Before the COVID-19 pandemic, a typical family’s food budget was pretty evenly split between home and places such as restaurants, convenience stores, or schools. Now, people are mostly eating at home. That sudden shift has disrupted the food distribution network in a way that sometimes leaves the supermarkets with some empty shelves.
According to the Food Industry Association last year the average family spent just over 5% of income on food at home and just under 5% for food away from home.
With a lot of restaurants closed and others limited to pick-up or delivery, experts estimate the demand at grocery stores has increased somewhere between 30% and 60%.
“Now that it's completely upside down with the restaurants being basically closed, people are buying a lot more. So the food chain just wasn't set up to handle all the additional inflow,” explained Todd Robinson, the Director of Marketing for the Michigan grocery chain, Busch’s Fresh Foods.
We’ll hear more from him later, but first we wanted to talk to someone who researches the food distribution system.
Ravi Anupindi is a professor at the Ross School of Business at the University of Michigan.
He calls the shift a “demand shock” to the distribution system.
But, you have to wonder, if the restaurants are not buying as many eggs, there ought to be more eggs for the supermarkets, right?
“Packaging and the supply chain that goes to restaurants for consumption in bulk is different than how the material moves to grocery stores and how consumers consume those things and buy those things,”Anupindi said.
While the supermarket packages eggs by the dozen, restaurants might buy 36 dozen packaged differently or buy liquid eggs by the 30-pound bucket full. That’s not something that’s easily repackaged for grocers.
Most supermarkets have recovered from the egg shortage, but it took a while to adjust.
Anupindi says the demand for more food from the supermarket is not only because the family is now eating three meals a day at home.
“The demand spike is not only real consumption, but hoarding. People have hoarded a lot of stuff and are because every family wants to reduce the frequency of trips to grocery stores, so they buy a lot more at one shop. So that creates shortages quickly,” he said.
We’re eating more at home and trying not to go to the store as often to reduce potential exposure to COVID-19.
There’s one other thing: when people do go to the store and they see empty shelves, there’s a tendency to worry about food security. If there are only two packages of spaghetti left on the shelf, do you buy them both, because you don’t know when or IF there might be more.
Back at the Busch’s store in Brighton, Todd Robinson says the chain has been able to find new suppliers for some items. But the target is constantly moving. Every week it seems like there’s a run on a different product.
“Toilet paper, flour and yeast, rice, packaged goods, canned goods. Funnily enough, tortilla chips. That was a strange one for me. But then other things that you might expect. Peanut butter and jelly, frozen pizzas, pizza rolls because the kids are now at home,” he explained.
Besides some empty shelves, shoppers have been finding unfamiliar brands. Robinson takes me to the toilet paper and paper towel aisle to show me there is stock there.
“We still have it, right? But it may not be the brand that you want. We have it. This shelf used to be bare, with nothing when there was a huge run on it. But we've managed to get the supply chain going and we've now got things in here. So you may not have seen this brand, but it's a good paper towel and works just fine,” he said.
Grocery chains across Michigan and across the nation are dealing with these supply chain problems.
We are beginning to see some actual shortages. A few meat processing plants closed because workers got sick. President Donald Trump ordered all meat packing plants to open, but they must meet CDC guidelines. At most meat processing plants, staff work side by side on the production line. If they implement social distancing, that’s going to reduce production. Some supermarket chains are already limiting how much fresh meat you can buy.
For the most part though, there are no major food shortages right now. It’s just that the food distribution system has not yet adapted to the different demand. Some food doesn’t even make it off the farm. It’s just thrown away. All those producers, processors, packagers, and distributors are still working to adjust.