Supply chain shortages weigh on PHL restaurant operations

Guests dine at a restaurant in Quezon City. — PHILIPPINE STAR/ MICHAEL VARCAS

By Revin Mikhael D. Ochave, Journalist

OPERATIONS of some local restaurants are hampered by global supply chain disruptions, which have caused shortages of some food items and driven up prices.

Eric Teng, chairman of Restaurant Owners of the Philippines (RestoPH), said food production at home and abroad has been affected by supply chain disruptions around the world.

“For example, there may be a decline in domestic rice production due to lack of fertilizer today. Fertilizer, a lot of it also comes from Ukraine and Russia,” he said in a cellphone response to Business world questions.

Mr. Teng said some restaurateurs have seen their costs double due to these supply chain issues.

“It is a very difficult and difficult situation now for a restaurateur,” he added.

Some restaurants are also facing delays in delivering raw materials and products used in their operations, Teng said, in addition to soaring fuel prices.

As a result, he said, some restaurants have already raised prices, while others are still trying to absorb some of the rising costs.

“Inevitably, we have to pass on the price increase to the consumer. But restaurants don’t want to raise their prices too much because they don’t want to scare off their customers,” Teng said.

“It depends on the restaurateur if they still have a stock and if they can absorb some of the cost increase. But it is unfair to assume that these restaurants can keep their selling price low for long given the increased costs they have to bear.ffuh right now,” he added.

For example, the restaurant chain Mary Grace Café admitted that there could be diffiright to buy their signature ensaymada due to “supply problems” on certain raw materials.

“Unfortunately, we are experiencing global supply issues on a few raw materials that are beyond our control. As we are committed to using only the best, high quality ingredients, please know that we will never compromise on what goes into all of our products and we hope to fix this issue soon,” Mary Grace Café said in a post on his Facebook page.

Newly opened donut chain Randy’s announced last week that it was suspending operations pending shipments of flour and other raw materials from the United States.

The Department of Agriculture said last week that there was a global shortage of potatoes used for French fries, affecting the supply of some fast food chains. Some fast food chains have stopped selling large portions of fries, and have offate other foods instead of french fries.

However, Mr Teng said the local catering industry can still manage, saying some operators are trying to Ife solutions by offoffering alternative dishes on their menus.

“In some restaurants, if the price increases are too great, they may just choose not to have it on the menu and serve other locally grown or locally available alternative items first,” he said. declared.

With inflation hitting its highest level in three years in April, there are also concerns that consumers will cut spending on restaurants.

“If customers usually order Iffive or six items, right now they might order four or If5 items just so that if money or budget is an issue, they can always cut back,” Mr. Teng said.

Commerce Secretary Ramon M. Lopez said the government is working to connect local producers and restaurants to encourage more local input and farm-to-table value chain models, even before the pandemic.

“We should continue to do more, as well as product consolidation to connect with institutional users such as restaurants and direct-to-consumer applications through online platforms,” ​​Lopez said. “Also, make sure that any local product is blind.fficheaper, there are fewer non-tariffsff barriers and allow easier access to these products by users and retailers.

Despite some challenges, Teng hopes the local restaurant industry’s rebound from the coronavirus disease 2019 (COVID-19) pandemic is on track.

“The recovery of the industry will continue. We just have to manage the challenges,” Mr. Teng said. “We are not in the worst case. We just need to be able to handle the problem. We were able to survive two years of COVID-19. We can survive this.

Economic Freedom Foundation (EFF) President Calixto V. Chikiamco said supply chain issues have been compounded by the protracted war between Russia and Ukraine.

“The war disrupted production and distribution. It could get worse because there is also a shortage of fertilizer. With farmers planting with less fertilizer due to high prices and lack of supply, crop production will fall in harvest season,” Mr Chikiamco said in a cellphone message.

The war also affected the global supply of flour that Russia and Ukraine are two of the largest wheat exporters in the world, he added.

Millions of tons of corn and cereals are blocked in the ports of the Black Sea. Russia’s grain and fertilizer exports were also affected by Western sanctions.

“I’m afraid the (Philippine) government won’t be able to help because the problem is global. These restaurants should switch to rice-based dishes instead,” Chikiamco said.

Meanwhile, Steven T. Cua, president of the Philippine Amalgamated Supermarkets Association, said there was a “relatively stable” supply of produce in supermarkets.

“(The) problem is on the rise inflation. I hope it doesn’t degenerate into a runaway inflation; not hyperinflation. Above all, don’t let us sink into the quagmire called stagflation,” Mr. Cua said.

“Small businesses may buy ingredients from a usual supplier, but may turn to other suppliers or sources of supply (other channels) when needed. In this sense, they are more flflexible,” he added.

Last week, economic managers raised the assumption for this year’s inflation rate to 3.7-4.7%, “following rising food and energy prices due to ongoing geopolitical tensions due to the Russian-Ukrainian conflict and the disruption of supply chains”. This is above the initial target range of 2-4%.

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