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07/11/2022

Best Practices for Managing Gas Supply During Disruptions

Gas supply disruptions are dramatically impacting operations for restaurants. Here's how to avoid them.
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fizzy water with lime

Beverage-grade gas is a must-have for restaurants and others in the foodservice industry; however, the pandemic continues to impact the sector’s carbon dioxide (CO2) supply, resulting in disruptions – and these aren’t expected to slow down.

Production plant shutdowns and delivery delays continue to impact supply and cause prices to surge, with more expected in the coming months, which will continue to impact gas supply. Most recently, gas companies are also navigating contamination in raw gas, including CO2, which is expected to impact the food and beverage sector soon as the industry feels the supply chain ramifications of this situation.

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At the same time, we’re seeing demand for CO2 continue to rise over the course of the pandemic as people’s habits changed, including the growing popularity of hard seltzers that require carbonation and the use of solid CO2, or dry ice,for home food deliveries.

Today, the food and beverage sector must remain diligent in monitoring and maintaining accurate records of gas supply to ensure they are getting the beverage-grade CO2 they need when they need it. This also helps with minimizing added costs at a time when surcharges are frequent. Ultimately, the sector revolves around the logistical supply of products and goods, like gas, so staying on top of your gas program is critical to stay on top of supply and spend.

Gas Supply for F&B

Prior to the pandemic, gas supply disruptions were an infrequent occurrence for the food and beverage sector and typically only impacted one region at a time. This is not the case today – we are seeing multi-region production shutdowns that dramatically impact operations for restaurants, including franchises and chains with numerous locations.

Another significant factor impacting gas supply and prices today is an ongoing truck driver shortage. In 2021, the trucking industry was short 80,000 drivers, which caused CO2 delivery issues and led to gas suppliers charging food and beverage companies a driver retention fee, contributing to skyrocketing prices for the beverage-grade gas.

At the same time, everyone is dealing with the ramifications of gasoline price increases, resulting in further surcharges for the delivery of CO2. In fact, in June 2022, the average price for a gallon of gas reached $5 for the first time, which is up dramatically from pre-COVID rates of $2.80. Similarly, diesel fuel prices recently reached their highest recorded average price ever at $5.82 per gallon, representing an increase of more than 60% when compared to 2019 figures.

What we’re seeing now is that those with the demand for gas, meaning our restaurant brands, chains, and franchises, are bearing the weight of all the supply disruptions in the form of drastic price hikes. The typical CO2 supplier is passing on costs associated with wage increases, rising gas prices, and more to the customer to maintain profitability. This can quickly become a concern for food and beverage organizations when they are invoiced for gas more than 2,000 times a year. Luckily, there are ways to manage and reduce CO2 spend and maintain supply.

Best Practices 

For organizations that are looking to minimize increasing costs during this time of disruption, there is one key best practice: continuously monitor invoices to ensure accuracy and identify opportunities to reduce prices.

Avoid Waste: invest in a point-of-sale (POS) system that enables automated inventory management and provides first in first out (FIFO) ingredient availability.

It’s critical that food and beverage organizations know what their supplier contract entails upfront to ensure understanding of what they have agreed to, especially as it relates to fees and contract renewals.

Once familiar with the contract, companies are better equipped to review invoices on a regular cadence and in real-time. This allows the company to confirm that all line items and inclusions are accurate and aligned within the parameters of their agreement. It is also important to pay close attention to the CO2 rate, delivery fees and ancillary fees, such as hazmat, fuel surcharge, driver retention and more. 

At the same time, these food and beverage brands and chains must ensure they know what their current gas and tank supply looks like to ensure they don’t have CO2 tank rentals collecting dust that they are paying a fee for. Confirming that you don’t have extra inventory in your possession that you are not using is an easy way to prevent additional charges.

Remaining aware of current and past inventory also helps address a common issue that we see when it comes to invoicing – ghost tanks. These are tanks that the supplier is charging a company for, but the company cannot locate. Often, these CO2 gas tanks were never delivered in the first place, so it’s important to have a reliable system for tracking inventories to prove that you were never in possession of the tank.

All these different tactics can be boiled down into one simple statement: you must know what you have and don’t have to stay in control of spend and supply.

 

A Better Way Forward 

For companies navigating gas supply across multiple locations, real-time invoice monitoring can be challenging. One way to ease this process is by establishing a standardized gas supply program. Finding a single-source supplier partner with a repeatable process for onboarding new locations, especially on a nationwide scale, and the ability to monitor supply across the organization makes gas supply simple and means the transition process is the same from location to location. And, with technology, suppliers can help analyze gas usage and anticipate future supply needs, helping keep food and beverage businesses running smoothly.

Having a supplier partner also helps reduce the number of invoices an organization receives for gas, which streamlines ordering and invoicing while improving efficiency. In fact, a single-source supply partner can help food and beverage organizations reduce their annual invoices from 3,000+ to 64 annually, saving teams time and money.

The pandemic and its impacts will continue to affect the industry and its beverage-grade gas supply. While you can’t control prices, there are steps you can take to make the most of your supply and reduce costs – like finding a reputable supply partner can help to optimize results.

 

About the Author

Donny Patrick serves as Head of Sales for the Industrial, Medical and Beverage industries at EspriGas. With 15+ years of experience in various sales and leadership roles, Donny’s primary objective is growing company revenue and developing long-term customer partnerships in all business segments.

 

LinkedIn: https://www.linkedin.com/in/donny-patrick-a227a77