McDonald’s runs out of milkshakes as supply chain woes grip the UK

August 25, 2021

McDonald's on Tuesday said it had ran out of milkshakes across the country.
The U.S. fast food giant has also been deprived of some bottled beverages throughout its 1,250 British outlets this week.

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LONDON — Supply constraints are weighing on Britain's economy with several big-name firms announcing they have run out of stock on particular items.

McDonald's on Tuesday said it had ran out of milkshakes across the country. The U.S. fast food giant has also been deprived of some bottled beverages throughout its 1,250 British outlets this week.

Last week, popular chicken chain Nando's was forced to close around 50 restaurants across Britain due to poultry shortages, while KFC has also been unable to provide some menu items in recent weeks.

The supply chain struggles are being widely attributed to a lack of truck drivers, caused by a confluence of new post-Brexit EU immigration rules, Covid-19 measures and self-isolation guidance.

Willem Sels, chief investment officer for private banking and wealth management at HSBC, said Monday that while the surge of self-isolation recommendations seen in July appeared to be moderating, there are some signs that the consumer spending boost from reopening the economy is also fading. However, he suggested that the underlying data remains hopeful.

"Businesses that are facing shortages in either goods or workers often have to react by paying more, increasing cost pressures," he said.

"The U.K. PMIs [purchasing managers' index] for both manufacturing and services had already started to drop last month, and they dipped further this month, but they remain well above the crucial 50 mark, meaning that the recovery continues."

Sels noted that the services PMI dipped somewhat more than manufacturing, indicating that some of the supply bottlenecks of semiconductors and other goods could now be easing. However, U.K. consumer demand and staffing in retail businesses continue to face challenges.

"In our view, it is natural that economic growth would slow somewhat after the initial sharp V-shaped recovery we saw in recent months. For equity markets, slower but still positive growth should still support U.K. stocks," Sels added.

Calls for action on supply shocks

The Confederation of British Industry revealed on Tuesday that retail inventories fell to their lowest levels on record in August.

The British Poultry Council this week accused the government of overlooking a worker shortage in the sector, particularly in farming and processing jobs.

EU nationals make up around 60% of poultry meat workers in the U.K., the body explained, but many have returned to their home countries due to a combination of Brexit and the pandemic.

Meanwhile, lobby groups the British Retail Consortium and Logistics UK have jointly demanded further action to address a driver shortfall of around 90,000. The groups have called for the government to review plans not to grant temporary work visas to drivers from EU countries.

Gaps in supermarket and grocery store shelves have been observed across the U.K., and some supermarket chains have begun offering bonuses to increase recruitment.

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