 Aloha and welcome to Restaurants Hawaii on Think Tech, Hawaii. I am your host, Cheryl Matsuoka, the Executive Director of the Hawaii Restaurant Association. And I'd like to introduce our Executive Assistant, Siobhan Garcia. Hi, Siobhan. Hi, Cheryl. Thank you. Yes, today I wanted to introduce our guest. We have Raymond Orozco, who is the Vice President of Sales at Triple F. Welcome, Raymond. We're excited to have you. Aloha. Thank you for having me today. Today, we'll be hearing from Raymond, who is representing Triple F, a distributor, and how challenging the current supply chain disruption is, and how it's impacting our healthcare facilities, our schools, our military, and anyone in the food service industry. So, first of all, I wanted to have Ray tell us a little bit about the company Triple F. Okay. So, Triple F is we feel we're one of the largest distributors of paper goods, non-alcoholic bar supplies, janitorial products, and healthcare products. I've been here at Triple F for 21 years already. We're working in the purchasing department, but now I do business development and take care of some of the suppliers, and we also try to lead the sales team into giving ideas to share with the customers that we sell to. Right now, it's been a tough time for the last since this pandemic started about getting surprised into the islands, and we just hope that it'll clear up within the next, we're being told it's going to clear up in the next year. So, hopefully, we'll have some better answers for everybody. Ray, did you just say one year? We're just being told. Most of our vendors are telling us now some of the products at least one year. So, to the end of 2022 now. Wow. So, Esteban, why don't you go first and ask the questions to Ray that you have, and then I'll take it from there. Thank you. Yes, so Raymond, for all of the viewers who are unaware of what Bill 40 is and maybe why we would be asking for an exemption. Can you explain a little bit more on this and the reasons why we might be asking for this? OK, well, Bill 40 is a bill that was introduced 2021 basically to ban the sale of foam products, polypropylene material, some plastic bags, and polystyrene material. So, basically, all this product is a one-time-use item and it's going into the waste into our landfill, and we really want to eliminate that. It's going to be, it's the bill is going into a new item. Most of the items are now called the gas or PLA, which is really hard time to get right now because everybody's going into this new thing on the mainland and also the foreign countries are using this product a lot more now. So that just means that it's that much harder for us to get these products. Is that part of why we're asking for an exemption? Yes, it is. Yes. Right now, it's we're being told some of our for our purchase orders have been in since early June and we're not going to see some of the products almost it's almost taken one year to get some of the product that we're ordering. Wow. So I can't imagine what do some of these companies do, you know, if they're waiting on a back order? We are trying to sell what we have existing product right now. You're trying to sub something else differently for the for the product that is short. You're just trying to go to different manufacturers. We're we're using a private. We probably added on like seven more new vendors this year, which we've never had before usually just try to keep a two or three. But we're just trying to get product into the items to to make sure that the restaurants can survive to us serve their special for the takeout restaurants. They need to do that. So so would you say then that means because there's such a back order on some of these other items that maybe ones that are not they're part of the bill 40, they're easier to get and therefore still having to bring them in to use those as a sub? Well, some of them aren't easy to get at all. Even the ones that that we can use right now that aren't going to be bad for bill 40, those we've had the lead time that you have to get right now is like a six month lead time to get your orders and to get product on onto the island itself. It's not just the material. It's packing packaging. It'll be the boxes for the material. The shipping lanes are just really that's what's really causing the problem right now, the shipping lanes and just there's so many containers out there with product that want to that people want to ship. There's no room for it. There's no room on the container ships to bring it in. And so the exemption that, you know, not only our industry, but many other industries are asking for how much of an exemption is, you know, do you feel is a good amount of time and can you explain a little bit more of what that exemption would mean? OK, what we what we would like to get is at least a one year exemption. It's not possible to it's because of the material that you cannot get right now. And some of the material that we feel that is reusable, the harder polypropylene containers, which is basically a two piece container is very thick. It's almost like a Tupperware item that you could reuse. And so we want to make sure that the state will let us the city, I should say the counties, let us use that product and to think about it, it's not going to be going into the waste as much as they think it is as a disposable item. And for the exemption, when would people know if they, you know, we did get this and if we didn't, what are the ramifications of it? Each I said each county is different right now, especially on Oahu. We've been working with the environmental services. We just we just found out today that there is an extension for another month to the end of to the middle of January, I should say. But that's not going to do much because by the time you use your product, it's going to it's going to be. I see inventory wise, we have more product than what we have because also to the restaurants have been slow. You know, there's a lot of restaurants