​Factors Affecting Product Cost and Availability

​In the middle of March, the entire food industry was hit with a massive shockwave. As restaurants and other outlets that prepare food-away-from-home stopped doing business instantly, consumer volume went directly and immediately to the retail supermarkets. This instant shift of consumer spending resulted in immediate shortages of paper towel, toilet paper, eggs, peanut butter, cereal, pasta, yeast, flour, frozen prepared meals and many more items that we and our families all saw with our own eyes.  Behind the scenes, the manufacturers were experiencing their own shock as items that they made almost exclusively for foodservice saw their demand go to zero – items like block cheddar cheese, fresh milk (yes, most milk is purchased by schools), french fries, certain cuts of meat and, of course, foodservice pack sizes of all sorts of product like paper goods, flour, peanut butter and pasta (where 1 pound packages are sold at retail while foodservice product is packed in a 20-pound bulk box).
​As retail purchases spiked and foodservice purchased cratered, manufacturers began to adapt their production schedules to ramp up their output of retail pack products. Now, as the nation begins to take steps to normalize daily life, foodservice sales are beginning to pick up and manufacturers are starting to adapt production schedules to meet the new foodservice volume. The manufacturers are at a decided disadvantage in predicting volumes because each state is opening and relaxing restrictions to their schedule and at their own pace.
​The factors above will result in some spot shortages as the pipelines are refilled. The good news is that these shortages will not be long in duration. Even better, if you are a member of  a GPO, like Team Four Foodservice/Value 4, you have the benefit of your GPO working directly with manufacturers to prioritize the product need of the entire membership.
​One other factor that has contributed to some higher protein prices is the spread of COVID-19 in certain processing plants for pork, beef and chicken. These plant workers many times are at workstations where they are elbow-to-elbow with fellow workers and the spread of COVID-19 hit some of these plants with high levels of employee infection. The affected plants closed temporarily and caused bottlenecks in production which, in turn, resulted in a few spot product shortages and higher protein prices. For the most part, the plants have reopened and have begun production. It is important to know that there was NEVER a shortage of product to be processed. The feed lots and farms were active and full, just needing a place to send the animals for production. As production has resumed, we have seen some prices already come down from their highs.
​On the distribution side, every foodservice distributor’s business instantly fell by large numbers - some by more than 50% overnight. The major distributors all eliminated Wednesday and Saturday deliveries to adjust delivery schedules to fit the reduced volume and began furloughing employees whose positions were no longer supported by the lower sales volumes. The distributors were also instantly faced with inventory of fresh and perishable product for which they had no sales and had short shelf-life, so they began donating product to food banks and adjusting their future inventory levels. Distributors will build inventory based on their best information of when business volume will begin to ramp up. It is imperative that you provide your distributors with advance information on your reopening plans so that they will be able to build inventory to support your business when you reopen. It is important to note that under normal circumstances, the average lead-time from the time a distributor places an order with a manufacturer and the product is delivered to the distributor’s warehouse is 10-15 working days. So, the more notice you can provide your distributors, the more it will benefit your business

​Next Steps: Planning for Reopening

May, 4 2020  National Restaurant Association
Put any extra time you have now to work so you’re set to reopen smoothly.
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​It looks like it’s going to happen — slowly, in fits and starts. Governors and mayors around the country are starting to talk about reopening restaurants for dine-in service, when it can be done, and what it would look like.
For sure, life won’t quickly go back to the way it was before mid-March. California Gov. Gavin Newsom, one of the state leaders working in regional consortia to come up with detailed plans and schedules, suggested a likely scenario:
“You may be having dinner with a waiter wearing gloves, maybe a face mask, dinner where the menu is disposable, where half of the tables in that restaurant no longer appear, where your temperature is checked before you walk into the establishment.”
In other words, it will take some doing to make it all work. Whether your restaurant remained open for takeout and delivery during this period of social distancing, or you closed down entirely, here’s how you can start rebuilding your business.
Understand the new rules and limitations.

