As Americans Return To Dining, Restaurants See Trouble Procuring Supplies
LULU GARCIA-NAVARRO, HOST:
As more and more Americans get vaccinated, the pandemic's grip on everyday life is loosening. That means the chance to enjoy those things we took for granted, like going out to eat dinner again at a restaurant.
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GARCIA-NAVARRO: If you have already gone out to eat, you might have noticed things are, well, a bit off. Service is slower. Portions might be smaller and prices higher. And so we're going to take a look at the food supply chain - the farm-to-table work that's mostly done out of view. But as mandates ease and the economy lurches back to life, it has come under new strains and new scrutiny.
JOE LANNI: We've all been looking forward to this summer as - you know, this could be the summer of love. The vaccine will be out. Everybody will be - you know, restrictions will be lifted, and it's going to be like the roaring '20s.
GARCIA-NAVARRO: Joe Lanni is the co-founder of Thunderdome Restaurant Group, which operates 43 eateries across the Midwest.
LANNI: Demand for restaurants and, you know, a lot of other businesses is increasing, which is what we were hoping for the last year would happen. But, you know, you can't just turn all of these suppliers on all at once.
GARCIA-NAVARRO: Lanni says it's been a scramble. Orders from the suppliers come late or are incomplete. Some items are simply unavailable. The signature dish at one of his restaurants is a chicken sandwich made with 7-ounce chicken breasts, but restaurants across the country have been reporting chicken shortages.
LANNI: When someone comes in for their chicken sandwich and we either don't have it or have to change the way it's prepared, you know, it can be a cause for disappointment for people.
GARCIA-NAVARRO: You can't make money off disappointed customers. Joe Lanni says that with labor shortages and uncertain supply, they might have to raise prices as soon as this week.
LANNI: We can't afford, especially now, to be selling something that we are, you know, going to be losing money on, obviously. It's been a really, really rough year. And we feel like we're on the verge here, and we're excited to get back and be with the teams. And it's just kind of another, you know, kick while we're down.
KERRY BYRNE: There's - it's chaotic in some cases.
GARCIA-NAVARRO: This is Kerry Byrne.
BYRNE: I was in the Charlotte airport last week, and I - to grab a sandwich, and the restaurant had a limited menu and no salad options. So they clearly hadn't been able to get their produce delivery.
GARCIA-NAVARRO: Byrne knows a thing or two about produce delivery. He's president of Total Quality Logistics, which arranges the transport that gets food from producers to suppliers to restaurants like Joe Lanni's.
BYRNE: We move currently over half a million truckloads of refrigerated products - so, obviously, that's almost all food and food-related. We're seeing complete disruption across the supply chain.
GARCIA-NAVARRO: He says this kind of freight usually moves predictably and reliably, but the disruption caused by a spike in demand on top of a nationwide labor shortage across the entire food industry is wreaking havoc. Remember that chicken breast?
BYRNE: The actual plant doesn't know when they're going to be able to process enough chicken to fill a truck. So then, you know, a provider like ourselves has to make sure that that truck is there. You know, when it was supposed to pick up today at noon, it might not be able to be filled until noon on Sunday, which means that the product is getting to the food service providers and the restaurants in an erratic kind of fashion.
GREG NEWHALL: Testing. One, two, three, four. Mary had a little lamb.
GARCIA-NAVARRO: At the far end of the food supply chain are people like Greg Newhall of Windy N Ranch in central Washington State.
NEWHALL: We're a small farm operation growing primarily beef, pork, lamb, goat, chickens.
GARCIA-NAVARRO: Most of Newhall's sales are directly to consumers, not to restaurants. But his business has been knocked about by both the pandemic and the recovery.
NEWHALL: People don't understand how unstable and insecure the supply chain is. That isn't to say that people are going to starve, but they may be eating alternate meats or peanut butter rather than ground beef.
GARCIA-NAVARRO: Newhall says he hasn't had any issues raising his animals. It's the processing and shipping that's the bottleneck, as the industry's biggest players pay top dollar to secure their own supply chains.
NEWHALL: If you want to butcher a beef, some of the state processors are literally booked not only 2021 but 2022.
GARCIA-NAVARRO: So Windy N Ranch is building its own butcher shop.
LANNI: It's a big investment for a small player like us, but we felt it was necessary in order to have the stability that we need to function.