who have inventory your your the numbers that you produce right now in the restaurants. They're not they're not there yet, you know, the what you serve, you know, ever since pandemic, you know, your restaurants are probably down maybe 50, 60 percent, some of them on on on doing takeout, you know, especially the takeouts. We're asking at least for your extension, at least to the end of the year, I feel it's going to be at least one year until we get really fully recovered because what it is, you can get some of the products sometimes like I can get ordered today, but I might not be able to get another order for four more months and to have inventory that long, it's not it's not feasible at all. And when will what or when will be expected to find out if this was? That's up to the mayor to sign the bill, you know, to get the extension. And we just hope that on Mayor Blanchardi will sign the extension that he sees how what is coming from all the distributors and even from the restaurants themselves, that it's not feasible to have this implemented so fast. OK, yeah, I mean, that's it's really hard to ask, you know, not only the restaurants, but like we said, all the other businesses that this affects like Cheryl was saying, you know, hospitals and and our military bases and everybody, you know, it's kind of hard for them to ask them to sit and wait. But I guess that's all we can do at this point. So, you know, thank you for explaining this and how it's all going to work and what to what's to come. Thank you. Back to you, Cheryl. Thanks, Siobhan. So Ray, so, you know, the burning question is, how did this all? Why did this happen? So I'm assuming that there is no product. So is it the plastics that there's no? There is some plastic material out there, not a lot, but also due to labor shortages, you know, the pandemic, it just put all these, especially because we import so much product into the into the US, all your countries are the Vietnam's, China's, the Taiwan, they all have labor shortages right now. So you can't they don't have there's nothing produced. They might have said they might have a product, but there's no labor to produce these items at all. And I said, once they get the items, it's just there's no containers to have the product shipped over to the US at all. And I think everybody's seen that if they look at the news of all the container ships out of California, that that are just sitting out there and not being unloaded. You deal with this every day, Ray, as you like you were mentioning earlier before this call, you know, it's not only plastics, but it's also other type of paper goods that you're also having a challenge getting. If you want to talk about a little bit about that, too, because it's the whole supply chain that has been disrupted due to the pandemic. Yes, yes, it is. We're being told, especially if you go to the your Sam's Club, your Costco's, they're always out of toilet papers. You know, it's not that everybody says they're hoarding. Not a lot of people aren't hoarding. It's just that the supply that they're even getting that we're getting from the manufacturers that there's there's no product at all. It takes the shortage for, you know, pulp, you know, it goes down the whole chain and how to produce the items from the pulp, getting to the manufacturer and all the other components that go to your your boxes. Companies are running out of ink to print on. You know, there's just a really bad supply chain disruption and it's going to last, you know, maybe, like I said, to the end of the year, we've been told some of this is going to be to the end of the year. And like you just mentioned, it's also the cost. You know, I've been getting reports from restaurant tours the cost of products. Hold on. I'm so sorry. Someone's knocking on my wall. The cost of products like chicken, beef, just in general food costs are going up from 15 to 25 percent. So what kind of cost do you see going up? We've had at least 60 percent and if not more 60 percent in cost from last year, 2020 to the start of this year, almost if not more, more than 60 percent in cost of goods. And a lot of it is due to shipping, petroleum prices. The driver shortage on the mainland, there's no drivers that are want to transport the product from here to there. And the trucking industry is really suffering right now. And that also affects us. So what we want to do is give you an opportunity, Ray, to give any suggestions or any kind of comments. I would hope that the mayor really looks into this in any of the city, the city, the city council can look at this, that it's really not feasible to do this to bill at all. It'll help everybody in the industry. It'll keep the mom and pops in going because they had to suffer with these costs. If you go to look at it, it did try by a plate lunch nowadays. It's minimum is going to be ten dollars. Something that cost you four dollars last year is up to ten dollars. So that tells you that's a 60 percent increase of your cost of goods. Like I said, not only does it affect the paper goods, but also affects the food cost also. And so we hope that they'll see that that it is affecting everybody. It's a total industry in the hospitality industry that's being affected by this. So, you know, I do have a quick question, Raymond. Is there something that people can do? Like I know you were saying, you know, we're really reaching out to the mayor and everybody. But is there something that you can suggest to whether it's restaurants or the other, you know, vendors and suppliers? Is there something that they can do to help? Just communicate with, you know, with your representative and try to get while we send a lot of letters to one of the groups that shows introduces the HFIA, they have a lot of letters from our vendors that we've been getting about the shortage of getting products and also their supply chain. And they're also giving us letters on what material we can use that is still good. That shouldn't be banned