are actually doing." Menus need to be flexible by changing them frequently to meet needs. Change price and availability constantly.

Warrener expects the U.S. to head into a recession, but not a recession like 2017.

"People's finances are in ok shape," he said. "For the most part, they're not overextended like 2007."

"The industry clearly has changed," Warrener said. "Where we land is going to be different. I think delivery, curbside and technology are going to be big parts of what we do forever."

About Mandy Wolf Detwiler

Mandy Wolf Detwiler is the managing editor at Networld Media Group and the site editor for PizzaMarketplace.com and QSRweb.com. She has more than 20 years’ experience covering food, people and places.

An award-winning print journalist, Mandy brings more than 20 years’ experience to Networld Media Group. She has spent nearly two decades covering the pizza industry, from independent pizzerias to multi-unit chains and every size business in between. Mandy has been featured on the Food Network and has won numerous awards for her coverage of the restaurant industry. She has an insatiable appetite for learning, and can tell you where to find the best slices in the country after spending 15 years traveling and eating pizza for a living.

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