With full-service restaurants continuing to face declining customer traffic and sales, operators are struggling to devise new strategies to reverse the trend and restore their profit margins. Some are looking for “quick fixes,” which don’t exist. The real solution: increased engagement with current and potential customers that drives both top- and bottom-line performance. The secret to accomplishing this may be somewhere you would least expect to find it: your supply chain.
Good suppliers are as passionate about your brand as you are. They can provide much more than products. They have expertise, insights and ideas, and all you have to do is ask for them. For example, they’ll advise you on potential product choices or alternatives to reduce costs.
However, the supply chain should not be viewed as a short-term solution to declining sales, but rather a strategic operation that will help you weather unforeseen financial storms. Cutting food costs does not increase traffic and sales. In fact, it can impact product quality that damages the brand long-term. The supply chain’s role—especially during challenging economic times—is to find the right products at the right price to help drive profitable business.
Innovate and Collaborate
Innovation is a key component in addressing soft sales, but it takes time to see results. It also requires a collaborative process involving the culinary, marketing, operations, finance, and supply chain departments, all tasked with the same goal: deliver higher, sustainable guest counts and profits. This is where your supply chain team becomes invaluable by reaching out to key suppliers who have rich data and resources that can be used to engineer improvements to your menu, operations, and even promotional strategies.
For example, the culinary team often sets product specifications, but those specs don’t always align with products that are easy to source and cost-effective. A restaurant might buy higher-priced tomatoes that end up being diced, when a lower priced product will serve the same purpose without reducing quality. The same is true for proteins. Sometimes the specified product is not of sufficient quality for its end use; other times the quality is higher than needed. When your suppliers clearly understand your menu and promotional strategies, they can recommend the best and most cost-effective products and alternatives to meet your goals.
Collaboration is key here. The culinary, supply chain and supplier teams need to agree on which products are best for their intended use. Of course, you don’t have to accept supplier recommendations if you don’t think they are the right fit.
The Supply Chain-Marketing Link
A critical part of the innovation process is being the first to identify new culinary trends to stay ahead of the competition. It is no longer acceptable to be a slow adapter. Consumers are savvy and frequent those restaurants that are on trend. Suppliers, with their large amount of data, know how consumer tastes are evolving and can provide you with products to update menus. Poultry is a good example. Although white meat has long been preferred among a majority of consumers, a growing portion of the population now prefers dark meat.
With recommendations and support from suppliers, restaurant operations can more efficiently develop new products. Testing should be constant, and operators need to have new products ready to go at any moment. Think of the situation like the bullpen in a baseball game. Someone’s always ready to enter the game when needed. Keeping an adequate supply of new products in the pipeline allows the opportunity to market limited-time offers that stimulate additional visits from existing diners and attract new ones. You also can launch LTOs by bringing in new suppliers who provide ingredients you currently use, but at a lower cost.
Supplier Selection: Key Questions
Choosing suppliers is one of the most vital decisions you have to make. Ask yourself whether they have the same passion for your brand as you do. Passion translates into greater engagement with your customers, the driving force behind sales success. Many suppliers realize this and are eager to work with you to grow your sales, as it obviously benefits their business. Invite them into your locations, so they can see how the product is actually used. Suppliers are experts at optimizing their products to improve operational efficiency. A test kitchen is a great place to start ideation, however, getting your suppliers into your restaurants will pay dividends.
When choosing a supplier, make sure you can verify their price is competitive. It’s equally important that your supply team have access to a wide spectrum of products and specifications, as this is critical to achieving your projected profitability. Also choose a supplier who provides business data that can guide your purchases six months to a year out. Last, ask if it has a social cause you can get behind that would raise your brand awareness among consumers or a sustainability platform you can leverage.
Focusing on supplier selection while managing the day-to-day needs of the brand is challenging. Outsourcing supply management may be an answer that provides a high level of expertise while allowing your team to execute your brand promise. Working with an experienced supply chain firm protects the investment you are making in your brand. A partner can provide leverage, expertise, and transparency that help you deliver on your brand promise and ensures your supply chain delivers maximum value in all economic conditions.