All I want for Christmas is... a working supply chain

14 October 2021 by

A lack of anything from CO2 to Christmas trees is instilling pre-seasonal panic, so how will businesses cope? Will Hawkes reports.

Michael Farquhar is concerned about Christmas trees. The operations director at D&D London is pondering how he'll manage to buy a decent tree for each of the restaurants he looks after in time for the festive period.

"How will we get them?" he says over coffee in a South London café. "They normally come in from Holland, Germany or Norway. Every restaurant needs one, the big ones probably will have two … that's the problem with Christmas. Everyone is trying to buy the same things."

Plenty of people are having similar worries. The crisis surrounding supply chains – a result of a shortfall of some 100,000 HGV drivers, according to the Road Haulage Association – the CO2 shortage and the recent petrol panic have added to a list of hospitality woes taking in Brexit, Covid-19 and the continuing lack of staff in the UK. With restaurants, pubs and hotels gearing up for Christmas – a Christmas that, lest we forget, celebration-starved customers were deprived of in 2020 – the stresses and strains that define hospitality are about to be exposed like never before.

"I think it will get worse," says Farquhar. "It's a time of year when everyone wants to go out, to enjoy the same things, which are Christmas crackers, decorations, turkey, the lot. There's much less room for manoeuvre."

Cancel Christmas?

If Farquhar is worrying about Christmas trees, then everyone in the restaurant world has a concern of their own. For some it's about ensuring they hold on to in-demand staff, while others fret that customers might respond badly to smaller menus.

Bundobust, a group of restaurants in Leeds, Manchester and Liverpool, has its own problems. This four-restaurant collective, which serves high-quality, good-value Gujarati vegan food alongside beers on draught, has a street-food angle: its food is served in compostable paper pots, emblazoned with Bundobust's elegant branding. Well, it is normally.

Bundobust Liverpool
Bundobust Liverpool

"They're manufactured and printed in China," says co-owner Marko Husak. "There's been a delay of four weeks getting the printed ones delivered, which leaves us with plain, unbranded pots. It's not a disaster, but not ideal either. We are looking into upping the par level and accounting for further delays, which could put a small dint in cash flow."

Bundobust has an advantage over D&D London, for example, in that its Christmas specials are as untypical as the rest of its offering, which takes in vada pav burgers and raghda pethis, a potato cake served with spiced mushy peas, sev, tomato, onion, and tamarind chutney. There are no problems in terms of vegetable supplies, Husak says – "I think we're cool with that for now" – although he admits that, looking forward, "it's a concern with the shortage of CO2, petrol and drivers".

Drivers are also a worry for Farquhar, although he sees the problem in terms of people. D&D London – which has more than 40 restaurants in the UK, mostly in London but also in Manchester, Leeds and Bristol – was short of staff in the summer, and the problem hasn't improved much; he can sympathise with haulage companies struggling to deal with orders because they're short on drivers.

"Our problem is a lack of drivers more than a shortage of produce," says Farquhar, whose restaurants include Quaglino's and 14 Hills in London. "We used to get all our supplies in the morning, before 10am, but now things arrive all day because there's a lack of drivers. It's a labour issue, just like we have in the restaurants.

"In the past few days our florist has contacted us to say that they're able to come into the restaurant a reduced number of times because of petrol shortages. We had another supplier yesterday, saying they can't do a second delivery any more. I think the petrol issue will be sorted out, but the driver problem is more long-term."

14 Hills
14 Hills

These problems have already had an impact on the length of menus at D&D restaurants, he adds. "Most of our menus are already extremely reduced," he says. "We're doing Christmas menus now to send out to corporate clients – and I think a lot of those will be amended closer to the time."

Oven supply goes cold

Some plans have had to be delayed due to supply issues. Antonio Megaro, owner and chief executive of the St Pancras Hotels Group, had planned to open a new pasta restaurant – Spagnoletti – but they couldn't get the equipment on time. "It's the ovens that we can't get, I think because of supply chain issues with microchips," he says. "That has pushed that project back by two or three months."

The group includes the California and Megaro hotels on Belgrove Street, opposite King's Cross Station. Megaro says his main focus at the moment is holding onto staff in a very competitive market. "We're in a good position," he says. "There's poaching going on, salaries are rising. We're always mindful of the need to make our conditions better, not just financially but in terms of being a pleasant place to work. And we're doing well on that."

It's a dog-eat-dog situation. You've got to make yourself more pleasing to other people

When it comes to Christmas, he's focusing on a few key suppliers. "We're keeping the number [down] so we can focus on the ones we really want, and they give us more attention," he says.

"We want to make it more worthwhile for them to deliver, rather than just an item here and there. It's a dog-eat-dog situation. You've got to make yourself more pleasing to other people.