for Bill 40. Exactly, Ray. One of the requests that we have to any of the manufacturers, it's specifically a manufacturer representative letter saying the concern that they have, the issues that they're having, the challenges that they're having. And these letters are all being compiled and then submitted to the city. So now that we've handled a little bit about Bill 40 and Oahu, which is Oahu's Bill 40, Maui has Bill 52. Yeah, Bill 52, a little bit different than Bill 40 on our Oahu. It'd be nice that all the counties got together and use the same product. I just see, you know, what can be used on what island and what can be used on island, especially for we have five distribution centers around islands. And so in Maui, we had to buy a different lid, coffee lid for our customers out there. And also in Maui, they can use, they cannot use a wax line cup, but on Oahu can. So it's kind of, it's hard to disruption how you're going to order from your vendors. Some customers can do a custom print because the ban is on Oahu. You can use it, but on Maui, you cannot use it. So everybody's having a problem. You know, this is the big companies, the chains that they can accept. They have to do different demands and it's pressure. It's a burden on them and it costs more to do something different on Maui, you know. Exactly, if you have a restaurant that is on Oahu and then you're a restaurant that's on Maui and not even restaurants. You have a coffee shop, you have a bakery, like you mentioned, everybody has to follow all the different guidelines of each island. And so for triple F, you folks also have to keep it straight. So you be sure that you let your customer know, oh, no, no. You know, unfortunately, you can do that for Oahu, but you can't do that on Maui. Yes. And that part of the service that triple F provides. Yeah. And we're just hoping that a lot of the restaurants, they have to apply for the exemptions. You know, it's a lot of paperwork that people have to do on a Maui, especially they want to do, but it's like the green placker that we do here for the Department of Health, well, they had to put a placket on their window that they're compliant with their bill 52 back. So they can use a safe for the new walls, a food tray. The one they can use cannot be wax lined, but we can't do it on Oahu. But it just affects the quality of what you're serving to out there and the food industry, you know, liquid, liquid items. You cannot put into a paper product that is going to be soluble. It's not giving the right presentation, you know, especially from chefs. It's not giving the right presentation to the product. So it does affect them, you know, and they just have to be compliant, you know. We feel that a lot of the retail that the supermarkets, they're going to get away with this because they bring all this prepared food in and they can sell it in any kind of container where if you manufacture on either Oahu or Maui, you have to be really diligent on what you're going to serve it in. You have to really be trying to, I would say, try to be compliant with that bill. I can't imagine what you guys in a lot of your sales must have to go through in trying to stay current on what all the different situations are and, you know, really informing your clients, you know, that must be difficult. Exactly. You know, I mean, that's you just hit on the nail that the salespeople really have to know how to communicate with the chefs or whoever don't or the restaurant is on what products are viable to use and if it's going to work for them to. So they just changed the whole concept of how they are going to serve their food in. Yeah, and when I, like you were saying, you know, they have to be they have to be knowledgeable in so many different areas because it, you know, like you said, Maui is totally different than Oahu and, you know, to be able to sub things out will be totally different. And I'm sure you guys have fairly large clients to really rely on you guys to be that person who knows what is happening on every island, you know, so my hats off to you guys. Yeah, well, it's it's it's just education for all of us, you know, I mean, our sales staff really has to work right now. And, you know, it's kind of a hard time during the holidays. You know, some people still don't want to see, you know, some people don't want to see in person people. So you that's showing the product on on the line or dropping it off. And so they got to, you know, just to drop off. So you got to get an answer back from them. Instead of just getting answer now, it's going to take a while to get an answer. That product is going to be viable for them to use. Yeah, now, something you mentioned a little bit earlier was, you know, I think it was to remember how early on we talked about it. But, you know, because a lot of the restaurants had a dip in their sales and were a lot slower than they were in previous years, I would assume that they have some sort of supply of things that might be on this bill 40. What what do you suggest to those clients of yours that say, hey, I'm sitting on stock that I cannot use? Well, we feel that the environmental services will give them an exemption, you know, to use to use a product that what they do want from us from the distributors is a timeline of when we should be able to get product in into the into the state, you know, so for what they're doing. So you're some of it's six months from now. And, you know, so as Maui, especially, they want you to get that timeline. If it's June, then that that's the data beyond. That's the date you can sell up to that, you know, the product is not feasible for bill 52. I should say, you know, that's going to be compliant. And one of we were on a zoom call last week with this city of Maui and the county of Maui and they were talking about, OK, what if I have a product that's not compliant, but another vendor does? Well, who does that restaurant going to buy from? You know, we have a lower cost, but they have