The State of the Hospitality Industry
Hospitality is an industry that exclusively flourishes on the retention of customers and consumers. Pre pandemic, the food industry was flourishing and stable; but then was abruptly inhibited due to the current pandemic of COVID-19. Certain companies cannot remain open because they are receiving little to no food orders and/or help from the government.
This pandemic has affected every level pertaining to the food supply from farmers to end consumers.
Farmers have been presented with many challenges that make them really question what to do to continue with production. It has been stated that “farmers face whether they should change crops; plow ahead, or exit production entirely” (McKinsey & Company). Many factors have been affected in farms such as labor, overstock, capacity within herds, and so on. Labor has dropped drastically because workers don’t want to put themselves at risk of catching and spreading COVID; most skilled workers are on visas are put at risk if they continue to travel during these times. With farms residing in rural areas, it is hard to find enough local skilled workers to continue harvest in time. “Already, farmers are taking extreme measures to deal with excess product” farms have been dealing with reducing their herds, breaking eggs, spilling milk, and etc to reduce the amount of excess products that they are not able to sell.
Foof factories are environments where workers are close in proximity. Foodservice companies have had a drastic decline in revenue. “Companies making new investments would be facing 40+ percent decline in revenue” (McKinsey & Company) making drastic changes in production processes will set back companies to where any new investments can become irretrievable and extend payback periods. “Distributers run a supply chain with upstream orders coming in that anticipate downstream orders going out” the amount of food being harvested and sent from farms effects the quantities that restaurants can buy off the distributor; with the current pandemic, distributors were stuck with surplus stock because restaurant orders had to be cancelled due to closings.
When it comes to packaged-goods and consumer companies, they have also been affected in the labor aspect because of the close proximity of the workers in factories. Manufacturers have faced trouble fulfilling the high demand of shelf lasting foods with limited capability to produce and directly distribute to consumers. Meat processing plants have been closed due to infection causing a national shortage in meat supply (and rise of prices). However, “comapanies are offering incentives to keep employees at work” (McKinsey & Company) In March, Trump signed an executive order to impose the Defense Production Act of 1950 which requires plants to remain open. But facilities face the decision of wether to upscale capacity for overstock, partner with food service producers, or activate mothballed facilities.
The appearance of COVID-19 has drastically changed many aspects of life. One of the hardest hit ones is the one that feeds all of society. The food supply has been hit due to farmers being infected and/or taking precaution and staying home to protect others; producers have had to slow production due to lack of labor; packaging facilities have also slowed and struggle to meat demands of smaller packaging to fit consumer needs; distributors had to cancel large orders in thebeginningand started to participate more in e-commerce to get products to consumers more directly.
Companies are finding new creative ways to continue production and ways to get food safely to consumers. “Such as delivery and pickup services, limited seating in restaurants, farm to shelf…” (McKinsey & Company). Depending on how society deals with getting rid of the virus will determine the paths that the food industry will take to continue to feed the masses; the time it takes for the industry to recover will vary as well depending on how well we take care of ourselves.
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