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Navigating the Supply Chain in the Restaurant Industry

Jay Bandy • November 15, 2021

The current challenges of sourcing and securing food and paper supplies for restaurants is the biggest challenge facing operators.

Asian produce market, restaurant supply

Since the start of the pandemic, safety measures such as social distancing, lockdowns and mask-wearing have completely changed our understanding of how consumers spend on food. We saw customers stockpiling on groceries and supplies in homes instead of going out to eat, raising retail sales by 29 percent over the previous year (1). Meanwhile, sales at cafes, fast-food restaurants, coffee shops, and casual-dining establishments fell by 27 percent.

According to this McKinsey Report, these “changes in consumer behavior continue to ripple through the US food and agricultural supply chains” even today (1). That’s because the supply chain is similar to a system in that each component must work well for the overall network to function. And in a system as large as the US Food System, small changes produce a proportionally larger domino effect, where “one occurrence triggers a chain of subsequent events” with the potential to bring the overall structure down (1).

What are causing these disruptions in the US food supply chain?

Shortage of workers is one reason. Growing and farming vegetables, meat, fruit, for example, is a crucial step in the supply chain. Many farming businesses, including crop producers, require specific types of labor to perform their tasks (2). Since so many workers are being afflicted with COVID-19, we’ve seen the farming sector experience a widespread shortage of workers who have been trained to complete specific tasks.

Regulation is another issue, as additional rules are needed to ensure that employees are safe and paid adequately while ensuring that the food is safe to eat. Unfortunately, measures set up to safeguard health have overall caused inefficiency and higher prices, which regrettably have caused layoffs for food workers and drivers (3).

Inventory Estimates. It has also been a time-consuming and challenging process to develop an efficient inventory estimate as many businesses had to rely on historical data over current patterns. This has resulted in under-ordering (and dissatisfied customers) or over-ordering (and increased waste).

A lack of communication is possibly the most overlooked problem affecting the supply chain. Even though the ability of supply chain actors to interact has vastly improved as technology has progressed, the sector continues to face numerous issues due to lack of communication due to the fragmentation of the food system and the supply chain (4). For example, each business works with its own logistical system, data-sharing practices and government regulations (or lack thereof) they must follow. This can result in problems with communication and the capacity to work together when issues arise.

Lack of transparency and miscommunication among workers (particularly regarding COVID-19) also continue to cause delays and disruptions in the supply chain. In addition, many restaurants and their vendors do not have access to tools that allow them to see their stock supply and demand in real time (5). What this means is that the relationship between the operator and vendor can be strained as a result of poor inventory control. Problems such as over or under-ordering, food waste, supplier unpredictability, negative customer satisfaction and impact on the restaurant’s reputation can all stem from ineffective inventory management (5). Unfortunately, these issues will remain without a simple, centralized means to provide feedback about the quality of food supplied and the service provided through delivery.
How supply chain disruptions impact us now

Supply chain disruptions are resulting in food insecurity and public health concerns across the world (6). And while food supply chains that are capital-intensive and highly mechanized (for staple crops like wheat, maize, and soybeans) have continued to operate with minimal interruptions in the US, we’re seeing labor-intensive food production like meat supply continue to fall behind (2).

Take the current chicken wing shortage as an example: consumer demand for chicken during the epidemic, as well as supply chain constraints, have driven up poultry rates this springtime (7). Suppliers have trouble finding enough personnel, and fast food restaurants’ “chicken sandwich wars” have pushed demand even higher. Prominent chain restaurants such as KFC, Bojangles, Buffalo Wild Wings, and even some smaller bars and restaurants are currently failing to meet the demand for chicken wings and other items (8).

In fact, Chicken wings are at their lowest level in a decade in frozen storage. “A pound of chicken wings cost $2.65 in the first week of February, up 10 cents from the previous week. Wings for $2.27 per pound kicked off the year.” Basically, wing inflation or shortage is happening because the demand for wings increases in the market, causing major supply chain disruptions. Experts say that it will take about a year for the chicken (and wings) supply to normalize (9).

How to overcome supply chain issues

Here are the top three actionable steps we think will help operators overcome the supply chain crisis.

