In the middle of March, the entire food industry was hit with a massive shockwave. As restaurants and other outlets that prepare food-away-from-home stopped doing business instantly, consumer volume went directly and immediately to the retail supermarkets. This instant shift of consumer spending resulted in immediate shortages of paper towel, toilet paper, eggs, peanut butter, cereal, pasta, yeast, flour, frozen prepared meals and many more items that we and our families all saw with our own eyes. Behind the scenes, the manufacturers were experiencing their own shock as items that they made almost exclusively for foodservice saw their demand go to zero – items like block cheddar cheese, fresh milk (yes, most milk is purchased by schools), french fries, certain cuts of meat and, of course, foodservice pack sizes of all sorts of product like paper goods, flour, peanut butter and pasta (where 1 pound packages are sold at retail while foodservice product is packed in a 20-pound bulk box).

​As retail purchases spiked and foodservice purchased cratered, manufacturers began to adapt their production schedules to ramp up their output of retail pack products. Now, as the nation begins to take steps to normalize daily life, foodservice sales are beginning to pick up and manufacturers are starting to adapt production schedules to meet the new foodservice volume. The manufacturers are at a decided disadvantage in predicting volumes because each state is opening and relaxing restrictions to their schedule and at their own pace.

The factors above will result in some spot shortages as the pipelines are refilled. The good news is that these shortages will not be long in duration and as a member of Premier you have the benefit of Premier working directly with manufacturers to prioritize the product need of the entire membership.

​The factors above will result in some spot shortages as the pipelines are refilled. The good news is that these shortages will not be long in duration and as a member of Premier you have the benefit of Premier working directly with manufacturers to prioritize the product need of the entire membership. One other factor that has contributed to some higher protein prices is the spread of COVID-19 in certain processing plants for pork, beef and chicken. These plant workers many times are at workstations where they are elbow-to-elbow with fellow workers and the spread of COVID-19 hit some of these plants with high levels of employee infection. The affected plants closed temporarily and caused bottlenecks in production which, in turn, resulted in a few spot product shortages and higher protein prices. For the most part, the plants have reopened and have begun production. It is important to know that there was NEVER a shortage of product to be processed. The feed lots and farms were active and full, just needing a place to send the animals for production. As production has resumed, we have seen some prices already come down from their highs.

​On the distribution side, every foodservice distributor’s business instantly fell by large numbers - some by more than 50% overnight. The major distributors all eliminated Wednesday and Saturday deliveries to adjust delivery schedules to fit the reduced volume and began furloughing employees whose positions were no longer supported by the lower sales volumes. The distributors were also instantly faced with inventory of fresh and perishable product for which they had no sales and had short shelf-life, so they began donating product to food banks and adjusting their future inventory levels. US. Foods will, as all distributors, build inventory based on their best information of when business volume will begin to ramp up. It is imperative that you provide US. Foods with advance information on your reopening plans so that they will be able to build inventory to support your business when you reopen. We, at Value 4 are ready to assist you in your reopening planning and will be happy to communicate your opening plans to US. Foods. It is important to note that under normal circumstances, the average lead-time from the time a distributor places an order with a manufacturer and the product is delivered to the distributor’s warehouse is 10-15 working days. So, the more notice we provide US. Foods, the more it benefits your business.