In 2021, US Foods faced a problem that has become all too familiar: As thousands of Americans re-evaluated their work lives in the middle of the pandemic, the company—one of the largest food service distributors in the United States—struggled to attract and retain workers.
It wasn’t exactly a new problem. For some time, the company had to deal with a nationwide shortage of truck drivers. “Young people aren’t going to this business,” said Pietro Satriano, US Foods’ CEO, in a new Harvard Business School case study entitled US Foods: Driving Post-Pandemic Success? So when COVID-19 hit full-force in March 2020, the pandemic only exacerbated a longstanding issue.
The shortage of drivers to deliver food supplies to the roughly 300,000 restaurants, hotels, hospitals, schools, and universities serviced by US Foods was not its only staffing problem. The company also faced difficulties recruiting workers to select and manage products in its warehouses. By the middle of 2021, US Foods, which employs about 26,000 workers, had 1,000 unfilled driving and warehouse positions.
"You’re saying you might be a truck driver for a while, but then you might move into management."
“The problem that US Foods was having was caused partly by COVID-19, partly by competition for workers from Amazon, and partly by changes in lifestyle,” says David Bell, Baker Foundation Professor and George M. Moffett Professor of Agriculture and Business, Emeritus, at HBS. Bell previously taught Satriano, who graduated from HBS in 1992, and wrote the case study with HBS researchers Olivia Hull and Amy Klopfenstein.
With a combination of savvy planning and creative thinking, US Foods managed to weather staff shortages while simultaneously growing its footprint. Despite a drop in sales during the pandemic, in 2021, the company was able to maintain its position as one of the top three food distribution companies in the US among rivals Sysco and Performance Food Group, capturing 10 percent of market share.
US Foods’ strategy provides valuable lessons for other businesses contending with post-pandemic staff shortages, supply chain issues, and inflationary pressures. “Everyone's facing staffing shortages,” says Bell. “You can't just throw money at the problem. You can, but there's a limit to how much you can do that way. So, the question is, what else can you do?”
Improving job conditions and raising wages
When COVID-19 swept across the world in 2020, more than 110,000 restaurants and bars closed at least temporarily, so demand fell for the company’s pre-chopped vegetables, prepared cheesecakes, and other products. US Foods sales dropped 12 percent in 2020, compared with 2019.
US Foods initially scaled back and shifted its staff, furloughing some employees and placing others in temporary jobs in other industries until the company needed them back.
For example, the company had created a role that it calls “restaurant operations consultants”—trained chefs who help on sales calls, providing guidance to restaurateurs as they decide which products to order. During the pandemic, many of these consultants were used to help restaurateurs apply for federal pandemic relief aid via webinars and one-on-one sessions.
Once business began to recover, US Foods set out to bolster its workforce by raising its hourly wages and offering signing and retention bonuses. The company also started to rethink the jobs themselves. “If you can't find people to recruit because they don’t care for the job, another tactic is to modify the job, so they don't dislike it as much,” says Bell. “You can either offer them more money to do the job or you make the job easier to do.”
Given the critical nature of the crisis, the company opted to do both. In addition to raising wages, it also sought to ease the burden and lower its attrition rate for new warehouse associates by limiting the number of hours they worked each night.
“We can’t afford to have our veteran employees leaving,” explains Rob Koppenhaver, senior vice president of US Food’s field operations, in the case study.
From dead-end jobs to management roles
With those two basic changes in place, Satriano sought to “widen the pool of people who could do the job,” according to Bell. The company began looking for ways to attract new demographic groups to truck driving, including women and young people.
Another important move has been what the company refers to as its “grow-your-own strategy.” That means turning what might seem like a dead-end job into a step on a more ambitious career ladder.
“Instead of making the assumption that these recruits are going to be truck drivers from age 23 until 62, you’re saying you might be a truck driver for a while, but then you might move into management,” says Bell.
US Foods managers began identifying warehouse workers eager to move up in some of its districts. The company then offered to train those workers to obtain a commercial driver’s license. In exchange for training, workers had to commit to driving for US Foods for two years.
"In the long term, the industry could use a plan for radically changing the way they deliver food to restaurants."
“After that, we hope we get them hooked into working for us,” said Koppenhaver. “You want to give people a path that shows what some of our most successful associates have done. They worked nights for five years, then they got the day schedule, and then maybe they became a supervisor and moved into management.”
Other strategies the company, along with the entire industry, is eyeing to address the driver shortage include self-driving trucks, lowering the age for license eligibility to 18, and advocating for the release of more visas for immigrant workers.
“There’s a lot of things you can do around the edges,” Bell says. “But I think in the long term, the industry could use a plan for radically changing the way they deliver food to restaurants.”
Radical changes may be on the horizon
To some degree, US Foods has done just that. Despite the big hit the company took in 2020, Satriano has been intent on expanding the company’s CHEF’STORE brand, a chain of cash-and-carry food stores that provide an alternative way for restauranteurs to make last-minute purchases.
With supply chain uncertainties now a part of daily life, sales at these CHEF’STORE locations have boomed, leading the company to consider opening new stores. Also, the company relies on another distributor to supply products at the cash-and-carry outlets, thereby avoiding additional complications to its core supply chain operations.
Bell says in the future, distributors might consider even more changes in the conventional way of doing business, from creating more self-service stores to rethinking truck sizes and pack sizes so that trucks become less onerous to drive and unload. Whatever plans they execute, they will likely have to continue redefining job descriptions to make jobs more appealing.
“The question is, are all these demands that employees are making transitional?” asks Bell. “Are labor shortages going to be with us in the longer term? Maybe this is just a temporary consequence of COVID, but maybe we should all start planning for the case where it is not.”
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Image: Stockphoto/Michael Vi