Multiple Sourcing and Backup

Operators should consider having multiple distribution channels in case they experience shortages. In one study of choosing between single and multiple sourcing based on supplier default risk, it was found that single sourcing had the advantage of a strong partnership between buyer and suppliers while lowering purchase price, but that this dependency created vulnerability and increased risk of supply interruption (11). Meanwhile, multiple sourcing was found to help operators “reduce the probability of bottlenecks due to insufficient production capacity to meet peak demand.” It also had the advantage of allowing the operator to have alternative sources of materials in case of the delivery stoppage by the supplier, as well as the flexibility and agility to react to unexpected events that could disrupt the supplier’s capacity (11).

Alternatively, you can brainstorm on ways to substitute ingredients or supplies you can’t do without. “You should communicate with your supplier for when a product cannot be delivered,” said Meredith Yerkes, Vice President of Business Development in Supply Chain at Consolidated Concepts in Boston, MA (10). Operators can also think of ways to utilize the ingredients you already have or using ready-made pre-cut items to save on labor.

Thus, the best operational strategy for supply chain disruptions is considering the worst-case scenario and establishing backup plans for when your supply has been compromised.

Menu Changes and Flexibility

One thing you can do when you run into supply shortages is simply “go to the market and do with what you’ve got” (12). This is precisely what Akash Kapoor, CEO of Bay Area-based franchise Curry Up Now, has been doing to get around the problem of ingredient deficits.

By being flexible and agile with their menu options, operators can simplify and shrink down their menus to feature ingredients that are less subject to volatility.

While an operator may believe that losing their specialty products and items that differentiates them from the competitors may also lose their competitive edge, the key is to focus on guest experience (10).

Communication

Operators should constantly be communicating with their suppliers. According to Tim Hand and Bruce Reinstein from Kinetic12 Consulting in their interview with FSR Magazine, operators should “reach out to their top suppliers for assistance on driving both front-of-house and back-of-house efficiencies. This can include streamlining the food preparation process through labor-saving products, new equipment innovation, new order-taking technologies, supply chain simplification ideas and finding efficient no-touch solutions for self-serve condiment and beverage stations” (13).

Another important consideration for operators is communicating to the staff about their supply status. For example, if your supply shortage prevents you from including certain items in the employee meals, do they understand why? What about issues concerning reducing food waste? Having a transparent, honest relationship with your staff, suppliers and customers will help your business tremendously in the long run.

Conclusion

Although acute ingredient shortages have subsided and we’re seeing all supply chain participants (manufacturing companies, wholesalers, and fast food joints) quickly adapting to this uncertain climate, those who are planning ahead, developing contingency plans, and learning how to be creative and flexible will most undoubtedly be in a position to weather out the supply chain instability.

References:

  1. https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/us-food-supply-chain-disrup...
  2. https://www.sciencedirect.com/science/article/pii/S0305750X21000176
  3. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7499675/
  4. https://doi.org/10.3390/logistics5010007
  5. https://doi.org/10.1111/cjag.12279
  6. https://www.ifpri.org/news-release/economic-and-food-supply-chain-disruptions-endanger-global-food-s....
  7. https://www.cbsnews.com/news/chicken-shortage-restaurants-nationwide/
  8. https://www.forbes.com/sites/sarahhansen/2021/05/08/from-chicken-wings-to-mothers-day-flowers-here-a...
  9. https://www.restaurantbusinessonline.com/operations/massive-chicken-wing-shortage-brewing
  10. https://goliathconsulting.blog/2020/06/15/responding-to-covid-19s-impact-on-the-restaurant-supply-ch...
  11. https://www.researchgate.net/publication/240167996_Choosing_Between_Single_and_Multiple_Sourcing_Bas...
  12. https://www.berkeleyside.com/2020/05/18/east-bay-restaurants-brace-for-instability-in-food-supply-ch...
  13. https://www.fsrmagazine.com/expert-takes/simplification-covid-19-era-what-it-means-restaurants-and-s...

