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Greggs Becomes Latest Food Business To Be Hit By Supply Chain Crisis In The UK; Firms Urge UK To Act

Published on Aug 27 2021 9:29 AM in Restaurant tagged: Greggs

Greggs Becomes Latest Food Business To Be Hit By Supply Chain Crisis In The UK; Firms Urge UK To Act

Greggs Plc has said that the UK bakery and fast food chain has become the latest food business to be hit by supply chain interruptions that are impacting businesses across the hospitality and retail sectors in Britain.

"Unfortunately, like others, we're seeing temporary interruptions in supply for some ingredients which occasionally results in shops not being able to maintain full availability on all lines", a Greggs spokesperson said in an emailed statement.

Media reports said earlier that Greggs faced shortages of its popular chicken-based products. However, the company told Reuters in its statement that there were no supply issues specific to the group's chicken bakes.

British retailers, cafés and restaurants are struggling to cope with a shortage of drivers, and in particular heavy goods vehicle (HGV) drivers, and food processing staff after COVID-19.

The problem is not unique to Britain - the United States and other European countries also have truck driver shortages - but Brexit has made matters worse, industry groups say.

Chicken restaurant chain Nando's was forced to temporarily close more than 40 outlets in Britain last week due to staff shortages in its chicken supply chain.

McDonald's said earlier this week that it had taken milkshakes and bottled drinks off the menu at all of its British restaurants while its rival KFC has also said it was struggling to stock some items or use its normal packaging due to disruption in recent weeks.

Unprecedented shortages of both staff and materials are hampering Britain's post-lockdown economic rebound, a closely watched economic survey showed this week.

Firms Urge UK To Act

Britain's leading employers are pushing the UK government to urgently increase funding to retrain workers and allow Europeans back into key sectors as supply chains buckle under the weight of COVID-19 and Brexit.

As noted above, a shortage of drivers, food manufacturing workers and hospitality staff has forced restaurants to scrap some dishes or close for part or all of the day, while gaps have appeared on supermarket shelves after deliveries failed to turn up.

Now retailers and logistics groups are warning that the problem will get worse as they struggle to stockpile goods ahead of Christmas and operate a normal service.

Tony Danker, the head of Britain's leading business group, the Confederation of British Industry, said that deep structural challenges existed in Britain. Rapidly deploying more government money to help retrain staff could help.

"Government needs to take a sector view of the challenges and identify solutions that can have an impact quickly," he said. "That could [also] mean being agile in the way we use our immigration system to bring in fixed-term visas for shortage occupations."

Jobs website Indeed said that the sectors facing the biggest shortages of candidates are offering the biggest pay increases, something the Bank of England is watching as it assesses whether longer-term inflation pressures are building in the economy, putting pressure on it to raise interest rates.

Between February and July, advertised pay grew by nearly 7% in construction, 6% in driving, 5% in manufacturing and 4% in food compared with a rise of 0.8% for all jobs, it said.

Bosses have said the causes are both global and local. A worldwide shortage of semi-conductors has hit sectors such as manufacturing badly.

But Britain's strict rules on self-isolation for people who came into contact with someone with COVID-19 - which were relaxed earlier this month - and an exodus of European staff due to the pandemic and Britain's departure from the European Union have compounded the problem.

In logistics, new truck drivers have struggled to train during the pandemic and the industry estimates that around 25,000 EU drivers have left Britain since the end of last year.

Finance minister Rishi Sunak has refused to yield to calls for a relaxation of post-Brexit rules for EU workers. The finance ministry thinks higher pay will lead to workers moving into sectors where labour is most scarce after the pandemic.

Some food retailers have already narrowed their ranges and cut bulky lines such as bottled water, which takes up space on trucks and offers only low margins in return.

John Allan, the chairman of Britain's biggest retailer Tesco, said this week that there might be some shortages at Christmas as the industry struggles to stock goods now.

"At the moment we're running very hard just to keep on top of the existing demand and there isn't the capacity to build stocks that we would like to see," he told the BBC.

Richard Walker, the managing director of supermarket chain Iceland, said that up to 40 deliveries a day were being cancelled.

The failings are being felt in the broader economy: its post-lockdown rebound slowed sharply in August due in large part to unprecedented shortages of staff and materials.

A quarterly survey published by the CBI this week said that reports of labour shortages in the services sector had now risen to their highest level on record.

A government spokesperson said that Britain had a resilient food chain and it was working with industry to help retrain workers.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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