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Supply Chain Comes to Grips with the New Normal

As the restaurant industry comes to grips with its temporary new normal, which includes dark dining rooms and consumers sheltering in place, individual members of the supply chain continue to adapt their approach, too.

Take, for example, manufacturers’ reps.

While the closing of bars and restaurants in some states and municipalities seemed rather abrupt, this was something that reps were starting to experience prior to COVID-19 becoming a full-blown pandemic. “Even before the stay at home order, nobody was really seeing anyone. There were no individual sales calls,” said Carl Boutilier, principal, for PB&J Commercial Agents, an Illinois-based independent manufacturers’ rep firm.

Once states like California, Illinois, New Jersey, New York and Pennsylvania issued shelter in place orders, only essential businesses could continue to operate, further slowing things for a segment of the industry where customer interaction is so critical. “A lot of our dealer customers have closed, specifically the brick-and-mortar stores,” said Jeff Couch, principal at Preferred Marketing Group, a California-based independent manufacturers’ rep firm. “Some are still going in with skeleton crews to support schools, corrections and so forth. Plus, they have a lot of disposables and that’s what’s really taking off.”

As operators closed their dining rooms, one theory was they might use the downtime to update their businesses. But thus far, those instances have been few and far between. “I’ve seen those instances. We’ve had some requests for that,” said Joe Ferri, chief operating officer at Pecinka Ferri, a New Jersey-based independent manufacturers’ rep firm.

“One dealer had a customer open a takeout-only pizza counter, but I think that’s all we are going to see for a while,” Couch said.

While traditional street business has slowed to a trickle, most project work continues to progress. “I spoke to some consultants and they are quite bullish,” Ferri said. “Those guys can and do work from home. They have a lot of work and that’s some good news.”

All operator segments will struggle in the short-term, forcing these businesses to adapt in order to survive. “The third-party delivery companies are adding new restaurants all the time,” Couch said. “Some of these restaurants are not designed for takeout but they’ve had to reinvent themselves to maintain some cash flow.”

But some may regain their strength quicker than others. “For the larger rep groups in the New York area, our emphasis has been business and industry dining, healthcare and institutional operators and those are not going away any time soon,” Ferri said. “We always say we sell restaurant equipment but that’s a bit of a misnomer. We’re really in the foodservice industry.”

Reps serve as a key conduit between the factories they represent and the communities they serve. And reps report a pretty consistent message from manufacturers. “The message they want to get out is they are still open for business and they have specific products that are in high demand,” Ferri said. “That includes hand sinks or anything that’s connected to food takeout or delivery or even ghost kitchens.”

That’s not to say factories are immune to the challenges of the day. “They are in survival mode like the rest of us. It’s not like they are crying wolf, either,” Ferri said. Many have enacted no visitor policies on their campuses, requested some office personnel work from home and even have restricted travel. And all have undoubtedly stepped up their cleaning and sanitation practices.

Many factories continue to use the downtime to train their rep networks on products and more. “We’ve been on webinars and conference calls nonstop — and most of them have been for training and education purposes,” Boutilier said. “Emails are coming in and we continue to provide quotes.”

All of this is done with an eye toward the future.

“When we come out of it, we want to be better and more ready than the other guys,” Couch said. He added, “We are still trying to fulfill our contracts with the manufacturers by being their local marketing. We have increased our social marketing efforts to boost awareness. And we are using this time to train, two hours a day with our teams on our software tools and more. Some factories have set up internal training for us. And internally we have something called brand champion where each person oversees three or four brands. They spend time getting up to speed on the lines and doing presentations for all of us.”

Looking Back to the Future

It’s easy to compare the COVID-19 crisis to other recent historic events that impacted the foodservice industry, such as the terrorist attacks of Sept. 11, 2001 or the recession of 2008. But Couch pointed out one key difference between then and now. “In those times you had to adjust but you still had business to do. It did not just shut off. And that’s what’s happening here,” he said.

While training is a good way to make the best of a less than desirable situation, reps, like everyone ese in the industry, want to know not only when they can get back to business and what the market conditions will look like at that time. “There will be commerce but it’s going to look a lot different,” Ferri predicted.

One aspect that reps expect to slow considerable is replacement sales of equipment. “Replacement business won’t pick back up until 2021,” Boutilier predicted. “I don’t think too many projects will be cancelled. They are too far along. But we could start to see that slowdown in 2021. If the project is ongoing, I doubt they’d cancel it. But I am not sure people will want to start new projects now.”

“It’s going to be a long recovery once we get back,” Couch predicted. “Some restaurants are small businesses that survive hand to mouth. The recovery is not the supply chain for them. It’s how many of their people that know their menu can they get to come back. You need those people who have been there five or six years to come back. Because in some instances being able to execute that menu and style of service takes some time to learn.”

For the supply chain, being ready for better times requires planning ahead and somewhat of a balancing act to ensure proper cash flow, staffing and inventory. “It’s not the recession that takes people out,” Ferri said. “It’s the uptick, when you have to scale back up when you see people get in trouble.”

And once the industry gets back to normal it could look much different than it did just a few weeks ago. These challenges could pave the way for continued consolidation among dealers, for example. “It could be tough for several segments within the supply chain and it could force some operators to close,” Boutilier said.

What the pandemic can’t change, though, is that indominable spirit of hospitality that defines all aspects of the foodservice industry. “The people who are in this business are here because they want to be in it and like people,” Couch said. And that’s as good a place to start a comeback as any.