METRO Insights - Issue 04 - July 2022

How big are the current challenges of high inflation and supply chain disruptions for METRO?

The current product shortages, supply chain disruptions and inflation are certainly also impacting our business. The areas most affected are the agricultural sector, energy and transport costs, but also packaging materials. The market is currently witnessing a shortage of wheat, corn, sunflower seeds, but also aluminum, glass and plastic. For example, Ukraine is the biggest producer and exporter of sunflower seeds to produce sunflower oil and all derivatives that contain this type of fat, like margarine, mayonnaise, biscuit. If the supplies from Ukraine continue to be disrupted and compromised by the war, the long-term impact will be felt across the world market in many categories.

What are the measures taken by METRO to respond to the impact on goods supply and availability?

To mitigate the impact of the raw materials price inflation and scarcity on our supply chain and thus on our customers is a key priority for METRO. We are intensively working with our international and local partners to find solutions to ease the impact on our business and the business of our customers.

For example, to currently replace sunflower oil we are contracting additional volumes on alternative oils that suit deep frying. Also, we change our recipes and packaging where we foresee scarcity of raw materials, keeping our values to sell sustainable products and our corporate strategy to grow our own brand share.

As another core measure, we have increased our communication with the METRO/MAKRO countries to align with them on those alternatives. Moreover, supply chain management is a key lever to mitigate such impact and thus we are continuously optimizing our central storage capacities and those in the countries to avoid shortages on key products such as oils, sugar, pasta and rice for our customers.

How does METRO leverage its international common sourcing strengths to secure stable supplies of goods?

Obviously, the raw materials situation must be reviewed on a regular basis and in a holistic way in order to adjust decisions and actions to ensure availability in all countries and channels across METRO, bearing in mind the long-term strategy.

Thanks to our longstanding experience in sourcing products across the globe, our teams in Düsseldorf as well our Trading offices in Asia for Non-Food and in Western Europe for Ultra-fresh Food have built strong partnerships with producers and suppliers, but also with Logistic Service Providers over the past years to ensure continuity of the business and to prevent disruptions as much as possible. On the other hand, the global situation leads us to diversify our sourcing practice, and for some products we are changing the production location to be closer to the customers. With most of our products already being produced and sourced locally in the respective countries, we are therefore further developing and enhancing our relationships with local suppliers.

Is there also industry-wide collaboration with suppliers and business partners, as this is after all a common challenge for the entire industry?

Indeed, the current supply chain disruptions are a common challenge for the entire industry, which requires us to rethink and transform the relationship with our suppliers accordingly. As a result, we are seeing an evolution from pure transactional interaction to more transparent engagement to reach common goals as partners.

One thing is clear: from our customers’ perspective, the key challenge is availability. Our customers must find at METRO the key articles that enable them to operate their business. Therefore, the whole mindset within our organization, but also with our partners, must be realigned on this priority. Again, as an example, that’s the reason why we change production locations of some goods to mitigate the risk of sea freight disruptions. Apart from storage optimization and the sourcing strategies, we also try to find alternative packaging solutions with our partners, as well as to be more transparent and accurate with our forecasts and needs. Some of our suppliers are also enduring financial difficulties due to the inflation, thus we must come around the table and find ways to ensure cash availability.

Overall, it is a positive fact that METRO over the years has developed a strong culture and knowledge of sourcing internationally and locally and we have built strong relationships with our partners, from all scales and in all areas of our business. Such partnerships are very helpful at this moment, as we are striving to work together with them to address the challenges and to find solutions to ensure the continuity of supplies and the availability of high quality and competitive products for our customers around the world.

Waiting to place your order in a crowded restaurant? This is no longer necessary: guests can order their preferred dishes and pay it with a touch of their fingertip – conveniently and fast using QR codes. And instead of asking for the bill, the guests simply pull out their smartphone. While this may sound like a vision for the future, it actually isn’t. Very soon, this scenario will become reality for METRO’s HoReCa customers: with a new checkout or point-of-sale (POS) system that sets the new benchmark. Following the acquisition of the Dutch company Eijsink, METRO’s subsidiary Hospitality Digital will soon be offering a cutting-edge and innovative POS system designed specifically for the hospitality business – as an overarching solution of a all-in-one package that incorporates the existing DISH digital solutions.

In the following article, Dr. Volker Glaeser, CEO of Hospitality Digital and an expert in the digital world, writes about when the new checkout system will be available to open up new opportunities and why it is essential for METRO’s growth.

