The world in 2022 experienced a global supply chain crisis across various industries. Shortages in ingredients, raw materials, and even labor have left a vacuum in several markets, causing countries around the world to scramble to protect their economies.
From computers to potatoes, everything and everyone is affected by the supply chain crisis. This is especially true for the food and hospitality industries, as they are heavily linked to other markets including transportation, logistics, and agriculture.
How can restaurant owners survive the supply chain crisis? In this article, we’ll try to break down the different factors of the crisis, its implications on the restaurant industry, and how owners can mitigate its negative effects while it persists.
What Caused the 2022 Supply Chain Crisis?
The 2022 supply chain crisis can be attributed to multiple factors, chief of which is the fallout from the 2020 COVID-19 pandemic. In fact, many industries are still in the process of recovering from the damages the pandemic caused.
Various nationwide lockdowns were put into place at multiple points throughout the past couple of years. This halted trade and transport between several countries, contributing to the shortage issue.
Many businesses have also shut down due to the lack of customers during periods of lockdown, and lockdowns have also stopped workers from going onsite to do their jobs, thus causing a delay in the production and delivery of goods and services.
Another main reason for the supply chain crisis is the abrupt stoppage of trade between several nations brought about by the Russo-Ukraine conflict. Russia and Ukraine are both global exporters of several raw materials that are essential in multiple industries.
Russia is one of the top exporters of oil, natural gas, wheat, steel, nickel, and aluminum, while Ukraine is one of the top exporters of corn, barley, soya, and sugar. This makes the procurement of these resources and related products more difficult and consequently more costly.
How Restaurants Can Adjust to Shortage and Inflation
As countries around the world brace for impact, restaurant owners can adopt several key practices to maximize their profits and mitigate the effects of the global supply chain crisis. While lesser sales are to be expected in the coming months, weathering the economic storm is a worthwhile endeavor that can lead to great benefits later on.
#1 Turn to Local Suppliers
One effective way to survive the shortage crisis is to restructure your inventory and rely on more local and accessible suppliers.
Third-party suppliers are overworked and are experiencing logistical issues and production delays. Several industries’ overreliance on third-party suppliers has made shipping slower and costs higher.
Relying on local producers of the goods you require will help circumvent these issues. By effectively shortening the supply chain, you can reduce costs while speeding up the time it takes for ingredients to come to your store.
Direct trade not only helps your business thrive but also supports your local market and bolsters your country’s economy.
#2 Time Your Purchase Orders
The prices of different goods and services are fluctuating every day. What you buy today can be more expensive tomorrow. Similarly, what you buy tomorrow can be much cheaper than what you got it for last week.
Restaurant owners can take full advantage of this fact by timing restocks in order to take full advantage of lower prices and discounts at the right moment. Buying in bulk can also help reduce costs as suppliers tend to give bigger discounts for high-volume purchases.
#3 Manage Your Inventory
Of course, just because it is cheaper doesn’t mean you should purchase stock immediately. Customer demand will always play a key role in determining which items to restock and when. You want to avoid having an over or under-supplied inventory as both cases lead to lost revenue.
Weigh out your options every time you restock. High-demand items should always be purchased even if costs are higher than they usually are. Although you won’t earn as much from these items, small profits are still profits. Having a constant stream of revenue is essential to surviving the crisis.
#4 Invest in Restaurant Technology
Automating your business is essential to maximizing your restaurant’s efficiency. Not only does it speed up your restaurant’s workflow, it can also increase the quality of your service and, by extension, improve overall customer satisfaction.
Various restaurant technologies have emerged to automate and improve several restaurant operations. If there’s a problem with one aspect of your business, there’s definitely a resto tech innovation that can help with just that.
Do you have a shortage of waiters or constantly have long queues? Self-ordering kiosks are a great way to speed up order times and make the process more enjoyable.
Want to teach new chefs how to make your different menu items? Digital recipe catalogs can list all ingredients, portions, and directions for your staff to follow. That way you can speed up training times and reduce possible food waste during preparation.
There are countless more technologies that involve inventory, accounting, delivery, analytics, and more that you can take advantage of today that will last you a lifetime. As the industry becomes more digitized, consider investing in a proper restaurant management system now rather than later.
#5 Reevaluate Your Menu
Restaurant menus are products of their time. Their designs and prices were made with their period in mind, which is why a restaurant menu 5 years ago can look drastically different from what they are today.
Given all the price shifts, marketing trends, and changes in consumer behavior, updating your restaurant’s menu can be a great way to keep your business relevant. A new menu can attract new customers while simultaneously piquing the interest of your loyal ones.
Following menu engineering principles can help you optimize your menu and keep items profitable. You want every menu item to have a purpose. Price your items properly and don’t be afraid to drop what isn’t working for your business. Make adjustments accordingly and profits will be sure to follow.
Thriving Amidst the Supply Crisis
Amidst health concerns, social unrest, and economic uncertainty, it’s really difficult to keep a positive mindset regarding the current state of the world. Despite this, economies have proven to bounce back after a recession, and this time will be no different.
All these problems are temporary, and supply chains will definitely return to normal once conditions improve. Surviving the supply crisis is a challenge for everyone, but making the right adjustments can significantly help you through these trying times.
Support your local business and invest in the right technology. Improving what you can now will help your business in the long run. With a little resilience and some creativity, you can definitely get through this crisis.