While a lot of costs have come down following the spike stemming from the COVID-19 pandemic, the restaurant industry continues to face supply chain challenges. We can see this with the current price of eggs in today’s market. Restaurateurs seek strategies to solve three primary problems: increasing backorders, rising costs of goods sold (COGS), and labor shortages. Here’s a closer look at these individual issues and what you can do to navigate them.

Fill Your Inventory With Lucrative Items To Avoid Backorders

Restaurant owners and operators should focus on developing an efficient supply chain strategy in order to avoid back orders. This includes having a reliable forecasting system, sourcing from dependable vendors, and maintaining adequate inventory levels.

Forecasting is essential for determining the necessary stock level of products. By accurately predicting how much product will be needed over a certain period of time, restaurant owners and operators can avoid having too little product on hand. Furthermore, this helps to ensure that the necessary orders are placed in advance, so as to not have any delays in supply due to vendor availability or lead times.

It is also important for restaurant owners and operators to establish relationships with dependable vendors who are able to deliver on time. Consistently ordering from reliable vendors with a good track record can help minimize back orders due to unexpected delays or disruptions in their supply chain. Additionally, restaurant owners and operators should maintain adequate inventory levels so as to avoid running out of necessary supplies. By monitoring inventory levels and stocking up ahead of peak sales times, restaurants can better avoid running out of items or having to place emergency orders.

Overall, restaurant owners and operators must be proactive in developing a supply chain strategy to prevent back orders. This includes having an accurate forecasting system, sourcing from dependable vendors, and ensuring adequate inventory levels are maintained. With the right preparation and planning, restaurants can ensure they have adequate supplies on hand when needed and minimize any potential back orders.

 

Engineer Your Menu To Navigate the Rise in COGS

While we’ve seen some deflation in the price of chicken, for instance, other items remain volatile such as eggs, oranges and orange juice. Egg prices, as of December, were up by 11% as a result of the widespread avian flu outbreak.

Restaurant owners face a unique challenge in managing their menu prices. With the fluctuation in cost of goods sold (COGS), it is important to create the right restaurant menu that keeps diners coming back while also staying profitable. Luckily, there are several tactics that can be used to help navigate these changes.

One way to manage menu prices during COGS fluctuations is by creating a tiered pricing structure. This allows restaurant owners and operators to adjust the cost of specific items but leave other items untouched. By separating out items that are more expensive than usual due to COGS changes, restaurants can maintain a lower overall price point on their menus while still staying profitable.

Another way to adjust pricing during times of COGS fluctuation is by highlighting daily specials on the menu. This can help draw in customers who are looking for a lower price point, while also helping restaurants remain profitable with dishes that require higher cost ingredients.

Overcome Labor Shortages

Higher wages and an increase in hiring incentives have been some of the strategies many restaurant chains have used to combat the labor shortage. Many restaurants are looking to raise their starting wages, with McDonald’s increasing its minimum pay for U.S.-based workers to $15 an hour by 2025. Other companies such as Applebee’s, Denny’s, and Taco Bell are also increasing their starting wages.

In addition to higher wages, restaurants are offering more generous benefits packages as well as increased hiring bonuses and referral bonuses for current employees who help bring in new workers. Restaurants have also been experimenting with different technologies such as artificial intelligence-powered recruitment software to make the hiring process faster and more efficient.

In the longer term, restaurants may need to look for more creative solutions to their labor shortage issues. Companies such as Burger King are incorporating features like “call-ahead ordering” and “mobile payment” capabilities that reduce the number of staff needed on site in order to run an efficient business. Additionally, restaurants can look into offering more flexible work arrangements such as shorter shifts and remote work opportunities that may help attract a younger, tech-savvy workforce.

Get a Partner for a Smart, Scalable Supply Chain

All of the above supply chain problems that the restaurant industry faces revolve around working with the right partners. Having a schedule that works with theirs ensures that everyone successfully gets what they want. This way, you have a scalable supply chain without worrying about the associated issues.

At Optimized Hospitality, we offer supply chain solutions to increase your confidence in running your business. Contact our team of experts to discuss your goals today.