Operations

Supply Chain Woes Continue for Restaurant Operators

If you’ve been to a grocery store or a home improvement store lately, you’ve probably noticed that the shelves are, once again, becoming increasingly bare. So are peoples’ fears resurfacing now that the Omicron variant is making its way across the nation? Or is the global supply chain really that broken?

In all likelihood, it’s a little bit of both. What we do know is that restaurants are still feeling the effects of supply chain issues, with some even renting cargo jets.

Let’s see how the shortages are affecting restaurants and just how long the experts think they’re going to last.

Cargo Jets Deliver French Fries

If you’re like many consumers across the globe, a shortage of McDonald’s French fries is nothing to take lightly. Those in Japan felt some relief when the giant fast-food conglomerate turned to Flexport, its logistics provider, for help getting French fries to its stores in Japan.

The answer was chartering three Boeing 747 freighters to deliver an emergency batch of potatoes from North America. One has to wonder if that will affect the prices of those fried potatoes.

Why the Shortage?

This shortage represents a perfect scenario of the current supply chain crisis and where it stems from. In this case, the French fry shortage starts at the Port of Vancouver in British Columbia. According to the American Shipper, flooding, landslides, and washed-out highways have led to significant reductions in truck and freight rail traffic.

In fact, the early part of December saw about 60 vessels waiting for a berth. While the situation is stabilizing, catching up will take some time.

The Massachusetts Egg Shortage

Do you remember the mid-December headlines announcing a pending extreme shortage of eggs in Massachusetts? While many may have assumed the sparsity was yet another supply chain issue, that particular dearth had to do with a law that passed in 2016 and was scheduled to take effect on January 1, 2022.

According to the law, egg-producing hens could not be kept in a cage that was less than 1.5 square feet. Restaurant Business reported that the New England Brown Egg Council warned that the egg supply could drop by 90%, and the price per dozen could hit $5.

Even though 77% of voters agreed with animal welfare activists that hens should be able to lay down, stand up, turn around, and extend their limbs, Gov. Charlie Baker signed a bill that changed the standards. The bill allows hens in spaces less than 1.5 square feet as long as they have vertical space. Apparently, this averted the possible shortage.

The Continuing Challenge for Restaurants

We all know about the many varied reasons for the current crisis. From a shortage in raw materials, closed factories, backlogged shipping ports, a lack of truck drivers, and an increasing demand, the global supply chain experienced an unprecedented breaking point in response to a relentless pandemic.

But, despite the latest strain, doesn’t it seem that there would be somewhat of an easing in the supply chain dilemma? Unfortunately, according to Business Insider, we have quite a wait before feeling any relief. Some economic experts suggest it may not come until 2023. On the other hand, CNBC spoke with trade credit insurer Euler Hermes, who indicated that there could be some normalization in the second half of 2022. He cited decreasing demand, increasing shipping capacity, and healthy inventory levels as the reasons for this somewhat optimistic outlook.

Whoever’s right, the good news is that there is something that restaurants and consumers can do to help weather the continued supply storm.

Buy Local

Despite the hardships and sadness, the pandemic taught us quite a bit about our current lifestyle and our demand for getting what we want when we want it. We want French fries—let’s charter a 747. We need eggs at an affordable price—let’s ignore consumer sentiment and what some consider animal cruelty. We want berries and grapes in winter, no matter the distance they have to travel.

Because of our demand, more than half of our fresh fruit and a third of our fresh vegetables come from other countries. So, what happens to the smaller organic product growers in the U.S.? Many are getting squeezed out of business.

In November 2021, Horizon Organic terminated its contract with 89 Northeast organic dairy farmers, effective in August 2022. Across the nation, the small family farm feels the effects of globalization and corporate farming. From 2011-2018, 100,000 small farms in the U.S. went under.

If there’s anything we’ve learned, it’s that the global supply chain is incredibly fragile. The restaurant seasonal farm-to-table movement started well before this crisis for reasons that included wanting the freshest food, supporting local, ethically responsible farmers and farming methods, and decreasing our carbon footprint.

It appears these restaurants may have been on the right track without needing a pandemic slap in the face. U.S. Foods reported on a Nielsen survey that found that fresh, local, organic foods influenced 69% of consumers’ purchases.

Author:
Categories:
Operations
  • Subscribe to our latest insights

chatsimple

Are you capital raise ready?