Supply chain disruptions are top-of-mind for restaurateurs, but the same issues that are making restaurant operations so challenging these days, including staffing shortages, rising prices, a fickle and unpredictable marketplace and, yes, supply chain issues, are affecting suppliers and distributors, too, according to Brian Warrener, an associate professor at Johnson & Wales University in Providence, R.I., who specializes in teaching food & beverage hospitality and management.
He recently shared his observations in a presentation at the National Restaurant Show and added that, although some of the challenges might be mitigated with the recession that is expected to occur later this year, which should include a loosening of the labor market, the economic contraction is likely to be short-lived and systemic problems could continue for months or years to come.
There are no easy solutions to the problems, but Warrener did suggest ways for restaurants to offset some of the difficulties, or at least find ways to pay for them.
Increase prices: Many operators that Warrener spoke to who have raised prices have received little to no pushback from their customers, as long as the quality of food and service were maintained — an important caveat. However, he cautioned restaurateurs to do so carefully, noting that with the middle class being squeezed as gas and food prices remain high, a majority of them are reportedly cutting back on dining out, trading down to less expensive restaurant, decreasing the amount they spend per meal or a combination of the three.
Focus on the most profitable methods of distribution: Warrener said that 54% of all adults and 72% of Millennials claim that delivery — often the costliest way to get food to customers — is an essential service to offer. However, customers in the restaurants, or at the drive-thru, are perfectly happy to do some of the work themselves — indeed, they might prefer to order and pay via their phones rather than have to talk to a human. Enabling frictionless or low-friction interaction for those processes makes guests happier and frees up the increasingly expensive workforce to focus on other activities.
Shrink your menu and simplify preparations: Nationally, menus have 13% fewer items than they did before the pandemic, and customers are okay with that, Warrener said. By focusing on fewer items and doing them well, restaurateurs can save on labor as well as cost of goods. Cross-utilizing ingredients and removing an extra garnish or sauce also makes life easier for everyone.
Warrener said that shifting to foods less affected by supply issues, such as staples and local ingredients, can also be an effective approach. He said the price difference between niche local products and national commodities could also be shrinking as shipping costs rise, so remember to comparison shop.
Strengthen your supply chain: Warrener pointed to chains like Wingstop exploring the idea of operating their own chicken farms as one way of making sure a restaurant has what it needs, but if that’s not practical, remember to stay in touch with your suppliers to know what’s available and what’s not, and also to shop multiple vendors. “Remember that the supply chain is volatile, not necessarily supply,” he said on one of his slides during the presentation.
Manage inventory more actively: The Holy Grail of just-in-time delivery, which reduces storage costs and ensures freshness, might not be practical anymore. Using to-go containers as an example, Warrener said that if you run out of them during a busy weekend, you’ve lost a huge chunk of business. These days it’s better to stock up when prices are low, or to splurge on extra whenever the items are available.
Invest in Technology: With good labor, or any labor, hard to come by, digital ordering, kiosks and other labor-saving tech is worth the investment.
Keep your menu flexible: If an item’s not available, empower and train your staff to be able to offer something else. With most menus being digital these days, anyway, editing them is easy.
Contact Bret Thorn at [email protected]
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