Preparing for the Opportunity Ahead

Michael Keck
Chairman, FEDA
President, Concept Services
michaelkeck@conceptserv.com

As always, the NAFEM Annual Meeting this past February was filled with great discussions and learning opportunities, but it also illustrated just how quickly things change in our industry. Two of the presentations touched on the ongoing supply chain struggles and what to expect in the near future. The speakers had done their research and prepared an informative session, but just days before the event Russia invaded Ukraine and the whole supply chain outlook shifted again.

For the past two years, it has felt that every time we start to get a handle on the situation and adapt another crisis pops up. It’s like responding to a fire only to hear there’s another fire on the other side of town. The conflict in Eastern Europe may seem far away, but like everything else, it is connected to the global supply chain. Ukraine accounts for 11.5 percent of the world’s wheat production while Russia makes up another 16.8 percent. With one country transformed into a war zone and the other cut off from global markets, the impact is sure to be felt by foodservice operators as prices will rise for hamburger buns, tortillas, sandwich bread and plantbased food oils. We need our customers to be healthy for us to be successful.

The fallout from the military activity in Eastern Europe is just another way the supply chain can make us all feel a little sick. Everybody is wishing for someone or something to solve the problem, but it doesn’t feel like help is on its way. Even the most optimistic forecasts predict that supply shortages and longer lead times will be with us through the end of this year. Meanwhile, our entire industry is dealing with higher prices. The cost of shipping a 40-foot container from China to the West Coast has topped $16,500 and offsetting that higher logistics expense equates to an extra $590 for every Preparing for the Opportunity Ahead two-door refrigerator brought in from Asia. The added cost doesn’t even account for rate increases at other points of the supply chain.

As leaders, we learn from the past, live in the present and plan for the future. The problem is that since COVID-19 began, the present is taking up most of our time and the fog around the supply chain is so thick that it’s impossible to see what is ahead. Fortunately, our industry relationships have been a source of strength through this difficult stretch. Dealers, manufacturers, consultants, service techs and the rep community are all going through this together so we can empathize with each other’s pain points. That’s led to more open and blunt discussions than at any other point I can remember in my career. The news might not always be good, but I appreciate knowing the facts and having the information I need to make adjustments.

As we continue to navigate the new supply chain realities, we should not only be mindful of how and why these shortages are happening, but we need to prepare our organizations for what is coming next. One of the major contributors to the supply chain disruption is the fact that the restaurant industry is bouncing back. I leave you with some great news: guests are again filling dining rooms, existing brands are expanding and new foodservice concepts are opening every day. The whole industry is ripe for a monumental shift in how it approaches the supply chain, and on the other end of this crisis lies tremendous opportunity. Mind your store, make great decisions, support your supply chain partners, take care of your people and serve your customers. If you do this, you will make things better and when things get better, we will all be better.