By Ed Avis
John Mayes is so used to products being out of stock at his distributor that it hardly bothers him anymore.
“Every week it seems there is something that is either short, delayed in shipping, or out of stock,” says Mayes, vice president of operations at El Toro Mexican Restaurants, which has six locations in Texas. “It’s funny, we have now just gotten used to it and roll with the punches. Out-of-stocks in the past were usually not a friendly phone call, but now it is usually, ‘Okay, what else you got?’”
The supply chain problems plaguing the world started with COVID and are now being exacerbated by the war in Ukraine. So many factors are affecting the supply chain — high fuel prices, labor shortages, increased storm activity — that nearly every restaurant product is being affected.
“We’re talking about all categories, not only food,” notes Pepe Stepensky, owner of Porkyland Mexican Grill in San Diego and four other restaurants. “Paper goods are also in the list of shortages…Sometimes you order three or four boxes of a product and (the distributor) sends you just one because they have to share what they have with other customers.”
Prices a Problem
Not only are many things out of stock; prices are climbing rapidly, too. For example:
Avocados: Prices spiked to their highest level in two decades after Mexican avocado imports were temporarily halted in late March due to a threat to a USDA inspector. Prices hit $38 per 9-kilogram box, which was 81 percent more than a year ago, according to U.S. government data.
Chicken: Wholesale chicken breast climbed to $2.70 per pound in March, 38 percent higher than last year and the highest price in at least two decades, according to Gro Intelligence. The chicken supply problem has been exacerbated by the avian flu outbreak and higher feed costs.
Tortillas: Prices climbed 8 percent over the past year, according to the Producer Price Index from the U.S. Bureau of Labor Statistics. Tortilla prices are at their highest level since the government started tracking those prices in 1991.
How Restaurants are Coping
To lessen the impact of shortages, Mayes says he has been buying larger quantities of some items such as to-go packaging when he can and stores them in his company’s warehouse. He also tries to keep two suppliers of each product on his list of partners.
“This way if one can’t get you what you need, then the other might be able to help,” he says. “I have found that rarely are they both out of an item.”
Searching among smaller local suppliers is another strategy. Mayes says he has been sourcing some dairy products from Sam’s Club and local grocery stores when his distributor is out. Stepensky does the same thing: “We run all over the city to smaller or local suppliers to get what we need.”
As far as dealing with higher costs, many restaurants are increasing menu prices. According to the U.S. Bureau of Labor Statistics, prices for food away from home jumped 6.4 percent during 2021, the highest rate of increase since 1982. Increasing menu prices obviously helps lessen the impact of higher supplies costs, but that strategy can also reduce the number of customers.
“Prices are sky high, but there is a limit to how much we can charge our customers,” Stepensky notes.
Is relief on the horizon? COVID restrictions in most of the world have eased, so more workers may be entering the labor force, which should improve some supply issues. But most of the other problems show no signs of abating.
“We can expect the current problems to linger for at least another 12 to 18 months in the short term,” predicts Gary Nowacki, CEO of TraceGains, a food ingredient sourcing platform. “But, of course, this assumes the Ukraine conflict doesn’t drag on into 2023.”
Ed Avis is the publisher of el Restaurante. Reach him at edavis@elrestaurante.com