Foodservice operators expect labor and product shortages to continue

Leaders from the Foodservice Leadership Councils recently joined the International Foodservice Manufacturers Association (IFMA) for a series of webinars to share their perspectives on the current landscape. While many challenges and opportunities were shared by the leaders within five foodservice segments, the common thread binding all of the segments was that of shortages — both by way of products and staff.

While these are major challenges in the current environment, Council members — representing Business & Industry, College & University, Elementary & Secondary, Healthcare and Small Restaurant Chain Foodservice — were thrilled to be at least 12 months removed from the depths of pandemic shutdown.

Read more about the Foodservice Leadership Councils here.

The College and University Segment: Operators Expect a Semblance of Normal in Dining this Fall

The major topics discussed during the C&U Council Meeting included question marks in terms of dining hall capacity levels, a (measured) return to self-serve stations and how the segment is managing supply and labor shortages.

Many operators in the C&U segment had to retool foodservice operations in a short period of time, and with the worst of the pandemic in the rearview mirror, panelists said they are eager to get back to normal.

“We will be somewhat back to pre-pandemic levels in terms of capacity levels in our dining operations, but it will be challenging to walk back some of the emergency measures we put in place such as unlimited meals to go,” said Janet Despard of St. John’s University. “We may keep some of those measures in place but it really is the million dollar question.”

Nearly all colleges and universities switched to staff service in the areas that remained open last year, primarily in the all-you-care-to-eat facilities. This fall, most programs are looking to make the move back to self-service, yet Greg Minner of Washington University said his dining staff and the students were able to make a connection during the pandemic — a silver lining in an otherwise dire environment.

“Our staff members were beginning to know students by name and even writing notes to them for curbside delivery,” Minner said. “I think our staff and students will miss that.”

Minner continued that his students “love” to interact with staff, particularly because they are away from home and it gives them the opportunity to speak with someone who cares about them.

Similar to all segments, C&U operators are faced with the challenges of product scarcity. This has impacted both scratch-cooking and prepared foods equally. Panelists have been told to expect increases of 8-10 percent of cost-of-goods from broadline distributors this year. Reducing the number of ingredients has been the top operator response.

“The commodities markets have doubled,” said Pat Bando of Boston College. “Things like frying oil have doubled in price if not more — think of french fries. You can buy the potato but the oil is a sunk cost.” Operators have begun to build an inventory to try to insulate against the product shortages.

The Business and Industry Segment: Employees Look Forward to Resuming Dining Options Post-Covid

The Business and Industry segment was among the hardest hit segments during Covid-19, but as employees begin to return to their offices, operators have experienced firsthand the excitement employees have for the return of foodservice favorites.

Mark Freeman of LinkedIn said the pandemic impacted his employees but pointed out that foodservice was sorely missed. “Our employees are returning to the office globally,” Freeman said, “and what is hilarious is they are posting food on LinkedIn,” to show their appreciation for the return of their dining services.

Corporate feeders have had a challenge procuring products on a consistent basis over the course of the pandemic, one that continues to hamper operations. Panelists said that shortages may be problematic primarily with broadline distributors but it also gives them the opportunity to support local distributors.

“[Using local distribution] is a great way to leverage diverse vendors, and here at the firm, they’re always happy when we can use small-banking partners,” said David Mesagno of JPMorgan Chase. Other panelists agreed they were supplementing sourcing with local suppliers because they have been able to receive items not available by “the big three”: Sysco, US Foods and PFG.

With several businesses bringing employees back to the office, panelists said that a return to normalcy will mean a return to socially responsible directives such as sustainability, which took a backseat to comfort foods and convenience during the peak of the pandemic. Panelists said that as employees return, they have already been active in asking about responsible procurement and environmentally friendly packaging.

“The challenge with the pandemic meant, for safety reasons, we had to look at single-condiment packets, but they are not at all sustainable,” said Freeman, whose employees skew younger and are very likely to be vocal about the source of food and packaging products.

The Healthcare Segment: Foodservice Staffing, Product Shortages, Cloud Foodservice Recovery

Some of the key topics discussed by healthcare operators included a return to self-service stations, supply chain constraints, labor shortages and an update on the critical issues the healthcare operator committee is managing.

Operators overall reported an improvement in healthcare foodservice compared to last year, largely by reopening foodservice areas and welcoming back visitors. “Three weeks ago we returned to self-service — those are typically thought of as coffee, beverage stations or salad bars,” said Kevin Vos of Spectrum Health. “It was a very welcome return.”

