How to shield your operation from strains resulting from the war in Ukraine
While the restaurant industry has experienced more than its fair share of volatility in commodities in recent years, the war in Ukraine is setting the stage for still more. As a report in The Economist bluntly stated recently, “Global commodity crises tend to cause severe economic damage and political upheaval…Today Russia’s invasion of Ukraine is unleashing the biggest commodity shock since 1973, and one of the worst disruptions to wheat supplies since the first world war.”
While consumers have still yet to feel the full effects of this commodities upheaval – whether that will include skyrocketing energy prices, empty shelves at the grocery store, political instability or more – it’s an important time to do what you can to help insulate your business from those potential outcomes where possible. At the U.S. Department of Agriculture Forum in February, Andrew Harig of the Food Industry Association predicted that on the retail side of the food industry, the most significant impacts will be felt in fuel and energy price increases, while escalating prices of wheat, corn, edible oils and other commodities will cause secondary pressures.
For restaurant operators, that may be a bit of good news. Of all of the expenses operators have, they may have the most control over those related to their operation’s use of energy. Assess your energy consumption and identify how you might make incremental changes that could help keep bills manageable. That could include anything from using smart meters and sensors to ensure appliances are operating efficiently to transitioning your delivery fleet from cars to bicycles.
You can also shield your business from volatility on the other side of the world by leaning into local suppliers and seasonably available ingredients as much as possible. Ukraine, dubbed the “breadbasket of Europe,” is a key global supplier of wheat, corn, sunflower oil and a range of grains used as livestock feed. The country’s ability to proceed with spring and summer plantings is uncertain as the war continues. While we’ll all feel some trickle-down effects of the conflict, whether we’re consuming commodities sourced from Ukraine or not, adopting a more local mindset will help operators ease current challenges and costs related to the supply chain, labor and transportation.