Four restaurant executives discussed challenges with supply chains a the Fast Casual Executive Summit in Indianapolis, Indiana.
Ask any operator what their biggest challenge has been during the COVID-19 pandemic and they’re likely to give you two: labor shortages and supply chain issues. Indeed, labor shortages have affected supply chains, making it harder for brands to obtain even the simplest of items, right down to pizza boxes and paper goods.
Coping with supply chain issues was the focus of a panel talk, “There’s No Crying in Supply Chain Management” at the Fast Casual Executive Summit held last month in Indianapolis, Indiana. It’s one of several industry events organized by Networld Media Group, which is the parent company of Fastcasual, Pizza Marketplace and QSRweb. The media company’s next event is a virtual conference, #QSRNext, on Nov. 9.
The annual three-day Fast Casual Executive Summit event draws executives from leading brands around the world.
Speaking at the supply chain management session was George Frangos, co-founder of Farm Burger, Jennifer Silveira, senior vice president of supply chain optimization for Consolidated Concepts, and Samir Wattar, chief operating officer for Layne’s Chicken Fingers. The session was moderated by Mark Cimino, SVP of account management for Buyers Edge Platform, a software and analytics company providing data-driven insights and technology to the food service industry.
Silveira said her company had trouble sourcing onion rings, which seemed simple, but as they were launching a virtual brand, onion rings were not a part of their regular menu and needed to be procured. “We had to get creative,” she said. The kitchen team worked with the brand’s produce distributor and they went with Restaurant Depot to buy the onion rings. Since it was a soft launch, they only needed enough for 30 out of 110 restaurants.
“It’s one of those little things that you think ‘how could this take a lot of time,’ but it did,” Silveira said. “It was a real challenge.”
Frangos said Farm Burger had difficulty getting paper goods, especially with an increased demand in carryout and third-party delivery. Prices doubled for eco-friendly paper goods. He had distributors say they’d show up and then never arrive, or bring the wrong items. Farm Burger went with a smaller paper goods company in his region that had wanted his business.
“We went to them directly and said ‘What would it take for us to be your primary buyer?’ and they said if we could commit to a certain amount they could go out to market and buy X amount of pallets, warehouse it for us, and we talked about actually giving them cash and paying up front for those items so we could at least have that consistent supply at the same time,” Frangos said. “It was out of the box.”
Wattar said the way he avoided supply chain issues was to build strong relationships with his suppliers.
“They’re facing the same challenges we are facing, from labor shortages and raw materials,” Wattar said, “but the biggest challenge the restaurant industry faces is open communication from vendors and suppliers.”
He cited a new product Layne’s Chicken Fingers just introduced. He met with a vendor on a Tuesday, and by Thursday he found out that the supplier was out of that product. The rep didn’t even know the company was out.
“How can suppliers and vendors have an open line of communication with us, the operators that are running the restaurant? That’s the only way that we will survive,” Wattar added.
Silveira said her company got a call at Christmas time last year from GFS telling they wouldn’t be able to fill her restaurants’ orders the following week. They said they wouldn’t be able to make the two weekly deliveries that were part of Consolidated Concepts’ agreement with GFS. They’d have to shift days.
“Our busiest week was between Christmas and New Year’s,” she said. “We jumped into action. We came up with a plan that they would alert us every night by 6 p.m. which routes they would have to move (and) which they’d have to change. We immediately put a memo out to the restaurants to let them know that they needed to build at least two days of safety stock on key items because we are not going to be able to give you more than eight hours’ notice that you may or may not get your delivery the next day.”
That went on for about 10 weeks and the restaurants learned to deal with the change. “None of this would have happened smoothly if we didn’t have this open communication with our distributors,” Silveira added.
Frangos said internal communications are critical as well. With prices constantly jumping, his team had to work behind the scenes to get new contracts, find new suppliers and get orders in their pipeline. Kitchen managers, chefs and general managers have for years just hit the same button to order the same supplies, “and now you’re asking them to order a different spec from a different vendor, and then maybe two weeks later you’re asking them to get that same item from (another) different vendor,” he said. “There are a number of times where a slice of raw bacon goes from 30 cents to 70 cents. Even though it was contracted at a lower price, you got a week’s notice. We make all these moves and we get another vendor, we get another local source and two weeks later I’m going through invoices and numbers and data and I see two stores are still ordering from the wrong vendor.”
Internal communications are critical in those instances for consistency for the brand.
Wattar said the ownership for communication is on the operator to be proactive and ask for information, and to hold the vendor accountable to give operators that information, which they all have, no matter the distributor. Wattar has a weekly meeting with his accounts manager.
“Build that relationship with whomever is managing that account, and that will alleviate a lot of the issues,” he said.
Mandy Wolf Detwiler is the managing editor at Networld Media Group and the site editor for PizzaMarketplace.com and QSRweb.com. She has more than 20 years’ experience covering food, people and places.
An award-winning print journalist, Mandy brings more than 20 years’ experience to Networld Media Group. She has spent nearly two decades covering the pizza industry, from independent pizzerias to multi-unit chains and every size business in between. Mandy has been featured on the Food Network and has won numerous awards for her coverage of the restaurant industry. She has an insatiable appetite for learning, and can tell you where to find the best slices in the country after spending 15 years traveling and eating pizza for a living.