All digital processes combined in one system

It only takes five minutes: then the restaurant is perfectly positioned digitally and equipped for the future. After this short time span, our new DISH including POS is readily installed in the restaurants of METRO’s customers. With the takeover of Eijsink, we can soon offer our customers a particularly versatile checkout system. A system that digitally controls all central processes in a restaurant irrespective of the terminal equipment used: for the electronic payment process including accounting data for the tax office, for table reservations or for online food orders which has become vital for many restaurants throughout the pandemic. The solution also supports a restaurant’s HR management and staff shift planning, and the automatic replenishment of goods from METRO: “Automatic Replenishment” will soon fill the gaps in the fridge without delay. Food ingredients are planned according to need, and nothing is wasted – an important step in the fight against “food waste”. All of this runs online and therefore almost by itself - because Hospitality Digital also takes care of system administration.

That way, our customers can focus on what really matters to them: the success of their core business. The restaurant owners simply select the digital modules they need. Hospitality Digital offers them customized solutions at an extremely attractive price.

Our path to the ideal restaurant checkout

The background to this development was the realization that, if METRO wants to be digital, its customers must be digital, too. That is why Hospitality Digital has been supplying around 250,000 restaurant operators in 16 countries with professional hospitality solutions under the brand “DISH” for several years now – for example with apps for reservations, online orders and website creation. The only thing that was missing to round off our offer was an adequate POS system.

To this end, we had closely observed the market for some time. In Hengelo near the border with Germany, we finally found what we were looking for. The cloud-based software “booq” by Eijsink is device-independent and thus allows for the optimal connection of Hospitality Digital’s digital “DISH” tools. Eijsink is not a newcomer in this field: for almost 40 years, this company has been supplying the hospitality industry with checkout systems and is the market leader in the Dutch market - since early April it is now a subsidiary of Hospitality Digital.

Steppingstone for digital transformation

For restaurant owners, the new system offers huge savings in terms of time and costs. For their customers, it creates a restaurant experience with exciting new possibilities. And for METRO, it represents a key step in terms of digitalisation and growth. That is because, as the only company in our industry, METRO will soon be able to offer a complete digital solution portfolio to 250,000 HoReCa customers in more than 20 countries in addition to its brick-and-mortar stores and food delivery business. It is this combination of a comprehensive product range and a large geographic market area that will lead to cost synergies and a significant competitive edge.

If the customer agrees that Hospitality Digital uses the data recorded from the POS system, he will receive offers that are perfectly tailored to his needs, such as the automatic replenishment of goods. Another benefit is customer loyalty. Digitally connected restaurant operators visit the METRO stores more frequently and already today contribute up to 11% added turnover. Meanwhile, the churn rate of customers who have a POS system is exceptionally low.

Thanks to the new POS system, METRO is therefore able to attract new customers and act even faster and more efficiently. The reason is that we gain insights into the digital processes and the underlying data from more than 20 countries – for example as to when the individual restaurants have their peak season leading to a stronger demand for goods. That way, we can at the same time also optimise METRO’s food management.

All of this makes the new checkout system an important pillar for digital transformation and for our company's multichannel model: the aim of sCore, METRO’s wholesale strategy, is that 40% of all sales will be generated digitally by 2030 and that every second HoReCa customer will become a DISH customer.

Right now, we are working at full speed to certify the system in the different markets under country-specific regulations. For Germany, a first test run has started in summer at a restaurant in Lage near the border with the Netherlands. In France, we will launch a test version in October and plan to roll out the system nationwide starting March 2023 as one of the first large markets in Europe. This will be followed by Germany, Italy, Spain and very soon also other countries. Because our aim is clear: offer METRO customers in more than 20 countries an extraordinary restaurant experience of the future.

When the “fire artist” turns out to be a talented chef with a burning passion for creative cuisine. When the “clairvoyant” does not only make the glasses shine but also her surroundings while she passionately waits tables. Or when the bartender turns into a “magician” who concocts cocktails that create magical moments for his guests. Then you have hit the right place: at the #gastrofamily. The aim of this communication campaign is to attract attention to the colourful world of the hospitality sector and to enhance recognition for many working in the hotel and restaurant sector. That is because restaurants, caterers and food service companies are currently faced with a big problem: attracting staff and bringing back skilled workers who have shifted to other sectors. Partners of the initiative behind #gastrofamily are Coca-Cola Europacific Partners Deutschland and METRO. The sponsor of the campaign is the renowned Leaders Club, a network for people and companies enthusiastic about gastronomy.

High time for a fresh start

“Even before the pandemic, the hospitality industry in Germany was losing important skilled staff. Lockdowns and Covid restrictions then distinctly exacerbated this trend: one in four jobs was lost and 250,000 employees migrated to other industries. Together with Coca-Cola Germany, we support the Leaders Club and stand up for our customers in the hospitality sector”, says Martin Behle, Executive Vice President Germany & Austria at METRO. “We have the network and the opportunities to bring employers and employees together through #gastrofamily. With this campaign, our customers can create an attractive employer profile for their business and show how diverse, colourful and attractive this industry is.”

