Yesterday, England was introduced to a three-tier lockdown system. Which is probably something we’re all going to be experts on in a few weeks, despite being baffled at the outset. For those in tier one (currently the vast majority of Merseyside) one of the rules means that pubs just selling drinks will have to close, but if they serve food they can open.
As a result, the future of the foodservice and wholesale sector remains as uncertain as a Covid-19 diagnosis. While e-commerce; home delivery; supermarket retail and the like have seen volume increases this year as a result of public health measures, logistics and warehouse operations dedicated to pubs, bars, restaurants and mass catering have been hit hard by Covid-19.
The nature of the sector is quick movements of high volumes. Working on tight margins shifting stock is paramount. But with the taps closed, food cannot be mothballed. Orders go to waste and margins disappear. No wonder the sector, predominantly led by Wetherspoons, has lobbied hard to keep trading despite Covid curfew measures.
The three-tier lockdown also follows a government induced spike in sales. Eat Out to Help Out saw a reported 100 million meals sold – a figure that is believable given the queues seen at some restaurant chains during August.
Yet, operationally, the rollercoaster of a massive lull in volumes followed by a massive spike, followed again by a prolonged period of uncertainty is a nightmare from a planning point of view. Staff and resourcing volatile levels of deliveries puts cost uncertainty into battered systems, makes sourcing and procurement virtually impossible to predict and can lead to waste, disappointed customers or a combination of the two.
For many retail operations the trick this year has been to develop a B2C offering. Which is easy to say but not so easy to execute effectively.
In food service and wholesale, getting a high volume, low-cost product directly to a customer is hugely difficult – and while the likes of Hello Fresh and Gousto have been taking warehousing space this year to handle increased demand – the home delivery of food service remains in its infancy with no clear, workable business model.
The three-tiered restrictions announced yesterday, alongside the volatility of their nature, gives logistics and supply chain operations in the food service and wholesale sector a major headache at a time when their operations were being stretched.
Reading between the lines of the Tesco interim results last week, it said that its wholesale division Booker (which bought Best Food Logistics last year) was “well-placed to emerge in a stronger competitive position”. For me, this means that Tesco is holding steady until the sector returns to some form of normal trading position.
We should not forget that while logistics has kept hospitals and healthcare functioning; supermarket shelves stacked and parcels delivered to doorsteps this year, there are subsectors that have struggled away from the limelight.
Whatever the blunt instrument of three-tiered lockdowns does to the economy in the coming months, wholesale and foodservice logistics will continue to suffer.
Christopher Walton, Editor, Logistics Manager