Retailers are expecting many consumer behaviors adopted during the pandemic will continue well into the future.
As part of the 2021 Chicken Marketing Summit in Fernandina Beach, Florida, supply chain executives from regional grocers and quick serve restaurants discussed the challenges faced during the COVID-19 pandemic and how their businesses will be changed going forward. The panelists were:
- David Aldrich, poultry buyer, Meijer Inc.
- Keith Anderkin, Vice President, supply chain and quality assurance, Zaxby’s Franchising LLC
- Bea Radtke, Director of Purchasing, Red Robin Gourmet Burgers Inc.
Challenges of the pandemic
COVID-19’s sudden appearance and seismic shift in public life forced retailers to pivot instantly. For grocery, a wave of demand drained store shelves, strained supply chains and raised scrutiny of the meat industry. For restaurants, quick serve restaurants (QSRs) went to 100% drive-through sales while casuals saw all their business shift to takeout.
Radtke said the burger restaurant with 570 locations dealt with staffing issues due to the transition and worked on their takeout packaging to improve deliverability. Aldrich said the 259-store grocer serving Michigan, Indiana, Illinois, Ohio, Kentucky, and Wisconsin faced issues with the availability of supply, labor and trucking.
Zaxby’s, Anderkin saw three to four weeks of bad sales during the initial outbreak but demand shot upward once it began to market on family meals and value meals. The 910-store chicken QSR franchise adapted its drive-throughs to handle increased demand.
Will the demand last?
For Zaxby’s, Red Robin and others, business in 2021 is already far outpacing 2019.
“If you sell chicken in fast food and you have a drive through window, you’re doing pretty well,” Anderkin said.
This level of demand was not forecasted and it likely won’t last. However, that hasn’t happened yet. Smaller businesses and those unequipped to handle the demand shift didn’t fare well, forcing some independent restaurants to close, but those independent businesses will return in the future.
A shortage of labor and supply
The pandemic changed labor dynamics in the United States. The employers said the labor supply is and will be tight, which will affect their businesses.
Anderkin said the dual shortage of workers and chicken – wings in particular – is a major problem. He said all foodservice and retailers are constrained by a shortage of chicken. In the restaurant industry in particular, the labor situation is dire and forcing the limitation of business hours in some cases. Zaxby’s is trying to hire more workers, but there is a fight for a share of the labor market.
Aldrich echoed his comments on labor. The end of COVID-19 related financial assistance may grow the labor pool. Radtke said restaurant closures are becoming common and the goal is to avoid closures during peak business hours or to maintain takeout if the dining room is closed.
Lasting changes
COVID-19 accelerated the development and adoption of digital shopping for both in-store pickup and delivery. Retailers believe these changes will be permanent and they restructured their business models to continue to provide them.
Online ordering through either proprietary or third-party services is now standard. Anderkin said consumers are willing to pay a premium for delivery, but he isn’t sure how long that will last.
For grocers, click-and-collect shopping is here to stay. Meijer is adjusting their staffing appropriately and is even looking into ways to automate certain portions of online order fulfilment. In the future, applications will be further personalized to serve coupons and advertisements based on shopping behaviors. Retailers hope to benefit from the consumer data they can gather.
Automation of some processes is being considered. Meijer is already a leader in automation, Aldrich said, and it will continue to invest in technology to streamline its supply chain. Nevertheless, a stocker is hard to replace. Radtke said Red Robin already uses tablets at the table for ordering and payment but it will not remove hosts or its entire wait staff as customers expect to be waited on at a restaurant.
Anderkin said every process in a Zaxby’s could be automated, but the cost of labor versus automation doesn’t balance out yet. There are some processes, like soft drink machines, which are currently being automated to meet increased drive through demand. The economic situation will set the tone for automation in QSRs going forward.
Can the chicken industry help?
The supply chain executives said the chicken industry could make some changes to improve their working relationship.
Anderkin and Aldrich said it would be helpful if the industry could provide more forward looking information about supply and develop contingency plans that grow certainty for the buyer.
Radtke said the industry should supply more small birds and expand the availability of that product to more customers. The growth of the chicken sandwich is driving demand for tender fillets.
Anderkin also said it would be helpful if the industry could adjust its product balance between white and dark meat as consumer preferences change over time.
