Banning plastic forks will be a headache for hospitality firms
Banning plastic cutlery is a win for environmental campaigners, but for restaurants battling inflation and rising energy bills, it could create more problems, writes Mark Stefanini
If you want some fish and chips to go, soon you won’t be able to eat them with a single-use knife and fork. Plastic cutlery, plates and trays will be banned in England, the government said earlier this week.
There will no doubt be celebration in environmental circles. But the decision will also be a cause of concern for businesses that regularly buy and sell single-use plastic products – in other words, hospitality. A sector which is already struggling with climbing prices.
Some businesses might have contracts for plastic cutlery long into the future, and for many there will be a question mark over how far they will still be required to pay for those contracts once the products are banned, not to mention how much it will cost to buy alternative products. Manufacturers in particular may be troubled by the thought that customers could seek to cancel contracts or refuse to accept delivery of single use plastic products that were contracted for previously. It creates a genuine risk of legal claims.
Some contracts may specifically provide for what is to happen where there is a change in legislation, or may contain a “force majeure” clause – which relieves a party in a contract from their obligations if some external event were to get in the way of performance – which is broad enough to cover a change in legislation. There have been other bans on plastic products in the past, so it’s not out of the question this was foreseen in many contracts; they saw the way the wind was blowing.
Other businesses, buying products in advance, will want to adjust the volumes of the orders.
The question facing supply chains after a legislation change often is one of relationships; businesses need to engage with their partners and try to address the problems and resolve them before the changes come in. This is particularly important as a risk mitigation measure. Many of these relationships have already been tested, perhaps quite significantly, over the last three years as a result of the pandemic, the war in Ukraine and the general global supply chain disruption.
It’s inevitable there will be contractual disputes as a result of the new rules. But firms and suppliers who take appropriate measures early to try and find a resolution, will find themselves in less strife. Of course, it’s unsurprising that early legal analysis generally leads to better outcomes in relation to such disputes, this can easily be overlooked by businesses facing issues on multiple fronts and extreme cost pressures. This is especially true at the moment for businesses in the hospitality sector.
Over the last few years there have been multiple supply chain crunches. It’s been a lesson in adaptability finding new solutions, often in very short time frames. But it’s also about valuing customer and supplier relationships.
Given the economic uncertainty that we have seen in recent years and the current downbeat economic forecasts, these types of relationships with supply chain partners provide one of the crucial building blocks of supply chain security. They may ultimately pay dividends in the longer term, helping businesses to weather future periods of economic turbulence.
Jonathan Cohen is a Senior Associate at Mayer Brown and contributed to this piece