Las Vegas Sun

December 6, 2021

Currently: 75° — Complete forecast

How Las Vegas restaurants, other sectors are navigating the supply chain hurdles

Supply Chain: Trucking

Steve Marcus

Tractor-trailers head south on Interstate 15 near Blue Diamond Road Wednesday, Oct. 27, 2021. Truck drivers in Las Vegas and nationally are being stretched as demand for goods outweighs the supply.

Supply Chain: Trucking

Semi-tractor-trailers are parked in a lot at the TA Travel Center at Dean Martin Drive and Blue Diamond Road Wednesday Oct. 27, 2021. Launch slideshow »

Peppermill Las Vegas is one of the resort corridor’s noted late-night hangouts.

But if you show up craving an order of the restaurant’s onion rings, you will likely be out of luck. And during some early morning hours, you won’t be able to place an order at all.

Executive chef Nicholas Orth is piecing together his menu despite not knowing what supplies will be at his disposal because of the current global supply chain challenges. Basic inventory — like glass cups, soup spoons, embroidered napkins or paper cups — as well as food items like onion rings are taking months longer to arrive than industry workers would normally expect. Even when commodities are delivered, the brand or look of a “sub item” may be different than what was ordered, often resulting in higher prices for businesses.

The global supply chain is a route that links manufacturing to transportation and logistics, or the moving of goods to customers.

Delays and shortages throughout the supply chain brought on by the pandemic are affecting nearly all produced or manufactured items, including those necessary to local restaurants like Peppermill.

Orth said his menu was constantly being reimagined, including only having onion rings available as a hamburger topper and not an appetizer or side dish. The shortage also means the restaurant cannot offer its traditional Thanksgiving dinner, he said, because items are either too expensive or not available.

Atop this, staffing issues have compelled the restaurant to shrink its 24-hour dining services to 7 a.m. to 2 a.m. Thursday–Sundays, and 7 a.m. to 11 p.m. Monday–Wednesday, a drastic change Orth said has resulted in an approximate $80,000 to $90,000 loss in sales per week.

Both kitchen and wait staffs have dwindled since the onset of the pandemic in March 2020 — not a new issue but certainly pressing, Orth said.

“If we can solve (the labor issues), I think a lot of our problems will disappear slowly,” Orth said. “But without people to work, there’s nothing anybody can do.”

Sometimes, the answer to filling a request from a customer for an unavailable item, like a cup for a to-go coffee, simply must be no, said Jason Lapin, president and chief operating officer of Blau Associates, which owns several Las Vegas restaurants including Honey Salt and Buddy V’s Ristorante.

“We’re scrappy and entrepreneurial,” Lapin said. “We make it happen. But, yeah, there’s definitely times when you just don’t have the supply you need to accomplish something.”

Lapin is also a consultant for major brands and hotels, where timelines for ordering new equipment are stretched to account for now-familiar delays in shipping and delivery. Resort companies on the Strip are likely also facing challenges but declined or didn’t respond to a request to participate in this story.

Shoppers might have noticed emptier shelves at grocery stores and other retailers or stalled delivery dates. Meanwhile restaurants and other local businesses await needed supplies to operate as close to normal as possible. This reality is the result of clogged ports like those in Los Angeles or Long Beach, Calif., where dock workers are working around the clock to ease the bottleneck of cargo ships lined up offshore and where truck companies and distribution centers are low on staff to shift these goods forward.

The primary problem is consumer demand has outpaced recovery on the economy’s production side, said Mark Vinter, senior economist at Wells Fargo. And as consumer spending ramps up near the holiday season, the additional worker and item shortage makes for a foreboding combination.

“Most of our policymakers in Washington believe that if you stimulate demand, supply will follow, and in a lot of the policies that we implemented, they did a very good job of stimulating demand,” Vinter said. “They put money in people’s pockets, but we made it pretty difficult for folks to get back to work right away, and so that made the situation a little bit worse.”

On the supply side, sparse labor has also adversely affected Las Vegas trucking company Desert Eagle Transportation, whose drivers work 14 hour-a-day shifts and are capped at 70 hours per week.

Three of those 14 hours are allocated for loading and unloading at warehouses, said Svetoslav Vitkov, a truck driver at Desert Eagle.

But with fewer employees forklifting deliveries on and off the truck, Vitkov said he had waited five to six hours rather than three to finish his work at the warehouses. Fewer truck drivers to handle this increase in demand only exacerbates the issues.

“Since there are not enough people working, we’re busier,” Vitkov said. “We have so many loads, and we can only do so much.”

Direct solutions, whether on the consumption or distribution side, are unclear and likely will persist past the holidays, experts say.

The two California ports are working 24 hours a day, seven days a week, according to the White House, which laid out a plan Oct. 13 to alleviate the bottleneck, or constraint, and ease consumers’ Christmas concerns.

Logistics company Stord on Monday will open a 177,000-square-foot warehouse in Las Vegas, something that could provide some relief for goods being shipped inland out of the Los Angeles and Long Beach ports because of the city’s proximity to California, said Stord CEO Sean Henry. This is Stord’s second warehouse in Nevada — the other is in Reno — and it will employ over 100 people, he said.

“There’s not much space in Los Angeles anymore, and it’s not economically efficient to store and move your inventory through that market,” Henry said. “Las Vegas is an amazing alternative for those who are seeing more shippers come to the Las Vegas market because of its proximity to the Pacific corridor.”

Transportation Secretary Pete Buttigieg said Oct. 17 that the complications could extend into 2022 and that passing an infrastructure plan in Congress would moderate these problems best.

“There are $17 billion in the president’s infrastructure plan for ports alone, and we need to deal with these long-term issues that have made us vulnerable to these kinds of bottlenecks when there are demand fluctuations, shocks and disruptions like the ones that have been caused by the pandemic,” he said on CNN’s “State of the Union.”

Vinter, however, said he did not think the federal government could make notable improvements to the congestion.

“A lot of the rhetoric that we hear out of the federal government is typically just designed to make it look like they’re doing something,” he said. “Unfortunately, this is a global problem. And the global economy shut down, and it has reopened in a very staggered way. … We are so interdependent upon one another for parts and materials that it’s just very hard to restart the economy and have everything go perfectly well.”