The total number of meals offered are still not to pre-Covid levels, panelists said, which is a reflection of a decline in staff and employee meals. The declines are attributed to employees that are still working remotely periodically, but the panelists expect staff to begin returning through early fall.

Supply chain issues will be part of the future, panelists acknowledged, but there are other complexities in healthcare that exist even when products are scarce. For example, there are strict diet guidelines healthcare facilities must follow and substitutes are sometimes unavailable. “This becomes most critical on the patient-feeding side,” according to Dan Henroid of UCSF.

With the labor shortage, healthcare operators have responded with various tactics.  Some of the tactics have included reducing the number of made-to-order options on the menu and cutting down on the number of ingredients required for meals. Prepared and ready-to-eat foods have also been explored.

“An ongoing discussion we have right now is, should we make this item or should we buy this item?” Henroid added. Others are looking to channel partners to help produce items that reduce the labor required to complete them.

The K-12 Segment: Students to Make a Full Return?

The pandemic in 2020 kept most public school students at home, and while vaccines are available and new cases have declined, there are still unknowns for many K-12 dining directors.

One major question mark among several school districts beginning the 2021-2022 school year has to do with mask mandates. While some districts have been lax on masking, others may require schools to continue to wear masks throughout the year.

“This puts a lot of pressure on us,” said Jessica Shelly of Cincinnati Public Schools, “because we still haven’t heard yet what the mandates will be.” Mask mandates impact everything from self-serve, to communal dining to salad bars and operators generally have these operational questions answered well before a new school year.

K-12 schools have been challenged with product shortages.  The pandemic required broadline distributors to socially distance and run warehouses at a fraction of pre-pandemic capacity. The massive layoffs and consolidation in the supply chain also had other detrimental effects including the shortage of truck drivers.

“We had multiple trucks cancel from California because suppliers can’t find drivers,” said Shelley. “We might find a great pipeline of products we need but it comes to a screeching halt when they can’t find drivers.”

With few foodservice staff to choose from, K-12 operators said they will reward manufacturers and suppliers who take the time to investigate their schools and districts so the time spent together during account management and bid discussions is productive.

In their words, few manufacturers have taken the time to understand the nuances of the school they are calling on and instead prescribe standard solutions across all schools — a practice that has only been amplified because of the pandemic.

“Elementary secondary is not one-size-fits-all,” said Laura Swier from Brookings School District in South Dakota. “If a manufacturer could be more unique in offerings and if they could listen to our suggestions, I think we could come up with concepts that would be very strong.”

Small and Medium Chains: Dining Rooms Slowly Reopening, But Several Unknowns Remain

Many of the comments from the small and medium chain council members were related to fundamental issues faced by nearly all foodservice operators across multiple segments, but there were certain differences specific to casual dining and quick-service.

“We, like many parts of the country, had our dining rooms shut down for a long period, and what we found when we opened them is that no one came back,” said Aaron Weedy of Ledo Pizza, representing the only Casual Dining chain.

One of the primary benefits of quick-service, however, has been its ability to pivot largely to carry-out and drive-thru only in light of dining-room closures. During the pandemic, the operational advantages of quick-serve were apparent.

“We saw something very different in our segment compared to full-service. Things have for the most part returned to normal,” said Jeff Chandler of Hopdoddy, a “better burger” fast casual concept.  “We were at best a 15 percent off-premises company pre-Covid, now we are at 30 percent and that has remained for the past six months.”

The panelists all described their opinions and experience on the issues related to supply chain and labor scarcity. They are resorting to contingency plans, such as moving outside of business models for ingredients and teaching staff to face the challenges of product shortages as just that — a challenge to be overcome.

While panelists commented they are trying to avoid menu price increases until they “absolutely have to,” they realize it will be inevitable. Couple this with trying to find staff with higher wages and it creates a perfect storm that has most operators scratching their heads. “We really have not been in this type of situation before,” Weedy added.

The next round of Foodservice Leadership Councils webinars will be held October 11-15 with updates on opportunities, challenges, and committee initiatives.

For operators interested in learning more about the ongoing council work and access to upcoming resources, visit IFMAworld.com/council, or contact Jim Green at [email protected]. You will receive updates on council activities and have complimentary access to whitepapers, webinars and conferences.