F&B Insights

The Shifting Restaurant Supply Chain

Do you remember in the not-too-distant past when you were met by empty grocery store shelves and toilet paper rations? In some cases, the pendulum has swung back to weak spending and an overabundance of inventory. However, between war and weather, the food supply chain is nothing if not unpredictable.

Everstream, an analytics firm, listed agricultural commodity shortages as a top supply chain risk as 2024 takes hold. Part of their forecast is based on the difficult year many growers experienced due to weather challenges. 

In 2023, we saw olive oil prices grow exponentially as the drought in Europe created shortages. Wildfires in Canada caused shipping delays, and extreme weather in India caused a massive increase in tomato prices. We expected grain to require gold bars due to the continued war between Ukraine and Russia.

The Effects of Extreme Weather

The effects of climate change are everywhere. Research by The Global Food Institute (GFI) explored the threats facing independent restaurants due to the rapidly changing climate. With agriculture one of the sectors most affected by climate fluctuations, it’s clear that the availability of food and ingredients will shift as the global climate transforms. 

GFI shared some interesting thoughts and observations from chefs.

“We will be prepared for a big weekend because we project sales based on the rhythms of the businesses’ sales. And then there will be a wildfire, and the concentration of smoke will be so severe, that people will opt not to leave their homes. We get stuck with food, beverage, and labor bills but no sales to offset them.” – Mary Sue Milliken

“There is always something we are challenged with, whether it’s the cost of romaine lettuce going from $28/case to over $200/ case, or tomatoes from Italy suck in port because of transportation issues for example. The largest problem is consistency in the final product when you have supply chain challenges.” –Brandon Whitestone

Diversifying

While it may seem like the larger restaurant chains have all the benefits in terms of purchasing power, smaller, independent restaurants have some advantages in their corner. Their flexibility enables them to make changes much quicker, especially if cornered by sudden market volatility. They can develop relationships with local growers and farmers much faster than restaurants that depend on nationwide and global supplies.

GFI also reports a surge of food hubs over the last 10 years. These “middlemen” connect farmers directly with buyers, such as restaurants, schools, and hospitals. Food hubs enable smaller growers to come together and pool their products, allowing them to sell to larger industries. At the same time, they note a decreasing population in smaller farms and an increase in large-scale operations.

The bottom line is that supporting local farmers who practice sustainable methods is critical to their continued existence and our supply of healthy food.

The Current Prices

According to the UDSA’s recent Food Price Outlook, Food from grocery stores increased 0.7 percent from December 2023 to January 2024 and rose 1.2 percent year over year. Food at restaurants rose 0.5 percent in January and was 5.1% higher than the previous year. Throughout January, food prices rose except for beef, veal, pork, other meats, fish, and seafood.

One of the big changes we’re seeing is the price of eggs, which, as you all remember, rose sharply. In January, they were down over 28% compared to a year ago. They also estimate that sugar, sweets, and nonalcoholic beverages will experience the highest price growth. Fats and oils are estimated to increase by 4.6 percent in 2024.

According to the National Restaurant Association, food costs will continue to be a challenge until wholesale prices start to fall across a broad range of commodities.

Do you know how the fluctuating prices have affected restaurant prices in your area? In today’s climate, staying abreast of how price changes affect the restaurant prices in your area is essential. Fortunately, there’s an easy way to do this. It’s called F&B Insights, and it gives you access to the world’s largest menu database.

FAQS

Are things going to get more expensive in 2024?

That is a good question. Prices should continue to moderate. Unforeseen circumstances, such as the geo-political climate and the weather, may affect this prediction.

What foods will be in short supply in 2024?

One of the foods expected to be in short supply is avocado oil due to unpredictable weather and climate change. Salmon is another item on the potential shortages list due to overfishing challenges and, once again, climate change. 

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