Chink in the Chain: The Pandemic has Put Unique Stresses on the Food Supply Chain

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The pandemic, along with the restrictions and challenges it created, has reshaped the food supply chain. Disruption of labour, transportation networks, processing and demand have rocked the system and many businesses have been forced to pivot to new models in order to keep the lights on. However, the long-term impacts of these shifts remain to be seen.

“This will likely be the biggest impact to our industry that most of us will see in our lifetime,” says Dan Lafrance, president of Kitchener, Ont.-based foodservice supplier Flanagan Foodservice.

In the face of dramatically decreased demand from restaurants, many suppliers turned to new channels to supplement their revenue streams. Large foodservice suppliers, including Flanagan and Sysco Canada, launched online-grocery offerings, making their products available to the general public for next-day contactless pickup. Meanwhile, small, specialized suppliers such as Leavoy Rowe Beef Co. and Daily Seafood, which typically supply restaurants throughout the Greater Toronto Area (GTA), began offering direct-to-consumer delivery. And, a range of restaurants across the country introduced grocery and pantry offerings as they adjusted their business strategies to suit COVID-19 restrictions ontheir operations.

The situation has also spawned unique partnerships as industry stakeholders strived to support each other while creating new sources of revenue. “We’ve had a great relationship with [Leavoy Rowe],” explains Andrew Oliver, president, Oliver & Bonacini Hospitality (O&B). “When they had to pivot to make up for the lack of demand needs on the restaurant side, they started doing home delivery.” And, seeing this, O&B saw an opportunity for the two companies to support each other. Through the companies’ partnership, O&B sells products from Leavoy Rowe as part of its ‘O&B-at-Home’ grocery offering and also processes the raw product into frozen meals, such as tourtière and chicken pot pies, which can then be sold by both companies in an effort to help increase the basket size of
online orders.

“For us, the grocery side has been very successful, but I’d say the reason it continues to be successful is we continue to add more and more on the prepared-meal side of things,” he shares, explaining the company aims to make it as convenient as possible for customers to plan and create meals. “We’re not providing a full restaurant experience by any means, we’re doing the next best thing…You do have to make more effort than if you’re at the restaurant, but we try to make it as simple and easy as possible for you to get what you would get at the restaurant at your home.”
Looking ahead, Oliver notes, “We’ll probably continue to do the prepared meals because there seems to be the demand for them.” However, he’s unsure whether suppliers that had pivoted their business models will continue with new direct-to-consumer channels on a full-time basis. “I think it’ll depend on how busy they are on their normal core business, which is doing larger drops. Leavoy Rowe [usually] drops off $2,500 worth of meat at one of our restaurants, three to four times a week. That’s a very different business model than dropping off $200 [orders] at many different locations to hopefully get up to that same amount.”

But, ultimately, he points out that how long the unique conditions caused by COVID-19 continue could have an impact on how and how much the supply chain will be changed for the long-term. “The longer people are willing to do online delivery, online grocery, the more likely they are to stick with it,” Oliver explains. As he points out,
grocery delivery isn’t a new concept, “[the pandemic] just expanded the products and the demand for it.”

As the country and the industry begin to move past the current crisis, it’s clear there will be lingering impacts. The stress on the Canadian economy and significant media attention on the shock to our food system have served to galvanized buy-local sentiments.

In fact, a recent article in the Canadian Journal of Agricultural Economics (Food Supply Chains During the COVID19 Pandemic) identified the growth of the online grocery-delivery sector and consumer prioritization of “local” food supply chains as key shifts that could contribute to long-lasting impacts.

“The sentiment to rebuild our economy by supporting Canadian companies and keeping the revenue in the country is strong,” says Lafrance. “Consumers want to support their local restaurants, help rebuild the economy in their communities and bring people back to work. As long as they are confident that we, as an industry, are diligent about food safety throughout the entire supply chain, Canadians will be there for us.”

For restaurants, Oliver predicts the most significant lasting impact on the supply chain will be “new pricing realities.” “It’s a matter of pricing of products that become scarce based on shutdowns of plants and manufacturing. On the other side, lobster’s not going to cost as much as it used to…there are going to be products that go down in price
as the export markets get a little bit tougher.”

“The pandemic has shown everyone we can’t be dependent on one single source of revenue or supply. Operators will likely take this opportunity to enhance their offerings with more takeout, meal kits and even grocery items. Whether the grocery items are local products or perhaps something unique to their establishment, it will provide a new revenue channel and help their brand story,” notes Lafrance. “Foodservice distributors must also change to reflect these needs. The key is to become slightly more diversified without losing focus on our core business
and customer.”

“The food supply chain and the entire industry — society in general for that matter — will come out of this being much more aware of the importance of health-and-safety precautions in every aspect of our jobs and our lives,” Lafrance adds, “Information and reputation will be critical in order to survive and thrive in the new world.”

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