A Guide to Restaurant Supply Chain Management
Restaurant supply chain management may not be the most exciting part of running a restaurant, but it is essential. If you can’t get your hands on and buy all the ingredients needed for success, then there’s no way to run an effective business.
It can be tough to know where to start when you are just beginning as a restaurateur. But don’t worry- here is your quick guide on restaurant supply chain management that will cover the basics and more!
What Is Restaurant Supply Chain Management?
To understand restaurant supply chain management, you first need to know what a supply chain is.
The supply chain includes getting raw materials, turning them into sellable goods, and distributing them to customers. There are many suppliers involved in this process that specialize in each step.
Restaurant supply chain management is an integral part of the business. It ensures that all links in the process are working to provide what we need and want from them.
Here’s a step by step look at what is involved in a restaurant supply chain:
- Sourcing raw materials. One of the first steps in opening a restaurant is sourcing raw materials, including identifying food suppliers and negotiating contracts with them.
- Logistics. Finding partners that will deliver raw materials is crucial for opening a restaurant business.
- Production. This is the process of turning raw materials into sellable goods.
- Distribution. You are getting sellable goods to customers. There are many ways you can do this, from bringing food to the dining area to delivering food to customers’ homes.
- Inventory management. Keeping track of inventory is essential to know when to reorder supplies and how much you need.
When you’re first starting in the restaurant business, one of your top priorities is establishing a supply chain. That way, if there are any disruptions along the line – such as with vendors or suppliers- then you’ll be prepared for it and will not suffer financially.
The COVID-19 pandemic is a perfect example of how this can happen. At the height of the crisis, many people involved in agriculture and food distribution couldn’t work due to unsafe conditions or lockdowns. This meant that when restaurants were ready to reopen after restrictions had been lifted, fewer raw ingredients were available. Hence, they weren’t always getting enough for customers’ demands.
Food prices have been going up due to low supply and high demand. The Bureau of Labor Statistics found that beef had risen 20% between March and June 2020, so restaurants raised their prices to mitigate the costs.
It’s surprising how little thought is given to the supply chain of restaurants. But this, in turn, has a significant impact on their day-to-day operations.
The Relationship Between Inventory Management and Supply Chain
Manage your inventory well to ensure that you have enough product for customers and a steady flow of food from the kitchen.
Keeping track of inventory is important because it can help you decide when to order more ingredients and supplies. It also helps with demand predictions.
Oracle found that many companies could reduce their inventory by 22% if better visibility into the supply chain. When you can make decisions based on data and accurate forecasts rather than hunches, it’s easier to order what you need when necessary without overspending.
Restaurant Supply Chain Management Best Practices
As a novice, you may not know much about restaurant supply chain management and logistics. Here are some best practices that will help you succeed.
- When shopping for restaurant supplies, try to find the best deals. This includes finding inventory management software that is priced competitively and using food delivery partners who are not too expensive.
- If you are unsatisfied with your current vendor, it is essential to reevaluate the situation at least once a year. There might be better deals and services elsewhere that will work for you.
- Join a collective. Group purchasing organizations can get supplies at better rates than individuals could on their own.
- Streamline your supply chain by finding suppliers that can handle more than one step of the process. For example, find a supplier who will bring ingredients to you instead of making you go pick them up.
- When determining what to do in-house, consider the pros and cons of each step. Is it worth paying a premium for food suppliers? Should you handle deliveries yourself or use Postmates instead?
- One of the worst things that can happen is if you have a new promotion and there’s no interest in it, or people are interested, but they can’t buy what you’re selling because your restaurant ran out. It’s essential to ensure that when revealing new dishes or sending coupons for particular items, you know how much supply will be available.
- There are plenty of tools to help restaurant owners keep up with their supply chains. Inventory management software, for example, can automate tasks that take a lot of time and effort by monitoring inventory levels or reordering supplies when necessary.
- Food safety is essential. Know where your ingredients come from. Remember the E. coli outbreak like the one that happened with leafy greens? Stay updated with agricultural reports from regions where your ingredients are sourced.
How Supply Chain Efficiency Can Boost Sales and Profitability
It’s essential to manage restaurant supply chains well because it can lead to benefits for the business, such as more sales and higher profitability. But how?
The first reason is that when supply chain links can share information, they can collaborate better. This collaboration gives you more control over the business and makes it easier to increase profit margins. Collaboration also reduces risk, which saves money.
For example, a restaurant might purchase bread from a local bakery instead of making it in-house. If the restaurant learns there is a flour shortage, and the bakery will need to increase prices, they can either remove bread while deficiencies are present or find an alternative.
Secondly, efficiency in the supply chain will allow you to spend less on inventory. Oracle’s study found a link between transparency and cost savings when it comes to restaurant supplies: more information about where your materials come from, what they cost, and how shortages may impact you means better-informed purchasing decisions.
For example, if your ice cream shop is known for its seasonal pumpkin spice flavor but nutmeg has become scarce, altering your recipe or offering alternatives can help maintain customer satisfaction while they wait out the shortage.
Final Thoughts on Restaurant Supply Chain Management
If you’ve read this article, then you know everything that there is to know about restaurant supply chain management. Go out and start making friends with food suppliers, keeping an eye on agricultural reports for the latest news in the industry, and looking into software that can help streamline your supply chain.