Labor shortages keep the industry up at night

Though the produce life is never without its problems, operators have had more to worry about after the COVID-19 pandemic.

Long-standing worries and new problems were discussed June 30 at a United Fresh Produce Association Reimagine Conversations session.

The session, “What Keeps You Up at Night?” was moderated by Jim Schallman, CEO of Danaco Solutions, Highland Park, Ill.
Speakers included:

• Peter Rosenberg, director of operations support for Texas Roadhouse Brands, Louisville, Ky.;
• Michelle Weaver, senior manager of produce services for Kansas City, Mo.-based Centralized Supply Chain Services, the exclusive purchasing agent for Applebee’s and IHOP; and 
• Dino Cancellieri, managing partner for fourth-generation grower Veg-Fresh Farms, Corona, Calif.

An in-webinar poll asked attendees “what kept them up at night” and some of the common answers included: 

• Labor shortages;
• Food safety and compliance;
• Transportation;
• Shipments and delivery; and
• Government lockdowns.

Pre-COVID-19

Schallman asked panelists what kept them up at night before the COVID-19 pandemic.

Weaver cited the annual or twice-a-year romaine advisories as a recurring worry in previous years.

“It happened for such a long time, we were able to perfect our triage response to those advisories,” she said. 

While the restaurants were able to get over the hump of not having romaine, she said “nobody wins” when advisories are issued.

“Those were the good old days, the romaine advisories,” she joked, drawing a comparison to the supply chain shock that the pandemic presented to restaurant chains.

Currently, she said labor shortages have become a huge issue, both at the restaurant level and in the supply chain. Still, the produce industry has fared better than other sectors, she said.

“I would say that if you took a step back and looked at all of the food (categories), produce re-ally fared the best, and I think that is a huge compliment to everybody, from the grower-shipper all the way through the supply chain and the distribution centers that serve us fresh produce,” she said. “Everybody has kept that train moving, no matter how much up the hill they had to push it.”

Rosenberg agreed with Weaver that food safety issues were the biggest worry going into COVID-19. After the pandemic, Cancellieri said Texas Roadhouse has been looking to add more suppliers for each item it sources.

“For every item that we carry, (before) we would try to have one, two or three (suppliers) and now we’re trying to have three, four or five suppliers to give us more leverage with freight, supply and labor, and to not have more eggs in one basket,” he said.

Adding suppliers isn’t easy, he said, as some shippers are not taking on new business.

“Even though we have enough product, for the supply chain in general, we need more suppli-ers,” Rosenberg said.

Cancellieri of Veg-Fresh Farms praised the role of United Fresh in keeping the industry up to date on food safety and COVID-19-related news and challenges.

“United Fresh was out in front of the industry trying to disseminate information to everyone immediately as they received it from government agencies,” he said. “They were fantastic about getting that information out to the members and giving us a comfort level that we had a connection at the highest levels that was going to give us the right information.”

Cancellieri said suppliers were able to deal with the challenges of COVID-19, despite the challenges of higher costs.
“The fresh industry, our industry, never missed a beat,” he said.

Labor worries

Filling warehouse positions can be difficult, Cancellieri said, with fewer and fewer younger people looking at the jobs as careers.

“What we’re trying to do is, in bringing people on board, we’re trying to show them the path for advancement, the path for the opportunity for them to grow above and beyond just those entry-level positions,” he said. 

The company also is emphasizing to its employees the stable and resilient nature of the fresh produce business. 

“We are the most resilient of industries around; we really have proven that people will always want to eat fresh, healthy produce.”

Weaver said finding reliable labor is important since a bad experience by a restaurant customer will translate into fewer future visits by that customer to that franchise nationwide.
Weaver said it is hard to predict how long the tight labor market will persist.

Rosenberg said Texas Roadhouse recently had a national hiring day where it hired 5,000 people on one day, translating to about five employees per restaurant.

“That was a huge success for us,” he said.

Inflation rising

On the topic of inflation, Cancellieri said pallet costs have gone up about 170% in the past three weeks. In addition, he said higher labor and other input costs will eventually be passed on to consumers.

Schallman said rising inflation could lead to higher interest rates, which could hurt growers as they try to finance their growing operations.

“The ability to control interest rates will be very important as to how people (will) invest in their businesses,” he said.
Rosenberg said he expected higher costs could linger through 2021.

“We’ve always been a concept that tried to have really good food at a really good price,” he said. “We’ve never passed along all the increases, and so that is our plan again moving forward.”