Lagging distributors send restaurants grocery shopping

Discussion
Photo: Getty Images/halbergman
Aug 19, 2021

Customers have been visiting restaurants more frequently in the U.S., even as the Delta variant of the novel coronavirus continues to thwart plans for an anticipated return to normal. Restaurants, however, are running into problems getting the ingredients they need to conduct business as semi-usual. Supply chain disruptions are forcing them to make unexpected changes to their menus and take hits to their margins.

In one example cited by a CNN article, the owner of a Middle Eastern restaurant in Vermont drove to a Whole Foods 3.5 hours away in Boston and paid twice the wholesale cost to get pita bread, due to a last-minute halted order from distributor Sysco. In another example, an upscale New York City restaurateur has begun substituting different varieties of vegetables into menu items due to distributor shortages and now puts in orders to multiple distributors, assuming that some orders will fall through.

Similar problems have been reported in Portland, OR, where an owner of a mom-and-pop restaurant told a Fox affiliate that she was having difficulties finding products as common as lettuce and spinach from big food distributors like U.S. Foods. Orders for calamari and blue cheese end up being pushed back indefinitely.

In the UK, despite the country’s full reopening in mid-July, supply chain interruptions have become so severe that they are forcing some restaurants to temporarily close locations, according to Reuters. QSR chain Nando’s has closed 40 UK locations due to chicken supply chain disruptions.

Earlier in the novel coronavirus pandemic, when the first round of indoor dining shutdowns left many U.S. restaurants wondering how to continue doing business, some big grocers stepped in to help keep them afloat. SpartanNash, H-E-B and Rouses Markets all launched programs that brought pre-made meals from restaurants to their store shelves.

Restaurants also altered their operations in other ways to address pandemic-era shakeups.

Large chain restaurants and small local operators, for example, began selling groceries alongside their takeout menus. This helped restaurants stay in business while meeting the needs of customers who were having trouble finding specific staples at grocery stores.

DISCUSSION QUESTIONS: Is there a way that grocers, farmers markets and the like can step in to partner with restaurants to help address these supply chain/distributor problems? Do restaurants run the risk of incurring significant damage as supply chain disruptions continue, and how can they mitigate them?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This problem highlights a big opportunity for restaurants to mimic what we’ve seen with some hypermarkets and establish more of a marketplace sourcing model."
"I think a more viable solution is for the food services distributors to make their supply chain operations more reliable."

Join the Discussion!

9 Comments on "Lagging distributors send restaurants grocery shopping"


Sort by:   newest | oldest | most voted
Dave Bruno
BrainTrust

I have little experience in restaurant operations/supply chains, so I hesitate to offer an opinion beyond hoping that some of these challenges might lead to more local sourcing of food for more restaurants. Our health, the health of the environment, and the health of local economies would all be improved if we sourced more food locally.

Rick Moss
Staff

A message posted online by our local go-to spot for (the best darn) Asian/Soul Food chicken wings (you’re ever going to eat):

“To Our Dear Customers,

2021 has come with some unforeseen challenges brought on by the pandemic of 2020. We have fought hard to keep our prices the same while maintaining the quality and consistency of our product. Unfortunately due to high demand and compromised supply chains, this is no longer sustainable for our small business. You will see some changes to our menu, ordering platforms and pricing within the next coming days.

We will do our best to keep up with the demand of our customers but some things are out of our control. We may be unable to fulfill orders or we will sell out and have to close earlier than our scheduled hours. For these inconveniences, we apologize and we thank you for your continued patience and support.

With love,

Wangs”

Richard Hernandez
BrainTrust

I saw this last night – the restaurant I went to ran out of chicken and basic potatoes. To add on to that issue, they had one cook, one waitress and one bus person and they were busy. I see more restaurants going to options other than food service distributors to keep their pipeline going.

