Restaurants today are in short supply of staple ingredients including chicken, beef and dairy. What they can find is often priced tremendously higher than they can afford. And while they don’t want to pass on higher prices to customers, they often have no choice.
Beef and veal prices have risen 20 percent over the past year, while pork has increased 14 percent. Even eggs, a relatively inexpensive staple, are up 11.6 percent. Restaurants and consumers alike are feeling the price pinch. The U.S. Department of Agriculture predicts food-away-from-home costs to increase 5.5–6.5 percent this year.
While the challenges continue to roll in for restaurants, technology can help them adapt and create digital resilience for continued success.
Circumventing the unavailability of certain food items
The impacts of the pandemic have highlighted the need for solid, sustainable restaurant-supplier relationships. When lead times on food deliveries over the past two years skyrocketed and suppliers turned restaurants away because of shortages in their supply chain, a strong relationship became a hot commodity.
“French fries, frankly, are a huge [item] for us, so we picked a big national company [as a supplier] and a product we like, and we made sure to lock in a good price for ourselves because we use so much of it,” Alex Brounstein, owner of Atlanta-based burger chain Grindhouse Killer Burgers, recently shared. “We don't really lock in prices for things, but we try to do it for beef and French fries because that's all we can really do it for.”
National ingredient shortages coupled with an absence of truck drivers in the market continue contributing to significant delivery delays and a lack of certain foods on store shelves and in restaurants. Not only are supplier relations critical during this time, but restaurants had to face yet another challenge: getting creative with their menus.
Given various commodity items were and continue to be in short supply since the pandemic began, chefs had to rethink their recipes and consider how they could do more with less. For example, darker meat chicken thighs are the new wings on many restaurant menus amid a shortage of chicken wings.
Embracing technology as key to future success
In light of the ingredient shortage, technology—including automation and machine learning—will be key in helping restaurants manage costs more efficiently and effectively.
Inventory management technology built with machine learning can automate inventory tracking to ensure the right ingredients are delivered at the right time to meet demand, and auto-ordering helps maintain appropriate stock levels for accurate sales forecasting. Maintaining optimal inventory can facilitate better decision-making, business planning and food waste management.
Technology can also provide insights to help determine what menu items are working versus which ones aren’t. By making data-driven decisions about menu optimization, operators can manage their costs and margins and increase flexibility when items run short or prices spike. For example, if beef is either too expensive or hard to come by, Grindhouse can offer a special on turkey or veggie burgers.
Enabling change through improved platforms and processes
Between the pandemic that led to ingredient shortages—and sky-high inflation—restaurants have been forced to change and rely on technology for help. They can create flexible menus that scale up or down, brainstorm ingredient or dish alternatives and maintain clear, ongoing communication with employees, suppliers and customers.
Consider pivoting menus with substitutions or alternatives to accommodate the shortages and satisfy customer demand. Focus on future-proofing restaurants so they are as prepared as possible for ingredient shortages.
And don’t forget how technology can help managers and operators better understand how their restaurant is faring with analytics and metrics around everything it takes to run a restaurant—from soup to nuts.
Dirk Izzo serves as president and GM of NCR Hospitality. He is a seasoned leader with experience in building and marketing innovative cloud-based solutions to help clients optimize their business performance. In his current role, Izzo is responsible for developing simple and innovative solutions that run the restaurant from end to end. NCR is the technology provider of choice for restaurants around the world and Izzo is focused on delivering the next-generation software, hardware and services that delivers on what customers want, when they want it.