By Jay Bandy August 24, 2025
The Phenomenon From Baby Boomers to Gen Z: A Generational Divide The current decline in alcohol consumption is not a fleeting trend but an accelerating, long-term generational shift. A Gallup poll shows that the percentage of American adults who report drinking alcohol has fallen to 54%, the lowest point in three decades. This trend is particularly pronounced among the younger generation. According to research, the share of adults under age 35 who drink has dropped by 0 percentage points, from 72% in 2001-2003 to 62% in 2021-2023. This suggests that today’s young people are the least frequent drinkers in recent decades. These changes are starkly reflected in consumer spending data. In 2021, U.S. Gen Z consumers spent just over $2.2 billion on alcohol, the lowest amount compared to all other age groups. Further reports reveal that 21.5% of Gen Z abstains from alcohol entirely, while 39% consume it only on occasion. Additionally, Gen Z consumes about one-third less beer and wine than previous generations. These figures not only validate a bar owner’s concerns but also signal that the traditional “party-hard” model is becoming obsolete. This is not a temporary fad but a lasting trend that requires a fundamental business model adjustment. Taking a Different Path: The Unexpected Impact of Economic Factors When exploring the reasons for Gen Z’s reduced drinking, a commonly overlooked factor is the economy. While many attribute the shift to changing values, a senior beverage analyst at a drinks company put it bluntly: “Gen Z ain’t got no money”. Compared to previous generations, today’s young people have lower incomes, less stable employment, and many have yet to reach the legal drinking age. Their disposable income is naturally limited. Interestingly, data indicates that Gen Z spends the same proportion of their after-tax income on alcohol as Millennials did at the same age. This suggests that Gen Z isn’t inherently averse to drinking; rather, they simply have less money to spend. For bar owners, this means the challenge isn’t just about “selling alcohol” but about convincing consumers that, within a limited budget, “going out for a drink” is a worthwhile and high-value experience. This forces businesses to reconsider their value proposition: Are they selling a beverage or an unparalleled social experience?   The Drivers Health Above All: Prioritizing Physical and Mental Well-being Gen Z’s focus on physical and mental health is at an unprecedented level. They are more aware of alcohol’s negative effects than previous generations and see it as a potential health risk. A Gallup poll found that 53% of U.S. adults now believe moderate drinking is harmful to health, a view driven primarily by young people. Two-thirds of respondents aged 8 to 34 hold this view. Crucially, mental health awareness plays a central role in this trend. While Gen Z reports higher rates of anxiety and depression, they are also more willing to seek professional psychological help. They openly discuss their sobriety journeys on social media platforms to manage their emotions and cope with stress. For this generation, alcohol is no longer a tool for “relaxing” or “de-stressing.” Instead, it can be a stumbling block to emotional stability and quality sleep. In fact, 34% of Gen Z cite mental health as a reason for abstaining, and 46% say they are “simply not interested in drinking”. Therefore, bars can no longer position themselves solely as places of “indulgence” but must adapt to consumers’ pursuit of “self-care” and “wellness.” The Digital Footprint and the Desire for “Control” The digital age has fundamentally altered the rules of socializing for young people. The ubiquity of smartphones and social media creates a constant state of digital surveillance. In 1991, 64% of U.S. high school seniors had been drunk at least once, but by 2024, that figure had dropped to just 33%, with two-thirds of the decline occurring after 2012, the year smartphones became widespread. Today, the risk of leaving a “digital footprint” after getting drunk has evolved from a social faux pas into a permanent public record that is impossible to erase. This pushes Gen Z to be more cautious in social settings and to “maintain control and avoid embarrassing moments that might be documented online”. This desire for “control” stands in stark contrast to the “indulgence: mentality of previous generations. If bars continue to promote a “binge drinking” culture, they will be out of sync with Gen Z’s core values. Instead, creating an environment that encourages safe, mindful consumption and offers curated social experiences will meet their new demands. The Shift in Socializing: From “Drinking” to “Doing” Gen Z’s social life is being redefined. They prefer to socialize at home or at friends’ houses rather than at traditional bars and nightclubs. They are actively creating “activity-centered” social patterns, such as escape rooms, rock climbing, pottery classes, or immersive art exhibitions. In addition, “wellness-focused gatherings,” such as yoga classes and “sober raves,” are increasingly popular among Gen Z. These activities all provide an interactive environment for people to connect without relying on alcohol. The bar’s status as a social venue is facing unprecedented competition. It is no longer the only “place to go” and must now compete with a wide range of engaging activities. Successful bars need to transform their space from a simple drinking spot into a social hub that offers unique, non-alcohol-centric experiences. The business model must shift from selling beverages to selling a curated social experience. The Unexpected Impact of Demographics A subtle, but often overlooked, factor is a fundamental demographic