Produce supply chain reacts to food-service changes

Issue Date: August 19, 2020
By Bob Johnson
Restaurant operators say they have counted on produce farmers and shippers to help them adjust to new business realities during the pandemic, including the transition to meals prepared to go for pickup or delivery.
Restaurant operators say they have counted on produce farmers and shippers to help them adjust to new business realities during the pandemic, including the transition to meals prepared to go for pickup or delivery.

Restaurant owners who saw their businesses plummet and farmers who lost essential outlets for their highly perishable produce have deepened their ties during the pandemic, according to speakers at a recent conference.

As food-service operators faced great uncertainty about the volume of their businesses and reliability of the produce supply chain, operators said they came to count on farmers and shippers to help them adjust on the fly.

"I can't think of any time we've had to lean on our partners as much as during COVID," said Anissa Mandell Chance, supply chain vice president for Focus Brands. "We've had to be flexible."

Focus Brands operates more than 6,000 restaurants, coffee shops, bakeries and ice cream shops under numerous names.

Chance made her remarks as food-service operators discussed their closer ties with produce grower-shippers during the Produce Marketing Association Food Service Delivered webcast in July. The organization moved its traditional summer event in Monterey to the internet because of the pandemic.

While there has been a significant shift toward selling produce through supermarkets, as people increasingly eat at home during the pandemic, speakers said food service remains an important if unpredictable outlet.

"Our business will never be the same," Chance said. "I don't think I've ever seen this willingness to work together. A lot of inventory was lost at every level of the supply chain, and we've had to consolidate SKUs"—stock-keeping units for menu offerings.

Other food-service operators at the conference mentioned they, too, consolidated offerings in response to COVID, which leaves them looking for fewer but more versatile produce items.

"We scaled back on our menu and cut back on the slow movers," said Lisa Kartzman, supply chain vice president for Shake Shack. "We've had very good supplier relationships, and we've gotten even closer. We've learned more about their issues with raw materials and transportation."

Much of the uncertainty in food service has occurred because restaurants are doing a significant amount of their business through previously unfamiliar outlets.

"We worked to be more resilient by focusing on our to-go business," said Hari Nagabhirava, supply chain vice president for the Cheesecake Factory. "Everybody is thinking more creatively in terms of how they do things. We're learning quickly."

A few national restaurant outlets have done particularly well during the pandemic, they said, by offering people ways of getting their food from a safe distance.

"The success Chipotle has had the last few months has been because of our technology platform," said Carlos Londono, supply chain vice president for Chipotle Mexican Grill. "We launched our app, and you can come and pick up your order without spending four or five minutes in the drive-thru. Pickup and delivery are here to stay."

Other food-service operators have also developed ways for people to pick up a meal without going more than a few feet into the restaurant, and Londono said he believes that system will flourish after the pandemic ends.

National restaurant chains that can offer drive-thru or pickup service with ordering via the internet have survived the pandemic best, and likely will come out the other side strengthened by their experience with new ways of delivering meals, speakers said.

"I don't think we're going to know the future of in-restaurant dining for quite some time," Kartzman said. "We in quick-serve, casual dining are going to be able to weather this. The independent, fine-dining restaurants with creative chefs will come back."

Experience from the other side of the world suggests that when sit-down restaurants do come back, they may recover quickly, according to Michael Simonetta, CEO of Perfection Fresh, an Australian grower, processor and marketer of fresh fruits and vegetables.

"I have friends who run restaurants, and they tell me they have been having record weeks, better than Christmas," Simonetta said.

The uncertainty and the shifts in what produce items they need, and in what volume, have led restaurant operators to rely on relationships with their produce suppliers.

"More than ever, we've had to lean on our partners like Lipman Family Farms, Taylor Farms and Calavo," Londono said. "We've shared the losses with some of our vendors, but we didn't have to throw any milk away."

Grower-shippers at the conference also noted the spirit of cooperation that has developed between food-service operators and produce farmers who share supply chain uncertainty.

"The collaboration is much like with food safety," said Kent Shoemaker, CEO at Florida-based Lipman Family Farms, which grows tomatoes and other produce. "We all rise or fall together."

As food-service operators adjust to their next changes, they said they will rely on their farmer-suppliers to help them make changes on the fly.

One consequence of these closer relationships: Many food-service operators said they have become more conscious of their own diversity and may be expecting the same of their suppliers.

"We look at the makeup of the leadership of our suppliers, from the vice president up," Kartzman said.

Other operators also advised they expect their suppliers to join them in taking a closer look at the diversity of their leadership teams.

"If you are in a leadership meeting and you look around the room and everyone looks the same, you have to seek a change," Chance said. "You have to see genders and races represented. ... We've never tracked that from a supplier management viewpoint, but it's going to be an imperative moving forward."

(Bob Johnson is a reporter in Sacramento. He may be contacted at bjohn11135@gmail.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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