We all read the headlines about the impact of COVID on restaurants as many of them were forced to close and those who weren't had dramatically reduced customer counts. Unfortunately, even after doors opened and customers for the most part returned to dining out, small local restaurants are facing an almost equally significant challenge.
Signs about "global supply chain issues" and "outages" are posted at restaurants around the country. Backlogs at ports, challenges in transporting goods from the ports to warehouses and then transporting those goods on to interim or final destinations. Although mega-retailers have been able to implement unique workarounds and the White House Supply Chain Disruptions Task Force made recommendations leading to operational changes at California ports, the supply situation simply isn't improving for small restaurant owners.
Critical Issues Restaurant Owners Face
Without even discussing the labor situation, there are three key issues restaurant owners are facing - outages of critical supplies and food items, purchase limits, and sometimes daily increases in price. These issues are stretching budgets, patience and passion to near breaking points.
Supply and Food Outages
I recently chatted with a friend who runs a local restaurant in a small North Georgia town. He provided some examples of how hard it is to get supplies, using only soft drinks as an example.
- Large soft drink cups: Out of stock, out of stock, out of stock. He has been unable to order them from any of his suppliers or purchase them from warehouse clubs.
- Medium soft drink cups: Very hard to find. The medium cup he prefers has been out of stock for weeks and his second preferred cup is now also out of stock. He is now forced to buy a much lower quality cup that holds less liquid for more than he used to spend on premium cups.
In addition, food outages have forced him to modify his menu. He has removed chicken tender baskets and chicken sandwiches from his menu because he is simply can't predict when the chicken will or won't be available.
Supply and Food Purchase Limits
In the past, my friend was able to order food and supplies from vendors and then fill in with a once-a-week trip to a warehouse club. Now, purchase limits mean that he is unable to get sufficient quantities of supplies or food items. He is now shopping daily at multiple locations, including retail stores, to find the supplies and food items he needs to keep the doors open.
Price Increases on Supplies and Food
Previously, restaurants would see periodic price increases. Now, prices increases can be quite steep on some items, such as coffee cup lids. My friend has seen an increase in the price of coffee cup lids of over 400% in recent months. In addition, since he is shopping daily at multiple locations, he is seeing daily price changes on some items.
How You Can Assist Your Small Restaurant Clients
1. Be understanding and compassionate. This is an extremely challenging time to own and operate a restaurant. Your clients are most likely worried about costs. And they are probably spending time normally invested in other operational areas in searching for supplies and food.
2. Encourage flexibility. There are outages, limits and rising costs, but they can make pivots to reduce those impacts.
- Menu changes: For example, thanksgiving provided challenges for restaurants, but also opportunities to take advantage of lower prices and ample supplies in some areas. Your clients may need to modify menus more often than they would prefer due to changes in cost and availability.
- Restaurant hours: Many restaurants are choosing to change operating hours, either by reducing daily hours or closing one or more days each week.
3. Provide operational advisory: Your clients are the experts in preparing and serving foods, but they may not be experts in operating a small business. Operational advisory uses operational indicators to measure and track business health and strategic direction, providing the restaurant owner with actionable steps based on data to mitigate risk and improve performance. You can add operational advisory to your client services or partner with a peer who has already begun offering advisory services.
Supply Chain Management During Disruptions
Earlier in the year, Joe Woodard spoke with Tom Uva specifically about supply chain management during disruptions. These strategies will likely be tested well into 2022 and your restaurant clients will continue needing your assistance.