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Tags: restaurants | supply chains | covid 19 | reopening

Reopening Restaurants Stretching Supply Chains to Limits

people walk by restaurant
People walk by a Manhattan restaurant in New York on May 19, 2021 in New York City. (Spencer Platt/Getty Images)

By    |   Friday, 21 May 2021 01:13 PM EDT

Restaurants attempting to reopen to customers as COVID-19 safety restrictions relax across the country have stretched food supply chains to their limits, The Wall Street Journal reports.

Mark Allen, the chief executive of the International Foodservice Distributors Association, told the newspaper that "over the last six weeks, we have seen the market come roaring back faster than anybody would have anticipated. The start up has been, in many ways, as difficult as the shutdown … Everybody is trying to turn it on immediately and the capacity might not be there."

The food and beverage consulting firm JPG Resources LLC found that various food-service businesses, including restaurants and hotels, now have to deal with heavy price increases on essential ingredients and unpredictable availability. JPG Managing Director Glenn Pappalardo noted that one independent pizzeria in Indiana has seen the price of pepperoni increase by 60% over the last five weeks, while a deli in the same state has only received 40% of the chicken it ordered from its supplier, and staple items such as flour have been routinely out of stock.

Suzanne Rajczi, chief executive of Ginsberg’s Foods Inc. in Hudson, New York, a company that services independent restaurant operators in upstate New York and in the Hudson Valley, told the newspaper that common items such as French fries have become increasingly hard to find, and her company has been forced to encourage customers to focus on items that are in stock, such as a 6 oz. chicken breast, over items that have run out or are running low.

"We’re trying to buy as much high-volume inventory as we think we can sell," Rajczi said, "but we’re still beholden to those manufacturers that are hampered by their production capacity."

She added that other factors have held-up delivery of products as well, such as a shortage of packaging materials.

"We can make salad dressing but we can’t make the bottles to sell the salad dressing," Rejczi said.

Kerry Byrne, president of the freight brokerage firm Total Quality Logistics LLC, added that a shortage of raw materials has caused deliveries to become inconsistent.

"That disrupts entire supply chains," he said. "Everything is stressed."

Supply-chain experts note that the food industry is currently experiencing a version of the bullwhip effect, in which businesses that scaled back activities have to quickly up production due to increasing demand and are heavily relying on suppliers to keep up, but suppliers largely switched to servicing retail customers such as grocery stores during the pandemic, when many restaurants were closed or limiting service to take-out.

Byrne noted that one regional burrito chain that previously got three regular shipments of boneless and skinless chicken thighs per week would be "lucky if they get two," these days, "and their supplier was out of chicken thighs for three weeks."

He added, "Companies are putting things on sale or restaurant chains are offering promotions on special items but then they’re not sure they can get the shipments they need to meet the demand. I’ve never seen anything like it, and there are no indications it’s going to let up anytime soon."

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US
Restaurants attempting to reopen to customers as COVID-19 safety restrictions relax across the country have stretched food supply chains to their limits. Mark Allen, the chief executive of the International Foodservice Distributors...
restaurants, supply chains, covid 19, reopening
517
2021-13-21
Friday, 21 May 2021 01:13 PM
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