Podcast Recap: Flexibility Equals Success for Food and Beverage Brands

Many challenges are impacting the retail and consumer products sector including labor costs, supply chain issues, inflation, and more. Riveron’s Spencer Ware joined a podcast discussion (Saul Ewing Arnstein & Lehr’s Don’t Miss A Beet) hosted by Jonathan Havens to examine considerations for food and beverage businesses.

Check out the highlights^[1] below, or listen to the full episode:

Jonathan Havens: Inflation, labor shortages, supply chain challenges—are these common themes consistent with the challenges in the food services space?

Spencer Ware: Those are the broad themes, however, it’s more nuanced in food and beverage. Restaurants and stores need to be much more dynamic in how they approach their business, now even more flexible than ever with their offerings, pricing, and operations. Long gone are the days of setting and forgetting the menu and the model, and then focusing on executing. Food services businesses are going to need to be very flexible and very dynamic to navigate all of these challenges because they’re going to constantly change.

JH: What about inflation in general and how it’s impacted the industry?

SW: The consumer price index can be a bit misleading – certain items will come in and go out to manage that headline number. But a lot of food experts are noticing that costs have risen more this year in the food space than they have in the past 40 years. It’s eroding margins. People are having to change the prices and the consumers are seeing this not only in their grocery bills but gasoline and other places. And we’re just talking about the cost of food, although there’s a compound effect because of transport costs and other factors. We’re going to have continued inflation, and people are trying to get ahead of this with prices coming up. Fast food chains, years ago, got rid of all the dollar menus and now they’re value menus, and this example tactic gives the ability to change prices more rapidly when costs change.

JH: Are there other things that stakeholders in the food and beverage space should be thinking about?

SW: We’ve talked about many costs like labor or food, and I wouldn’t assume that any of your costs are fixed. Don’t hesitate to negotiate with your landlords. Think about changing suppliers. As costs have been going up, suppliers have been trying to pass these along, but food service companies should consider re-sourcing items – your cleaning supplies or paper products. A ton of peripheral costs are increasing, and companies should not simply accept those pass-throughs. It’s going to be an interesting cycle for restaurants. Hopefully they don’t need to endure any more pandemic lockdowns, but, regardless, there’s a need to be incredibly flexible, thoughtful, as it seems operating models are going to be on attack from all sides through this cycle.

[1] Excerpts edited for brevity and clarity. Listen to the full episode here.