The Top Challenges Facing Bars: Supply Chain

Don’t miss the other two installments in our series on the labor shortage and inflation.
By Ashley Bray

We’re finishing up our series, The Top Challenges Facing Bars, with a look at supply chain issues. We spoke with James J. King, the founder & CEO of Titan Hospitality Group, about how the bars and restaurants in his management group are navigating product shortages.

The Problemsupply chain challenges

The pandemic, labor shortages, and other factors have tied the supply chain up in knots, and it remains to be seen how the conflict in Ukraine could have further effects on supply and demand. Although an immediate effect has been the pulling of Russian products off shelves, back bars, and order sheets.

Although the supply chain issues can be felt in all sectors, King says product shortages have been a bigger issue on the beverage side—especially when it comes to premium and aged products. “We were seeing, and still do see, probably one to three items a week that we order out of stock,” says King.

This is due to a number of factors: the glass shortage; the time it takes to make certain liquors (aged bourbons and whiskeys, for example); and the fact that many consumers bought products in bulk at the height of the pandemic, leading to shortages. “You can’t just make 12-year bourbon overnight—it takes 12 years. So whatever batch is there is what they have to sell,” says King.

The supply chain woes aren’t limited to liquor. It is also affecting bar equipment and perishable orders as well. Some of the contributing factors include the increased difficulty of moving goods around the country due to obstacles like weather and driver shortages, as well as plants shutting down due to COVID outbreaks. “We’ll have a produce order come in, and it’ll be missing broccoli and green beans one day, and the next day they won’t have asparagus, and the next day cauliflower,” says King. “There’s just no rhyme or reason. So it’s really a wake up call every day, of what’s the challenge going to be today?”

The Solution

What King finds hasn’t worked to combat supply chain issues is expanding or diversifying suppliers, “We’re finding that every single company has the same exact challenge. At first, you kind of took the attitude of, ‘If you can’t get it for me, I’ll get it from someone else.’ Then you go to that person, and they’re like, ‘We can’t get latex gloves either.’ So everyone is in the same boat there.”

Instead, King has turned to carrying more inventory and buying in bulk, when possible.

“We’re definitely carrying more inventory than we ever have because we’re just trying to be prepared for the shortages that we don’t know are coming. So we’ve probably increased our inventory by about 35 percent,” says King. “We’re fortunate enough to have multiple units and pretty big purchasing power, so we’ve been able to negotiate some deals and bring in larger quantities of items at one time, and that’s helped offset a little bit of the cost and give us some backup stock to make us last for a little while.”

King notes that the challenges of having to order earlier—often seven to 10 days out—has made it more difficult to forecast supply needs. This, coupled with constantly changing consumer confidence that leads to empty and then full restaurants, has made forecasting an art akin to fortune telling. “When the finances are tight, the last thing you want to do is have what you call debt money on the shelf, or you don’t want to have $6000 worth of napkins sitting in a stock room that’s just going to sit there when you could be using that money to pay your payroll,” says King. “But if you don’t have it and all of a sudden consumer confidence increases, and people want to go out and buy dinner on the weekend, then you run out of everything. It’s this never-ending juggling of trying to plan ahead, trying to forecast sales, and a lot of guesswork. Sometimes you get lucky and sometimes you get burnt.”

supply chain challengesWhen it comes to perishable foods, buying in bulk to save it for later is not an option, which makes forecasting even more difficult. Plus, owners are often stuck with whatever perishable food that supplier has at the time, which isn’t always what they needed or wanted. This leads to the need for quick menu changes. The same can be true on the beverage side, where bartenders may have to swap out one tequila or vodka for another when a particular brand is unavailable.

Fortunately, technology has helped to alleviate some of the pressure in these cases. “One of the challenges I think restaurants have faced is getting away from printing things, being more flexible, and going to digital menus that can be updated at any given moment,” says King. “We can go into the cloud, change a couple of ingredients, and then hit refresh and still have accurate menu information as opposed to having a printed menu where the server has to go through a laundry list of items that are not available or have changed.

“[Printed menus] come at a great cost too. Every time you reprint a menu, it costs money, and then it changes two weeks later, and you’re like, ‘Oh I have to do this again!’”