It’s no secret that supply chain issues have meant continued instability for foodservice businesses around the world over the past two years. However, through it all, some have taken steps to tackle this instability and become more profitable, setting out a path for the rest of the sector to follow.
To learn more about how you can do this, we spoke to Fletcher Bowley, Head of Sales at Caravan Coffee Roasters in London. He told us more about these issues, and how hospitality businesses can address them.
Read on as we explore how to successfully combat these challenges to increase profitability, reduce operating costs, and be more health and safety-conscious.
Foodservice challenges & supply chain issues
It’s no secret that the supply chain issues that have emerged in the past two years have had a significant impact on the foodservice industry. Between growing energy costs, labour shortages, rising supply prices, and high staff turnover figures, there’s plenty for hospitality businesses to contend with.
Fletcher explains that for many business owners in the hospitality sector, these issues are a day-to-day concern.
“They cause unwanted stress across all parts of the business,” he explains. “In turn, this creates a difficult and challenging environment to navigate.”
Let’s take a closer look at some of these issues and how each affects the wider industry.
FK32YK Federation coffee shop in Brixton Village Market, South London.
Rising costs of food & goods
It’s no secret that supply chain disruptions and inflation in the wake of the Covid-19 pandemic has caused the cost of living to rise across the board, and this naturally extends to the cost of food and beverage items.
At the end of 2021, inflation rates sat at around 6.8% in the US and 5.1% in the UK, both of which were the highest figures in over a decade. As a result, many companies have implemented price increases to cover higher supply costs.
Labour shortages
As well as rising costs, labour shortages continue to disrupt supply chain movement and affect foodservice businesses as a result.
Major labour shortages in the transport and logistics sector in particular mean that there are fewer workers than usual to pack and transport goods to businesses.
There’s also a massive global shortage of other “frontline” workers in general. This has further contributed to ongoing staffing issues.
Data from the US Bureau of Labour Statistics shows that there were 10.6 million job openings in November 2021 alone, while there were only 6.7 million hires in the same period of time. In the US in particular, this shortage can be linked to a rising number of retirees, growing demands for higher pay and better working conditions, as well as tighter immigration controls.
High staff turnover
Many foodservice businesses have been impacted by the so-called “Great Resignation”.
In the US, statistics from the National Restaurant Association show that the annual staff turnover rate for the hospitality sector was a staggering 75% in 2020. In the same year, YouGov found that the UK’s retention rate in the hospitality industry was just 70%, compared to an 85% average across the wider private sector.
But as well as creating operational issues, losing staff is also expensive. Recruitment costs money, and Cornell University’s Center for Hospitality Research estimates that the cost of staff turnover is on average approximately $5,864 per person.
In the wake of the Covid-19 pandemic, plenty of workers in the hospitality sector sought alternative employment when the businesses they worked for were forced to shut their doors.
Becoming more profitable
According to Fletcher, foodservice operators need to be more innovative with their menu options, and “do more with less”.
“Operators should be exploring new and different ways to offer more value to customers through every interaction,” he says. This can help to drive up revenue and improve profitability.
Read on to learn more about some of the ways to do this.
Workflow & efficiency
Fletcher starts by pointing out efficiency. He says that as well as cutting down menus to focus sales on the “most profitable” items, businesses should cross-utilising ingredients when possible.
Fletcher also notes that quality equipment also has a prominent role to play. Using equipment that is energy-efficient as well as having boosting workflow efficiency can mean a lower unit cost per sale, as well as increasing the number of potential customers your team can serve.
A great example of this is Marco’s SP9 precision coffee brewer. This automatically brews consistently high-quality filter coffee every time, adding a new high-quality product to your menu while freeing up staff to do what they do best: provide great customer service.
Automate where you can
“Introduce more automation and innovative technology into key areas where they can help drive greater efficiency and increased productivity,” Fletcher says.
Investing in equipment that’s more versatile and automated means saving yourself more time, in turn improving workflow and productivity.
Take the Marco MIX, for example. With the push of a button, it can be used to dispense water at three different temperatures, meaning staff can fill up hot or cold in the same place without having to run around behind the bar. It also has an undercounter, space-saving design to improve employee workflow.
Modern equipment also offers a raft of energy-efficient options to reduce operating costs. For example, the MIX’s insulated tank makes it 70% more energy-efficient than other similar water heaters.
The FRIIA is another example of an efficient, automated piece of equipment which offers similar benefits. It has the ability to dispense hot, cold, or sparkling water from one single tap. It can even be customer-facing, allowing customers to fill their own water glasses without interrupting employees.
FRIIA is also a multi-purpose option, dispensing hot, cold and sparkling water. This means that cafes can use it for tea, coffee, hot chocolate, americanos but also lemonade and sparkling fruit-based beverages. This could potentially free up important space on a counter and could even allow sites to remove their beverage fridges, which are becoming more expensive to run as energy costs increase.
Focus on health & safety
In a December 2021 survey, Deloitte found that 64% of consumers still don’t plan on returning to their pre-pandemic dining habits in the next six months. This means that takeaway and delivery services will continue to play a prominent role in the foodservice industry.
As a result, foodservice businesses need to reconfigure the takeaway model to streamline tasks and reduce unsafe customer touchpoints. Integrating new technology can help to maximise efficiency and keep everyone safer.
You can even get creative when focusing on and adapting to consumers’ health and safety concerns. For example, the FRIIA hands-free font is a great way to reduce customer touchpoints, allowing customers to refill their water bottles and glasses without coming into contact with surfaces.
Fletcher also reminds us that it’s important for employees to have the training, resources, and support to deal with these ever-changing consumer demands.
“Keep them accountable and make sure they’re committed to thinking about the safety of customer, their teammates, and themselves,” he concludes.
Implementing new processes and equipment can help foodservice businesses save time and improve efficiency. In turn, this improved efficiency can give way to higher profitability.
At the end of the day, this is the best way to counteract any rising costs caused by supply chain challenges. As well as increasing your margins, it also improves stability in the medium and long-term. What are you waiting for?