A recent survey revealed 95 percent of restaurants experienced significant supply delays or key food shortages in recent months.
In a letter sent on Monday, the National Restaurant Association asked for President Joe Biden’s help as the restaurant industry continues to face supply chain challenges.
Supply shortages and delays are worsening the current business landscape restaurants are navigating, causing increased costs and limiting the industry’s ability to function, said Sean Kennedy, the Association's executive vice president of public affairs. Full-service restaurants are the most likely to be impacted.
The Association found 95 percent of restaurants experienced significant supply delays or key food shortages in recent months. This is having a clear impact on menus, as 75 percent have decided to make changes based on supply chain challenges they face.
Wholesale food prices in September experienced the highest 12-month increase since 1980, and restaurant commodity prices for beef, fats and oils, and eggs climbed 57.7 percent, 49.6 percent, and 39.2 percent, respectively. Overall, menu prices have risen 4.7 percent in the past year.
“Restaurants aren’t like other small businesses,” Kennedy said, adding that restaurants operate on tight pre-tax margins averaging 3 to 5 percent. Typically, companies only have 16 days worth of cash on hand.
Additionally, in September, 51 percent of small business restaurant owners said they couldn’t cover their rent, according to an Alignable survey.
“Faced with these very challenging times, our industry is doing its level best to protect employees and customers, while restaurants are struggling to keep their doors open,” Kennedy said.
The Association applauded the creation of the White House Supply Chain Disruptions Task Force and made several suggestions of what would help restaurants navigate the continuing supply chain shortages.
The first solution is to create a clear path for legalization of more than 11 million undocumented immigrants living in the U.S. The Association also asked for an overhaul of the visa worker program to match willing workers with willing employers.
“The restaurant industry is built on a culture of diversity and inclusion, employing individuals from many cultural and socioeconomic backgrounds,” Kennedy said. “It’s time to create a viable visa worker program that allows legal foreign-born workers to come into the U.S. under a controlled process to work year-round in the hospitality sector.”
The Association then emphasized expanded employment opportunities, particularly around reducing stigma of hiring ex-convicts. And to help with the shortage of 80,000 truck drivers, the group hypothesized a solution to allow more young people to enter the trucking industry as drivers. The average age of a long-haul driver was 55 in 2018. High school graduates are barred from joining the trucking industry immediately since federal regulations require interstate drivers to be at least 21.
“The bipartisan infrastructure package currently being considered in Congress contains a program modeled on the DRIVE-Safe Act to safely train 18- to 21-year-old individuals to become drivers, allowing them to drive in interstate commerce once they meet rigorous training and safety requirements,” Kennedy said. “Implementation of this program is something that can be immediately done to begin addressing the truck driver shortage.”
He adds, “Allowing more qualified, safe drivers to enter the workforce will not only help alleviate the driver shortage, but also help the economy get back on track and work to solve the supply chain crisis.”
Next, the letter calls for the Biden administration to address the shipping crisis by supporting the Ocean Shipping Reform Act of 2021, which establishes minimum requirements for shipping contracts to ensure transported goods are not unreasonably refused, and enacts reforms to address unfair business practices. The document also said officials should consider suspending or reforming the Merchant Marine Act of 1920 in order to allow transported goods to move more cost effectively in between U.S. ports.
The letter concluded with a call to action for Biden to remedy supply chain shortages through national trade tariff policies.
“Restaurants rely on global, interconnected supply chains to provide meals to millions of customers daily, and disruptions to these supply chains significantly affect the availability and price of products vital to restaurants in every community,” Kennedy said. “Removing burdensome tariffs on food and beverage products, in addition to equipment used in the supply chain, can ensure that the foodservice industry can continue to grow the U.S. economy and add jobs.”
The industry advocate encouraged the White House to provide tariff relief to businesses on food and beverage products.
“We urge the Administration to consider opening more markets and eliminate barriers surrounding importation of food and animal products that meet our country's rigorous food safety and animal health standards,” Kennedy said.
The Association described an industry that is deeply struggling without proper financial resources. With the $28.6 billion Restaurant Revitalization Fund depleted, more than 177,000 restaurant applicants missed out on funds to keep their business afloat.
To date, 90,000 restaurants have closed permanently or long-term, and restaurant sales are down approximately $300 billion since the pandemic, according to the Association.
“The drop in consumer confidence brought on by the delta variant this summer halted the small gains we made earlier this year, and there are no indications of immediate relief,” Kennedy said in the letter.