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One of the most important factors to a restaurant’s success is its supply chain management. Sounds easy enough, right? But, there are many elements that impact how raw materials get processed into food and end up in the hands of consumers.
Supply shortages caused by COVID-19 and other supply chain issues have affected restaurant menus across the United States, according to the National Restaurant Association. Not all problems can be avoided, but proper management tools can help you prepare your business for the good, bad and everything in between.
Breaking down your restaurant’s supply chain
As unique as every restaurant is, the supply chain looks pretty similar for most businesses. It can also be said that most restaurants that nail down the supply chain management procedures find success.
So what is a supply chain? And, why is it so important? First, a supply chain refers to the process of getting raw materials to a restaurant and on the customers’ plates for them to enjoy. It seems like a simple process, but it includes sourcing raw materials, delivery logistics, production, distribution and inventory management. It’s important because it determines the quality of food a restaurant will serve, how much that food will cost and how much a restaurant will ultimately make. It also improves customer satisfaction by having the menu items that people want for a price they are willing to pay.
Let’s break down the supply chain process.
1. Sourcing raw materials
Before you procure goods, you have to source them. Sourcing is the process of finding and selecting suppliers to provide you with the goods you need to run your business. It’s important to test food suppliers for quality, negotiate prices and contracts and establish standards for the goods you are choosing.
Logistics is the part of the supply chain where raw goods are delivered to the restaurant. It’s the logistics team’s responsibility to get items from point A, the source, to point B, the restaurant, as quickly as possible for an affordable price. A restaurant does not want to be shipped rotten or spoiled food, which is why the delivery is so important.
Production is where the chefs, bakers and culinary artists come into the picture. No matter what type of food your restaurant serves, production is the process of turning the delivered raw materials into the food being chosen off your menu.
Once the raw goods have been turned into a finished meal, distribution is the part of the supply chain that serves that meal to your customers, either directly from the kitchen, through takeout or delivery. The customer is part of the supply chain without even realizing it as they enjoy the meal they’ve been served.
5. Inventory management
The last step of the supply chain is inventory management — keeping up with what needs to be ordered and what raw materials are running low. The goal is to have the right items at the right place at the right time. This means paying attention to customer demand and anticipating the needs of your chefs and staff.
Common challenges across the supply chain
The National Association of Manufacturers released its Q1 2022 Manufacturers’ Outlook Survey, which found that 88.1% of respondents said supply chain challenges were a primary business challenge, 85.7% cited increased raw material costs and 79% are unable to attract and retain quality workforce. These are problems that businesses of all sizes are facing — and the restaurant industry is no exception.
With many factors playing into the supply chain, problems are bound to occur. Knowing what challenges might affect your restaurant will help you manage issues.
Raw material shortages
COVID-19 disrupted many supply chains across the globe, and food supplies are no exception. When farms, manufacturing plants, warehouses, distribution centers and shipping companies have problems, getting raw materials to restaurants becomes difficult. Ultimately, when there are no supplies to ship, the supply chain is put on pause until products are available.
According to the National Restaurant Association, the restaurant industry is still 750,000 jobs short of the pre-pandemic employment numbers. Although many people have returned to restaurant jobs since, there are still many empty positions needing to be filled. Staffing shortages put a strain on current employees and can result in customer dissatisfaction. For more tips on how to handle a staffing shortage at your restaurant, click here.
Rising cost of goods and services
In order to gain the highest ROI, restaurants must buy raw materials at a lower price than they are being sold. With the rise of inflation and the cost of necessary goods, restaurants might not be able to make the same amount of profit as originally planned.
Food distributors are pivotal to the supply chain, but they also experience issues like changing consumer habits, staffing shortages, competition from other distributors and delivery delays — all difficulties that will cause supply chain disruption.
Bottlenecks and backorders
When a part of the supply chain lags behind it causes a bottleneck, or congestion, that slows down the natural progression of business. A bottleneck can be caused by any number of factors, but a big one is backorders — items being out of stock or unavailable for a period of time.
If your restaurant experiences any of these supply chain disruptions, it affects your customer’s experience and your bottom line.
How to improve supply chain resilience
The supply chain doesn’t have to be a headache — it can be a streamlined process that ensures your restaurant’s success. Improve operations, avoid unnecessary headaches and cultivate a positive experience for you, your customers and your employees, all by taking steps toward better supply chain management.
You might be wondering how to actually create a more positive management style. Here are some best practices to get you started.
- Foster a positive relationship with suppliers by communicating well and making timely payments
- Evaluate your vendors often to ensure they are offering you the support and service you need
- Streamline the supply chain with multipurpose partners that can do more in less steps
- Substitute menu items when your restaurant experiences raw material shortages
- Have backup food suppliers just in case your supplier experiences shortages or backorders
- Increase food safety measures to ensure your guests are protected
- Increase inventory visibility to track availability of products in real time and ensure nothing runs out
- Simplify processes by identifying a trusted technology partner that can offer helpful solutions
What Grubhub can do to support your supply chain
Speaking of better supply chain management, Grubhub has tools and technology that you can take advantage of.
Grubhub Marketplace was designed to connect customers and restaurants together. There are 33+ million diners who are searching for restaurants just like yours, and this platform can increase your exposure and drive sales. With higher sales, you’re able to buy the highest quality raw material, pay vendors on time, worry less about rising costs and improve customer experience.
Reach more customers with Grubhub Delivery — one of our solutions to the worker shortage. We have 300,000+ on-demand delivery drivers who can help you get your food into people’s hands.
Launch your own commission-free ordering website with Grubhub Direct. When customers order through this online ordering tool, you get access to their data immediately. What better way to forecast demand and avoid costly shortages? And, if supply chain disruption does impact your customer’s experience, mend that relationship with targeted marketing and promotional tools.
Partner with Grubhub today and experience better restaurant supply chain management.