a higher cost and they're trying to be compliant. And we just that we have that we have excess inventory that we can sell to them. It's not fair to some of the distributors. You know, we that's what we feel each with each other, you know, because we might have product this month while we might not have it two months down the road, but they have it. So it's going to be confusing for customers who to buy from. They're going to have to. OK. Today, Triple F has it so and so doesn't have it today. So it's going to be hard, you know, when that's hard for your guys business, right, to be able to project, you know, of course it is. Yeah. And we're getting that right now. You know, some of the we were trying to be compliant for January 1st. But now they keep signing these extensions. OK, it's going to take us two to three weeks, maybe at least minimum three weeks to get the product in, you know, that we can be able to sell again. And so what we're taking, you know, you take a chance of having overstock inventory, you're you're you know, you're duplicating and sometimes even triplicating the inventories because you you have to try to get product in here and you want it. You might get it from three different manufacturers. And so you might get 100 cases from that one, 200 cases from this one and so on and so forth. So it's a lot of inventory that you had to have on hand to to make sure that you can supply your customers. You know, Ray, I wanted to also showcase and have our viewers here. Not only are the schools, the military bases are our health care facilities suffering with the supply chain disruption, but it's also distributors such as yourself and the manufacturers. So as you just said, right, it's it's where you have a limited amount of space in your warehouse. You know, you probably have products that you probably are sitting on that you would love to move, right? Because that's the model of what you do, right? And and if you don't move them and then all of a sudden then feel 40 or 52, right, then you've got all this inventory. Yeah, that's what's happening now. So we're, you know, we're trying to, you know, it's end of the year. So we are trying to get through both. We're trying to eliminate product that's not going to be compliant for Bill 40. And so we're trying to have some good sales on it right now. You know, our excess inventory. And even the new product that we're trying to get in, it's not coming yet. You know, it's so we're stuck in a hard place right now. We're short on some products. So, you know, the other distributors are going to get the business right now. So, you know, sales guys suffer, you know, so lots of income for them because there's no product to sell, you know, and eventually the cost of the goods for them. Everybody thinks that the cost of goods, the new products, the PLA, the big gas are just a small, like a two percent, three percent increase. And that was told when the Bill 40 first came out. It's not it's if you look at the total package, the containers, the cutlery, the serving utensils, the bags that you have to serve it now in. It's about a 30, 40 percent cost to the end user. So if you're a plate lunch, cost you only say a dollar fifty to serve just the raw material. Now it's up to three dollars. So it's going to be hard for the customer to swallow that, I think. Would we agree with you because, you know, as restaurant tours and business people, we try to keep the cost down because we, you know, we understand that, right? It's your economics and sometimes your hand is forced that you have to increase some of your your products, your plate lunches or your meals due to the increase on whether it's your protein or whether it's your takeout goods, you know, whatever it is, right? Because like anything else, we're all in it, right, to support each other. So Raymond, before we close, do you have any other closing statements? And then I'll do a closing statement. Well, my my thing on this, all of everybody wants to be compliant, especially the distributors, we want to be compliant to the new rules. But in the long run, I think we just have to look at it to where let's think of it as we can't get the product. That's the main thing. So let's try to be resourceful of what we can do correctly, you know, and we can and everybody can save money, you know, you'll save money to your customers so you don't have to have the exorbitant prices of for the new material that's going to be coming in the big gas and the PLAs. So many of these restaurants, bubble tea shops, there's right now there's no material that they can use. It's going to be feasible for 2022. I know a lot of them had the leading film. I don't know if you'd have the leading film for your boba drinks. That's not going to be OK for 2022. So they're going to suffer. A lot of customers are going to suffer how they're going to do their things. The cost of goods, I said, are going to be so much more for them. We just hope we just hope that they they can extend the bill for us. Exactly. Thank you, Ray. Thank you so much for taking the time and jumping on with us today. And as you said, you know, we all want to do what's right. We I'm a third generation here. I have grandchildren, so we want to do what's right for our islands and to keep Hawaii Paradise. And yet, as this pandemic rages and still we have challenges with our supply chain, thank you for bringing everything to light to share with our viewers what this disruption has done, not only for the manufacturers, for the distributors and suppliers and also for the nursing homes, the health care facilities, our Department of Education and our schools. And of course, our whole food service industry, because it impacts everybody. And as I mentioned always, this is the Hawaii Restaurant Association. We are the voice of Hawaii's food service and restaurant industry. And again, thank you, everyone, for joining. We look forward to dining together again. Thanks. Thanks, Cheryl. Thank you. Thank you.