Pandemic Causes Long Lead Times for Commercial Kitchens & Cafes
It’s hard to believe that 13 months have gone by since the start of this pandemic. At that time, we certainly didn’t fully understand the effect it would have on our day to day lives, let alone the supply and demand challenges it would cause. Personally, I’m sure I never imagined struggling to find toilet paper or ketchup, and professionally I never dreamed of needing to order a walk-in box with four months lead time.
Our industry, from the foodservice equipment and project solutions side, heavily competes with the COVID-19 vaccine supply chain. Rightfully so, many of our vendors have retooled their manufacturing plants, resources and materials to help mass produce the vaccine and aid in its distribution.
Walk-in refrigerators are a hot topic right now because the production has been greatly affected by outside factors. There is a shortage on foam insulation and compressors – two key items necessary to make a walk-in. As I mentioned previously, these items are going to the federal government to create massive chillers that store the COVID-19 vaccine. Without getting into too much detail, the Pfizer, Moderna and Johnson & Johnson vaccines all have different storing temperatures. According to the FDA, the Pfizer vaccine in particular has to be kept unusually cold at approximately minus 70 degrees Celsius (minus 94 degrees F). This is colder than a winter’s day in Antarctica!
But let’s think about it in terms of supply for a minute. If a vaccine site is carrying multiple brands, the product needs to be kept at two different temperatures and therefore that site requires multiple compressors, storage units, etc.
And continuing to discuss materials necessary to build a walk-in, metal costs have increased tremendously. According to Credendo, after almost two years of decline, steel prices have risen sharply in recent months. The growth is nearly 40% when comparing the stats between January 2020 and January 2021. This is due to restricted production growth and an increased Chinese demand. Metal is also being used to create syringes for the COVID-19 vaccine. The New York Times reported on April 10, 2021, that 754 million vaccine doses have been administered worldwide. That means somewhere between 754 million and 1 billion 508 million syringes have been used. Even more have been produced.
In addition to competing with the vaccine, all factories are operating at a reduced capacity due to COVID. This of course affects any industry, but let’s get back to the supplies to build a walk-in fridge for a moment. Remember those winter storms that hit Texas back in February? Well, Texas is home to many of the chemical plants involved in the supply chain for many products we use. For several days in February, there was no power or drinkable water in parts of Texas as the electrical grid collapsed. Although the health and safety of people is far more important, this fluke natural disaster created yet another hurdle in the supply and demand for our industry.
Typically, it takes five to six weeks from the time you order a walk-in box for it to be delivered. Currently, we are receiving estimates of 14 to 16 weeks and that number is still growing. As a matter of fact, some manufacturers aren’t even supplying an estimate; they’re just keeping a list and filling the orders as they can. I almost wish the company my wife and I bought our couch from in December would do that! So far, it has gone from delivering in six to eight weeks, which was February, to April to mid-May. We’re just keeping our fingers crossed that its not stuck in the Suez Canal!
Another item the team at elite|studio e is raising lead times concerns for is counters and millwork. There is a lumber shortage and according to Fortune it just keeps getting worse. Supply has fallen due to COVID-19 restrictions on sawmills, but quarantining Americans have been pursuing home renovations and do-it-yourself projects. I also read in Bloomberg recently that we may be experiencing a paper shortage, and unfortunately that includes toilet paper too. We all remember how much fun that was.
For foodservice operators, unfortunately the concerns don’t stop there. Currently, we are seeing four major foodservice markets (K-12, Higher Education, Business & Industry, and Sports & Leisure) all modifying and thinking about reopening strategies creating high demand for supplies, design, etc. While renovations can happen year ‘round, we typically see different peak times for these sectors. For example, K-12 and Higher Education renovations usually happen in the early to mid-summer, while many Business & Industry projects are completed during high vacation times like late August and December. In addition to modification work, any projects that were put on hold prior to the pandemic are coming back to life.
In my role at elite|studio e, and as someone with a background in economics, I watch the market, read the experts predictions, etc. With a combination of all the factors mentioned above I don’t think I've ever seen anything like this.
The lesson I can’t stress enough is don’t procrastinate. If you’re thinking about doing a renovation between the summer and the end of the year, I strongly recommend you get started now. Certain items are already affected and, as I said before, its only going to get worse.
Earlier this week, we ordered track shelving for a back of house renovation. This item is normally in stock, but right now there’s a 14-week lead time on it. I’m not telling you all of this to scare, but I want you to know that we have a pulse on what is happening out there. elite|studio e is your foodservice solution partner and can guide you through this process. Unfortunately, we don’t have a crystal ball and we can’t change government policies due to COVID, open up the Suez Canal, or speed up delivery. Here’s what we can do to help alleviate some of these challenges:
Secure your pricing now, so you lock in lower costs
Order long lead time and custom items
Phase your project
The pandemic has caused both supply and demand shocks according to many economists. The way it is affecting our industry just means we have to think differently, plan further ahead and sometimes get creative with how things will work. I know it's easier said than done, but we should take all of this as a good thing. The vaccines are being distributed, so our health is being secured. More and more people are spending time with friends and families again. Schools, restaurants and business are reopening. Our industry is activating after the hardest stretch in most recent memory and that to me is incredibly exciting. Now, let’s get started!