Venky Ramesh
BrainTrust

More than grocers, farmers’ markets, and the like partnering with restaurants, I think a more viable solution is for the food services distributors to make their supply chain operations more reliable. If that means they have to move their sourcing operations closer to the customer, they should do that by forming such local alliances. They get the added good will of helping the local communities.

Ricardo Belmar
BrainTrust

For local, small business restaurants, these supply chain shortages encourage more local and diverse sources. I have heard of some regions banding together between restaurants and local farms to encourage this, but the situation gets more complicated for larger restaurant chains. Perhaps there is an opportunity for grocery brands to step in and offer new services to restaurants. These grocers may already have established relationships with local farms or other regional suppliers that they can leverage. While these costs may not be as low as direct sourcing for the restaurants, it could provide a stop-gap until the supply chains normalize. The consumer desire to spend their dollars with restaurants is still high as many people grew tired of cooking all the time during the pandemic, so the motivation is there!

Melissa Minkow
BrainTrust

This problem highlights a big opportunity for restaurants to mimic what we’ve seen with some hypermarkets and establish more of a marketplace sourcing model. Of course, given that these restaurants and some of the suppliers are smaller, the platform used to keep connected could be simpler, but the sentiment could be the same. In Brazil, we’ve seen local grocers message their suppliers via WhatsApp to check in on potential inventory. I wonder if this is a system restaurants could have with several suppliers to ensure they always have resources available to tap into. Diners will always be dismayed when they show up and their favorite menu item isn’t available. Local restaurants have suffered significantly during the pandemic, but consumers aren’t more forgiving because of the circumstances. Finding a supply chain solution in the restaurant industry is just as important as it has been for retailers.

David Spear
BrainTrust

Earlier in the pandemic, I saw a large breakfast/diner chain in the South pivot to sell some of their inventory (eggs, milk, waffle mix, bacon, etc.) to families that were struggling to find some of these items in grocery stores. It helped families, it helped the breakfast/diner chain but, most importantly, it was a leadership move that will be forever remembered in the hearts and minds of thousands of people who reacted positively to this decision. Restaurateurs will have to be agile in how they operate their locations and develop multiple contingencies for supply chain sourcing.

Brandon Rael
BrainTrust

The pandemic’s supply chain constraints and challenges spurred on have had far-reaching impacts and have been especially challenging for the food and restaurant industry. A longer-term mitigation strategy is around the potential of near sourcing and leveraging locally producers across the vegetable, fruit, meat, and fish categories.

The restaurant industry has also had the challenges of dealing with a significant decrease in customer traffic, social distancing mandates, and a workforce seeking employment in other viable industries. From a sourcing perspective, a supply chain should be built around resiliency, adaptability, and a contingency plan to leverage alternate and local vendors when these challenges come up.

Brian Cluster
BrainTrust
The supply chain issues persist across industries. I am afraid the model of low cost and lean operations (JIT) strategies made the supply chains longer and more prone to disruption. It is interesting to see this play out. My local bagel shop depends on a large distributor for some of the basic commodities such as milk, straws, sugar packets, napkins. On several occasions this Spring the shop ran out of sugar packets because they were on backorder. This should never happen as there are multiple suppliers. In an age of an increasingly fickle customer where one bad experience may cause a valuable customer to leave, there is no excuse for not building redundancy in some of your must-have suppliers. With more sophisticated data management tools such as Supplier Master Data Management, retailers/restaurants can build out data models and references and rules for secondary and other backup suppliers to minimize supply chain disruption. Data relationships between regions, suppliers, and store locations can also be developed to create a more regional approach to the supply chain as… Read more »
wpDiscuz
Braintrust
"This problem highlights a big opportunity for restaurants to mimic what we’ve seen with some hypermarkets and establish more of a marketplace sourcing model."
"I think a more viable solution is for the food services distributors to make their supply chain operations more reliable."

Take Our Instant Poll

How likely are supply chain shortages experienced by restaurants to get worse before they get better?

View Results

Loading ... Loading ...