This communication campaign kicked off in May this year with a press conference at INTERNORGA – right in time for the outdoor season when guests are again flocking into the beer gardens and restaurants. It provides restaurateurs with free materials and messages to position their activities easily and fast in their local communities and attract attention to their business.

The fascinating world of hospitality

Whether you work as a chef, a waitress or a bartender: six authentic #gastrofamily testimonials epitomise these important hospitality jobs, reflect the diversity of this industry and are representative for its options and opportunities, for team spirit, fun and varied work in the hospitality industry – and for all those who put their heart and soul into making sure that things run smoothly in their hotels, restaurants, bars and cafés.

“The hospitality sector offers a lot of variety and the possibility to discover your own strengths and develop them further and, on this foundation, start a career. Those with a passion for people have found the right spot and it gives a lot of pleasure to be a host”, summarises Kerstin Rapp-Schwan from Düsseldorf, board member of the Leaders club and owner of the SCHWAN restaurants.

Why this sector has much more to offer to its employees than its reputation may suggest is shown in a study by the online job posting platform YourCareerGroup: the respondents particularly valued the teamwork in their job, but also its variety, customer service, international career opportunities – and the different cultural backgrounds of their colleagues. There is hardly any other industry where workforce diversity and cultural variety are more frequently found. Another important benefit are flexible working hours. What is more: especially in Germany, where around two million people are employed in the hospitality industry, working conditions have improved – even though a lot still remains to be done.

#gastrofamily now spreads this message. The initiative addresses prejudices against hospitality jobs and at the same time takes a look at the industry’s often home-grown problems. By doing so, it wants to stimulate a discussion on how to sustainably improve the industry’s culture so that employees remain loyal to the hospitality sector in the long term. The name of the campaign was thus selected on purpose: working as a team in the hospitality sector creates a kind of family feeling.

A message with a long-term effect

Via Instagram and Facebook, #gastrofamily attracts interested parties to the website: the landing page www.gastro-family.de, which is at the core of the communication campaign. This is where restaurateurs can download video clips, images, customizable posters, text modules and instructions free of charge.

Potential employees can access general and industry-specific job portals under the menu item “Wege in die Gastronomie” (roads to hospitality). Experienced restaurateurs like #gastrofamily ambassador Kerstin Rapp-Schwan share how they got into the hospitality sector, dealt with the obstacles encountered and made their way to success with plenty of passion and commitment. In addition, visitors of the website will find an interesting mix of offers and links to further information, such as podcasts, blogs and scene magazines showing how this industry “ticks”.

However, the initiative does not only address people interested in this industry through digital channels. Starting from June, the #gastrofamily ambassadors will also attend a series of events and will use the campaign to promote gastronomy as attractive employers. In addition, they are looking for additional partners. The plan: to drive this initiative forward with the support of as many industry players as possible in order to reach the target group in the best possible way.

With this plan, #gastrofamily is intended to have a long-term and sustainable effect on the industry and also continue beyond the year 2022, if necessary. That is because, also in the future, the hospitality sector will need all those who are willing to give their all – and have a burning passion for their work.

Here are 3 examples of those engaged in such aids and support programmes:

In Slovakia, a direct neighbour of Ukraine, already during the first days after the war, METRO Slovakia provided food aid directly at the borders in cooperation with the Slovak Modern Trade Alliance (SAMO) and the Red Cross and under the auspices of the president of the Slovak Republic Zuzana Čaputová. At the same time, they provided targeted food supplies directly to Ukraine. The 6 METRO stores are furthermore in contact with individual humanitarian organisations and volunteers, and many of the METRO colleagues are actively helping war refugees by providing food at the borders and offering accommodation.

Poland has also been a major destination for many Ukrainians who fled their country. Accordingly, over 300 volunteering employees from MAKRO Poland offered inbound refugees housing or transfer from borders to safe places. MAKRO Poland also created an employees’ fund in cooperation with the Piotr Kotowski Foundation to provide financial support to children relocated to Poland from Ukrainian orphanages. Furthermore, the Polish colleagues collaborate with the Food Banks Federation to provide donations of food products as well as financial aid.

Continuous help has been provided by METRO Romania, who has cooperated with humanitarian associations in northern Romania to leverage its modern infrastructure to support the refugees. In addition, METRO Romania also launched a dedicated humanitarian campaign that between 28 March and 16 April, the company donated 2 RON (Romanian Lei) to the Romanian Red Cross for every customer invoice registered in its wholesale stores and in the online shop. The initiative has been met with very positive response and great commitment from customers and the public.

Also, beyond these examples, various METRO countries support the Ukraine with donations and aid programmes, including Austria, Bulgaria, Germany, Hungary, Italy, Kazakhstan, Moldova, Netherlands, Portugal, Serbia, Slovakia, Spain, and Switzerland. Find a complete overview of the help initiatives here.