​They won’t be the same across the country. Figure out how you can comply. (Your local restaurant association can advise you.) For example:
  • Where will you purchase masks and gloves for staff?
  • What about noncontact thermometers? How will front-of-house staff enforce customer occupancy limits and physical distancing rules?
  • Who will be in charge of training staff to use these new tools, procedures and sanitation regimens?
Follow established guidelines for reopening safely, with protocols for safe food handling, cleaning and sanitizing, employee health and hygiene, and social distancing. Start with the National Restaurant Association COVID-19 Reopening Guidance.
​Deep clean and sanitize your restaurant. 
​Hire a specialty service to deep clean every single surface in the front- and back-of-the-house, or have your staff do it. Don’t forget to clean and sanitize the drive-thru station, all POS equipment and staff headsets. Check out CDC guidance and cleaning here. Later, when it’s time to open, you can publicize your efforts — even make a video of it.
Reconfigure and rethink the dining room.
​Even if a minimum distance between tables isn’t mandated in your area, guests will be shy at first about close contact. Space out tables and chairs, even bar stools. You can put barriers between booths. If there’s enough time and money before the reopening, consider freshening your dining room with a new coat of paint.
​Think about maximizing revenue. 
​With half as many chairs and tables in the dining room than you had before, you could experience reduced dine-in sales. What would make sense to optimize dine-in receipts?
  • Could you switch from table service to counter service, at least for part of the day?
  • Could you find an additional seating area? With warm weather on the way, it may be a good time to add sidewalk seating or a patio.
  • Increase table turns by simplifying and streamlining the menu. Also look into faster (touchless) bill-pay technologies.
Take stock.
​Take care of all the tasks you had carve out time to do for before.
  • Inventory refrigerated, frozen and shelf-stable items.
  • Discard any out-of-date produce, meat or dairy products.
  • Dump condiments, wash and sanitize containers and refill them.
  • Wash down and sanitize refrigeration units before restocking.
  • Clean and organize shelving and storage areas as well as supplies stored behind counters and neaten up the drive-thru station. Make them look new.
  • Clean and sanitize the ice machine and beverage dispensers and have them serviced.
  • When you plug in equipment and turn on the gas, double-check that everything is working properly.
  • Schedule a preventive maintenance service appointment to tune up all your equipment.
Reorder food, drink and supplies and restart services.
​Every other restaurant in your area will be reopening and restocking simultaneously, so allow plenty of time to get deliveries ramped up.
  • Order shelf-stable supplies in advance to stagger resupply.
  • Restart waste disposal service, linen service and any other regular services at the same time that you’re ordering supplies.
  • Re-evaluate supply contracts and adjust as needed.
​Evaluate your hiring needs.
​With fewer covers and, possibly, a simplified menu, your staffing requirements may be different than they were before. Begin, of course, with the people you’ve kept on the payroll and those who were laid off during the stay-at-home order. But, even in a period of unprecedented high unemployment, some of your old staff may have left town or moved on. You may need to hire new employees — who will also have to be trained before you’re up and running again.
Get the word out.
​Communicate your plans so customers know you are ready to go.
  • Update your website and announce your return on your social media platforms — Facebook, Twitter, Instagram, and so on.
  • Offer a special deal or a limited-time online coupon.
  • A festive sign in the window and a few balloons could catch the eyes of passers-by.
  • Consider a direct-mail campaign to neighborhood residents. An ad (with a coupon) in the local shopping circular might be worthwhile, too.
  • Send announcements to TV and radio stations, newspapers and any hyper-local media, such as community websites.
  • Consider a joint “We’re back!” campaign in conjunction with other neighborhood restaurants, bars, theaters and/or shops.
Save every receipt.
​You’ll need them all for loan documentation, rent relief, insurance claims and taxes. Track every single expenditure, from special cleaning services to purchase of COVID-19-related gear.
Periodically re-evaluate; what will be your new normal? This is a time to experiment and adjust for both businesses and customers. Figure out what works and what doesn’t. Your business may or may not go back to being exactly what it once was, and either way, it’s fine.

Below are some major steps to reopen

  • Put together P&L Proformas based on different levels of sales volume.
  • Develop a staffing plan based on volume and your sanitation & safety programs.
  • Decide on the menu(s) you will offer.
  • Decide if Food-Away-From-the Restaurant (F.A.R.) is viable for your business, choose your options (Delivery/Curbside/Grab ‘ N Go/Meal Kits/Catering Packages/Take-Out). 
  • Develop an execution plan.
  • Create a name & logo for your program.
  • Create or modify your Employee Manual to include COVIS-19 policies and procedures and communicate it to your employees, train, train, train your staff on the policies.
  • Execute your Clean/Sanitize/Disinfect Program.
  • Secure product
  • Update your website to promote your reopening and any new menu items or services you will be offering.
  • Include your sanitation & safety statement.
  • Take steps to secure your site to protect against cyber theft.
  • Make sure that a customer can place an order on-line, pay for the meal and leave a tip.
  • Begin work on touchless pay for food enjoyed in your operation – ask your POS vendor what they have to offer.
  • Establish your social distancing program.
  • Execute your on-going sanitation & safety program.