Food supply chain disruptions causing sticker shock at Michigan restaurants

Posted at 11:36 AM, May 29, 2020
and last updated 2020-05-29 12:53:54-04

(WXYZ) — The Rebound Detroit is our effort to bring you the experts, resources and guidance you need to bounce back.

Restaurants looking to reopen are facing financial hardships like never before.

Now, economic experts believe both businesses and consumers will be forced to change the way they operate.

Coronavirus concerns forced restaurants across the country and here in metro Detroit to shut down for months.

And when they reopen, owners have to fight with fickle food costs.

"Prices are crazy right now."

Restaurant owner Sam Armatas says before the pandemic, he used to serve nearly 1,700 people a day.

Now they're lucky to make 70 meals from open to close for takeout.

"The supply chain is messed up."

Armatas is caught between low demand and an erratic supply chain.

"Today an egg is eight cents. Right before, it was 25 cents an egg," said Armatas. "We're dealing with food in the warehouse that has probably been in the warehouse since mid-March."

From produce to proteins, economic experts say the cost for reassurance to do business is becoming more unstable.

"They're really are disruptions all throughout the supply chain."

Dr. Richard Sexton is a professor of agricultural and resource economics at the University of California, Davis. He says restaurants looking to rebound will have not only have problems with food pricing -- but also dealing with new health guidelines.

"The meat prices have risen and will probably continue to rise. Milk prices are down due to reduced demands," said Sexton. "People will be at least at the outset reluctant to resume their normal habits."

"We're going to hopefully adapt and change as it moves forward," said Armatas.

Armatas says this pandemic could even impact how they list their prices.

"I don't know if we can come out with a paper, or a solid menu again. It's almost we price weekly at market value," said Armatas.

Saying this is the new cost of doing business during the COVID-19 crisis.

So here is the rebound rundown:

  • Restaurants have fewer customers & rising costs.
  • Restaurants are struggling with fewer customers and unsteady costs.
  • Pressure on the bottom line could effect jobs.
  • Menu prices may change more than usual at your favorite restaurant.

Despite the challenges in the food supply chain, Professor Sexton doesn't predict that extra cost will impact shoppers at supermarkets.

He says the last thing a big grocery chain wants is to be accused of price gouging during a pandemic. And adds the supermarkets would rather be out of stocked out than raise price to balance supply and demand.

Additional Coronavirus information and resources:

Read our daily Coronavirus Live Blog for the latest updates and news on coronavirus.

Click here for a page with resources including a COVID-19 overview from the CDC, details on cases in Michigan, a timeline of Governor Gretchen Whitmer's orders since the outbreak, coronavirus' impact on Southeast Michigan, and links to more information from the Michigan Department of Health and Human Services, the CDC and the WHO.

View a global coronavirus tracker with data from Johns Hopkins University.

Find out how you can help metro Detroit restaurants struggling during the pandemic.

See all of our Helping Each Other stories.

See complete coverage on our Coronavirus Continuing Coverage page.