"But I think Christmas will be fine – I'm more worried about after Christmas. At the moment we're not profitable but we're stomaching losses just to get back on our feet. I'm very fortunate, I don't have to pay rent on my properties, but for a lot of people the New Year will bring price rises and whatnot. The medium term is worrying."

Shipping forecast

The issues that have affected the rest of the industry have also affected pubs and brewing, but there doesn't appear to have been any blockage in the flow of beer from brewery to customer. According to Anselm Chatwin, co-owner of the Graceland group, which runs six pubs in East and North London, there was a problem about a month ago but nothing since.

"We had a period when deliveries weren't on time – they were a day late, or they couldn't say when it was coming, but we've got past that," he says. "Today we had a problem with one supplier but I think it was logistics rather than supply chain. It's been OK."

Food is different. Chatwin is putting together the Christmas menus, which has meant some tricky conversations with suppliers. "The problem is that our suppliers are saying ‘I'm not even going to tell you a price for that, I have no idea', or that they're not sure they're going to be able to get something. That's making it tricky."

On the plus side, enquiries about Christmas bookings are much higher this year, he says. For Alex Troncoso, who co-owns Lost & Grounded Brewery in Bristol with partner Annie Clements, there are serious supply-chain issues to overcome before he can think about the festive period. Due to the success of his company, they're currently brewing in Belgium, and – as a brewery that primarily makes lager – much of their ingredients come from the continent too.

"On the whole we're OK, but to and from Europe seems to be a fiasco," he says. "With trucks going from here to there, there's a lot of extra paperwork – we've had a couple of times where trucks have been left sitting there over the weekend because the paperwork isn't matching. Malt supply has been OK, surprisingly – we get our malt from Belgium and Germany."

There have also been problems with sourcing cans and cardboard, he adds, while a planned expansion in November is reliant on equipment arriving from around the world. "Some of the equipment is coming from China, and shipping rates are up by 300%, something like that," he says. "There's a global issue with shortage of container space. But, touch wood, the equipment is at sea now, and the rest is coming from Germany. It's all looking on track."

The problem is that our suppliers are saying ‘I'm not even going to tell you a price for that, I have no idea'. That's making it tricky

Troncoso's concerns around Christmas are focused on the lack of HGV capacity and competing with bigger beasts, like supermarkets. CO2 is also a potential issue: "Even if we keep up the supply at the brewery to keep production going, there's no guarantee that there might not be a cylinder shortage. After the last year and a half I hope that doesn't transpire because it would be such a devastating blow for pubs that have battled through."

It could be a difficult Christmas for everyone but as ever, optimism is not hard to find.

"I hear people say that if we get through Christmas without another lockdown, then hopefully the Covid-19 situation will get a lot looser and everything will start to look better," says Farquhar. "Let's see."

How will customers respond to hospitality's problems?

Anyone who has ever looked at Tripadvisor will know that the general public can occasionally be unforgiving. It's no wonder, then, that some operators will be approaching the festive period – when huge demand will meet stuttering supply – with trepidation.

People are already eating out in increasing numbers and that will continue, according to Hannah Cleland, consumer analyst at GlobalData. "Our consumer surveys are showing that the number of people eating out in Q3 of this year doubled," she says. "People are getting more and more comfortable with eating out, they're really keen to make up for those perceived missed opportunities from last year."

How will customers respond to problems created by supply chain issues? "It's a hard one," says Cleland. "Customers are going to be reading the news, they'll know that hospitality has suffered during the pandemic. They'll be sympathetic." And can operators turn shortages to their advantage?

"I think sourcing food locally is something that will appeal," she adds. "Consumers associate having a local, narrow menu with good quality. It appeals to a lot of demographics. Those who wanted Brexit will associate it with self-sufficiency and patriotism, while young consumers like it because it's environmentally aware and sustainable."

How to avoid a Christmas catastrophe

Uncertainty reigns in hospitality, but there are still things you can do to ensure Christmas isn't cancelled. Here's where to start:

Be nice to your suppliers

Suppliers have their own problems, of course, but when it comes to selling their wares they've never had it so good. Now is when good relationships with suppliers will pay off – and also the time to ensure you keep investing in that relationship. Talk to your suppliers: do they have the capacity to stockpile items? How do they expect Christmas to play out? Be prepared to pay extra.

Prepare your customers

Some customers may think that we're back to normal, so it's up to you to disabuse them as kindly and as elegantly as possible. Make them aware that they're looking at a Christmas where shorter menus, fewer options and higher prices could be the norm, not the exception. Christmas is traditionally an expensive time of year, so that's in your favour.

Keep it simple

There are so many variables in play at the moment, so now is not the time for experimentation. It's Christmas, anyway, when customers yearn for tradition and warmth – so give them that and keep everything else straightforward. In a business which has never been so complicated, focus on the things people really want.

Start buying now

If you have space, you're in luck. This is easier with wine, of course, and other relatively non-perishable items. But whatever you can get now will make Christmas that little bit easier.

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