shift. Traditionally, men, especially white men, have been the main drivers of alcohol consumption volume. However, their share of the drinking population is declining, being replaced by women and people of color—two groups that have historically consumed less alcohol. Today, women make up most alcohol consumers under the age of 25, and their average consumption is only half that of men. Furthermore, Gen Z is the most racially and ethnically diverse generation in U.S. history. This indicates that even if individual drinking habits within each demographic group remain unchanged, overall, per-capita alcohol consumption is bound to decline due to these population shifts. This is a structural, permanent challenge, not just a change in consumer sentiment. Key Drivers of the Sober Shift Health & Wellness Awareness of negative health effects; connection to anxiety and depression; viewing sobriety as a form of self-care. Economic Factors Lower disposable income; price sensitivity; a desire to save money. Digital Culture Fear of a permanent digital footprint; desire to maintain control; normalization of sober culture on social media. Social Norms & Demographics Shift to activity-centered socializing; rise of non-alcohol-centric events; a demographic shift towards groups who historically drink less (women, people of color).   The Strategy Rethinking the Product: Embracing the “No & Low” Menu Gen Z’s beverage choices reflect their preference for novel flavors and convenience. Studies show that spirits and Ready-to-Drink (RTD) products are the most popular categories among Gen Z, while traditional wine and beer have a mixed outlook. More than half of Gen Z drinkers “often or sometimes” choose non-alcoholic beers, mocktails, or low-ABV cocktails when socializing. Non-alcoholic beers like Heineken 0.0 and Guinness 0.0 are even considered “trendy” brands by Gen Z. Therefore, a bar’s inventory model must expand beyond traditional alcoholic beverages. Bars should position themselves as “beverage destinations,” not merely “alcohol providers.” Specific suggestions include: • Develop a premium mocktail program: Offer complex and visually appealing non-alcoholic cocktails to satisfy Gen Z’s desire for flavor exploration. • Curate a selection of non-alcoholic and low-ABV options: Create a diverse menu of non-alcoholic beers, spirits, and low-alcohol beverages. Highlight “better-for-you” qualities such as natural ingredients, organic fermentation, or functional ingredients like vitamins and adaptogens. By making non-alcoholic beverages a premium, core product line, a bar can directly meet Gen Z’s demand for health, self-care, and flavor innovation. Redefining the Venue: From “Intoxication” to “Experience” The shift in Gen Z’s social patterns requires bars to reimagine their reason for existence. If a bar is just a place for “drinking,” it will be unable to compete with at-home gatherings and new types of event venues. A bar must transform itself from a simple drinking spot into a place that offers a unique social experience. • Host activity-based social events: Organize regular weekly or monthly events centered around activities, such as trivia nights, board game nights, live music performances, or mixology workshops. • Cultivate a “third space” atmosphere: Create an environment that prioritizes community and genuine human connection. Make people feel comfortable and safe, whether they are drinking or not. This atmosphere provides a unique social experience that cannot be replicated at home, offering consumers a valuable reason to go out. Marketing Strategies for the Modern Drinker Traditional top-down advertising is largely ineffective for Gen Z, a generation of digital natives. They place greater trust in recommendations from friends, family, and relevant influencers. Successful marketing must be a two-way conversation that builds an authentic community around the brand. • Embrace a digital-first strategy: Invest heavily in social media platforms like TikTok, Instagram Reels, and YouTube. Produce short, shareable video content, such as 5-second cocktail recipes or fun behind-the-scenes clips. • Collaborate with micro-influencers: Partner with micro-influencers who have authentic niches in areas like mixology, wellness coaching, or food. • Encourage user-generated content (UGC): Create branded hashtags, filters, or remixable music to inspire users to post original content related to the brand. Use an authentic, creative, and inclusive tone, focusing on celebrating human connection and mindful drinking, and avoid outdated “party-hard” or “macho” imagery. The goal of a bar’s marketing should not be to convince Gen Z to drink but to show how the bar’s beverages and atmosphere can enhance the lifestyle they seek—one focused on health, fun, and authentic connection. Gen Z’s Preferred Drink Categories (Alcoholic and Non-Alcoholic) Preferred Categories Spirits (especially white spirits like tequila and flavored vodka), Ready-to-Drink (RTD) canned cocktails, hard seltzers, mocktails, non-alcoholic beers (e.g., Heineken 0.0), adaptogen-infused spritzers. Flavor variety, convenience, health consciousness, self-care, suits at-home socializing. Mixed or Declining Categories Traditional beer, red wine, heavy spirits. Lower consumption among women and people of color; does not align with “health” or “control” narratives; considered less novel in taste than spirits and RTDs. Goliath Consulting Group is a restaurant consultancy group based in Atlanta, Georgia. To learn more about our services including menu development, business strategy, marketing, and restaurant operations, contact us at http://www.goliathconsulting.com or email us at getresults@goliathconsulting.com
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