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Restaurants Face Continuing Shortages

Restaurants face price increases on food ingredients and unpredictable availability.

As they attempt to reopen to customers as COVID-19 restrictions ease, some items are unavailable. Food industry suppliers scaled back servicing restaurants during the pandemic, and will take time to ramp up production to catch up with returning demand.

Video Spotlight:  

This post is based on the Quartz article, US Restaurants Are Facing Shortages on Everything from Olive Oil To Chicken Wings, by Michelle Cheng, October 6, 2021; the NewsMax article, Reopening Restaurants Stretching Supply Chains to Limits, by Theodore Bunker, May 21, 2021; and the YouTube videos in the Spotlight. Image source: Klaus Vedfelt/Getty Images.

Discussion Questions:

1. How does the bullwhip effect apply, as restaurants reopen after COVID-19 restrictions are lifted?

Guidance: During the pandemic, restaurants pulled back their operations due to lockdown.  As a result, food suppliers switched from servicing restaurants to grocery stores.  Now as restaurants reopen, they find their suppliers cannot keep up with the sudden surge in demand. This is resulting in ingredient shortages.  These variations in demand at the restaurant end of a supply chain ripple backward through the chain causing large swings of inventory shortages and surpluses throughout the chain, also known as the bullwhip effect.

2. How do restaurants cope with ingredient shortages from a material requirements planning perspective?

Guidance: From a material requirements planning perspective, restaurants build their menu around items that are in stock and buy as much high-volume inventory as they can sell.  This means that their master schedule will cut down on end item varieties and quantities with a shorter planning horizon.

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