Although many consumers have returned to dining out more regularly over the past months, the full recovery of the foodservice industry in Australia continues to be hampered by supply chain disruptions. Below is an outline of the main contributors to supply chain issues, creating challenges for suppliers, food distributors, operators and consumers in the Australian foodservice industry.
Major weather events such as storms and floods have resulted in supply shortages of raw materials. In addition, changes in consumer habits have created a shift in demand which has also contributed to the supply shortages in the Australian foodservice industry. The combination of low supply and an increase in demand have in turn resulted in a surge of raw material prices, which are forcing companies to pass the added cost on to their customers in order to maintain their profit margin.
While the prices of raw materials are skyrocketing, the cost for shipping containers overseas is increasing as well – with price increases of up to 500% being reported. Labour problems and shortages are resulting in significantly longer turnaround times for containers to be offloaded and delivered. Many people are also still hesitant to return to work in certain labour-intensive industries, which limits the available workforce for crucial job roles in the supply chain.
Another contributor to slower delivery times is the fairly recent implementation of Covid-19 standards and protocols that restrict the number of people working on vessels, creating major congestion in a number of countries’ pickup and delivery procedures.
As a result of the raw material supply shortage and production challenges, many suppliers in the Australian foodservice industry have chosen to reduce SKUs in order to prioritise products with high demand. In addition to this, warehouse position shortages and plant reconfigurations that have been implemented to allow for social distancing, have resulted in longer production times and delays in their delivery.
Food distributors in the Australian foodservice industry have also experienced staff shortages for both warehouse and driver positions. Likewise, they are dealing with the ramifications of inflated raw material, energy, and labour cost as a direct result of supply chain disruptions. Food distributors service many channels of the Australian foodservice industry, all with differing product needs.
With the current supply shortages, multiple solutions are required in order to meet the needs of each and every customer. In addition, shifts in consumer habits and behaviours have created an extra layer of complexity when attempting to forecast demand, resulting in lower order fill rates.
The situation is no different for Australian foodservice operators such as restaurants, cafes, pubs, clubs, hotels, catering and institutional channels. Venues grapple with the impact of the supply chain issues including inflation and have been hit with unprecedented labour and training challenges.
At the end of the chain, consumers experience problems with getting the products they want due to being out of stock or having an increase in price. To conclude, ongoing supply chain disruptions are significantly impacting the Australian foodservice industry from end to end. Labour shortages, skyrocketing costs, inability to accurately forecast, shortage of supply and rising demand have created serious challenges for suppliers, food distributors, operators, and consumers in the industry.