GARCIA-NAVARRO: A spokesman for the National Chicken Council said that among the corporate-scale producers they represent, supply-chain issues are leading to a tight chicken market, but also pointed to the air fryer revolution and the chicken sandwich wars. The meat giant Tyson also says some of its roosters are underperforming. Now, for a big-picture view on all this, we called up Chris Barrett. He's an agricultural economist. I asked him what the biggest food supply issues are right now.
CHRIS BARRETT: So today, we're struggling to get people back fully to work because they don't have child care or elder care for their loved ones. Those haven't fully reopened. Second, people are nervous about going back to work in crowd-facing service industries. And there's also the readjustment of the manufacturing process. As restaurants are quickly opening back up, the food manufacturers and processors have to retool to begin to supply again the bulk-packaged products that are being used by institutional food service providers.
GARCIA-NAVARRO: So I want to focus on the restaurant industry for a moment. What I seem to hear you say specifically to their concerns is that, you know, they actually get supplied in a different way than me or you do when we go shopping.
BARRETT: Yeah. Keep in mind that the commodity that's produced on the farm gets transformed before it shows up at either a grocery store or at a restaurant - a food service outlet. And the manufacturers and processors that are in the middle there - they had to shift from spending much of their operation on servicing restaurants, suddenly having to switch to servicing grocery stores. Now they're having to switch back, and that requires retooling machinery or requires reconfiguring production lines. It requires reworking the whole logistical routing of how their trucks and storage facilities operate. We're reopening fairly quickly, and that's causing a few adjustment problems. Just as it settled out quickly a year ago, it will work out quickly now, too, but it doesn't happen overnight.
GARCIA-NAVARRO: Will the labor issue also, you think, sort itself out relatively quickly? Because what we have heard is that a lot of people left the restaurant industry and found jobs elsewhere - better-paying jobs, maybe, with better conditions.
BARRETT: Yeah, I think the labor part is going to be a big issue. I think once schools reopen in August, September, that will make it a little bit easier for many families. But you're absolutely right that, again, restaurant workers and grocery workers were essential workers who fell ill at a greater rate than the rest of us did, and they've realized now that they're running some risks. And they want compensation for that. And they found alternative work in the meantime. So the restaurant industry is probably going to have to increase wages on average to bring people back into its workforce, and it's going to need to wait for some improvement in care for dependents before people are fully returning to the labor force.
GARCIA-NAVARRO: So what's your prediction? I mean, we've seen prices go up. Do you think that that will be a sustained issue? Or do you think that things will, by and large, go back to the way they were before?
BARRETT: Things are going to go back, by and large, to the way they were before. Prices have gone up largely for reasons entirely independent of the pandemic - largely, frankly, because China has recovered economically much faster than the rest of the world has. And China had gotten not just clobbered by the pandemic but also by African swine fever, which killed off a large share of its hog population. China is the biggest pork consumer and producer in the world. And as China's pork production has begun to recover rapidly, its demand for feed grains has just exploded, and that's been bidding up the price of corn and soy globally and pulling up lots of other commodity prices.
GARCIA-NAVARRO: I'm wondering if there are any lessons or takeaways about our food supply chain that you have - mistakes we can avoid in future emergencies or just maybe things that we should be doing differently now.
BARRETT: Yeah, I think two of the big lessons that we've learned - and then a third that's more subtle. One of the big lessons is we often worried about concentration for antitrust reasons. We worried that firms that control too much of the market can extract an awful lot of profit, either from farmers or from consumers. But we are awakened now to the problems associated with resilience of the system. If you have just a few nodes that can shut down easily - a few meatpacking plants that get shut down because of a disease outbreak on the packing line or, now, from hackers.
Second big thing is I think we're going to come to appreciate what a crucial role labor plays, especially from the relatively lower-paid, lower-skilled workforce that is in farming and food manufacturing and in parts of food service. And the more subtle point is that the food system's actually remarkably resilient. I mean, the fact that you couldn't get the variety of pasta you wanted in the midst of the worst pandemic any of us have seen in our lifetimes is not exactly a great problem to face. So we need to be careful about overreacting to the temporary and, frankly, relatively modest problems we saw in the food system due to the pandemic disruptions in this country.
GARCIA-NAVARRO: That is a good note to end it on. Chris Barrett is an agricultural economist and professor at Cornell University. Thank you very much.
BARRETT: Thanks so much.
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