Kathleen Iacocca, assistant professor of management and operations at Villanova School of Business, considers what will happen as states begin allowing businesses to reopen with the waning of the coronavirus epidemic.
With the reopening of retail and other types of businesses will come a recurrence of supply-chain disruptions, Iacocca says. The restaurant industry in particular will “go up on its head.” Restaurants account for 51% of the food supply chain, and once they reopen, demand for sit-down service will skyrocket. That could lead to major shortages of perishables.
Some have predicted that patrons will be slow to return to dining in restaurants, but Iacocca foresees “a rush through the doors.” On one hand, people will be reluctant to gather in proximity to one another, but on the other, they’re getting tired of being pent up and are looking for release. “When the economy opens up from a business standpoint, every small business is going to be clamoring to get customers, and customers are going to be eager to get out,” Iacocca says. “I think we’re going to see a huge spike in demand, and supply won’t be able to keep up with it.”
To mitigate the impact of a sudden rush of customers, restaurants will adopt a number of strategies, including promoting less-popular items that are easier to obtain, and attempting to shift activity to off-peak periods. In addition, they’ll be looking to diversify sourcing and obtain more supplies from local providers. Other than that, Iacocca says, “they’re just going to try to weather the storm, as have businesses with other products.”
Eventually, activity will return to a steady state. “One great thing about supply chains is that they’re very agile and responsive,” Iacocca says. “The pain will be very short-lived.”
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