Smart Supply Chain Management Can Reduce Food Waste and Improve Margins in Your Restaurant

Around 33 to 40 percent of food goes to waste each year. A large chunk of that comes down to complex problems in global food supply chain management that most restaurants have little control over. What restaurants can do, however, is re-think how their direct food supply is managed – from transport to inventory control. It may be a small part of the overall supply chain, but how food gets to a restaurant has significant implications.

In this article, we’ll look at the smart strategies restaurants can enact in their supply chain management to minimize food waste, improve margins, and ease their environmental impact in the process. 

Enhancing Operational Efficiency

A smart supply chain is characterized by the use of “statistics to manage complexity and risk, from planning to decision-making.”  In other words, it uses data to shape the supply chain, often in conjunction with AI and machine learning technology.

For restaurants, the key to improvements in this area is the advancement of temperature-controlled shipping technology. Here are some of the key smart supply chain solutions that can help enhance restaurant operational efficiency:

• GPS Tracking Systems: These smart systems can do far more than just track the location of a restaurant’s incoming food deliveries (though this alone boosts efficiency). They can also be set up to monitor temperature fluctuations, light exposure, and humidity. This helps prevent food from being spoiled in transit and also helps restaurants ensure that their delivery systems aren’t wasting fuel.
• IoT Monitoring: Internet of Things technology can be used to monitor the various machinery involved in keeping a restaurant’s food supply chain running smoothly. If a fridge breaks down, for example, IoT ensures that an alert is immediately sent out. 
• Route Optimization: This technology uses real-time GPS data, alongside information on weather and traffic patterns, to optimize how a restaurant’s food delivery gets from A to B. From an operational efficiency standpoint, it helps reduce delays and fuel usage.

The Hidden Costs of Food Waste

According to the James Beard Industry Report at the end of 2023, more than 50 percent of the restaurants that participated in the survey showed lower profits than the year before. Most referenced rising food costs as a central factor, but it’s not just the cost of food that haunts restaurants. It’s the cost of waste.

About 17 percent of food is wasted at the consumer level, and yet many restaurants don’t even know how much of their inventory is going to landfill each month. It all gets swallowed into the dark hole of restaurant expenses, where instead, this area should be closely monitored as it can have a huge impact on profit margins.

Too many restaurants try to cut expenses and improve margins by simply buying less or sticking to more affordable ingredients, but without proper food supply management, those efforts won’t see real results.

Leveraging Real-Time Data

One of the most efficient ways to cut restaurant costs and improve profit margins is to invest in real-time data technology. Integrated solutions, such as a restaurant POS system, can track sales trends and link directly to inventory management, ensuring that food stock aligns with customer demand. Tracking and analyzing what’s happening at all times with food and deliveries can completely change how a restaurant operates. Here’s how:

• No double purchases: With proper live food delivery tracking, restaurants can see their entire supply chain at all times and avoid accidental double orders.
• Accurately timed deliveries: Timing is everything. If the special for the night is fresh oysters, but the delivery of those oysters is a day late, it can throw off the entire menu. GPS tracking, dynamic scheduling software, and route optimization tools all use real-time data to keep deliveries on time so that food doesn’t arrive spoiled or past when it can be used. 
• Prepped for delivery: Once food arrives at a restaurant, it usually needs to go straight into refrigerators, but if there’s uncertainty about when the truck is arriving, it’s easy for things to get delivered when back of house isn’t ready to store it. Access to live tracking on incoming deliveries means that restaurants can be better prepped to ensure that the cold chain isn’t broken. 
• Temperature-controlled throughout: GPS tracking and IoT can provide real-time data on the temperature of food in transit, which means better inventory control and ultimately, food being kept fresher for longer and thus less likely to go to waste. 
• More data to use for future orders: Real-time data quickly translates into useful historical data that restaurants can use to inform future purchasing and logistics decisions. GPS tracking isn’t just useful while you’re waiting for that dairy order to arrive, but later in the month when reflecting on how much time these deliveries usually take and whether or not they’re occurring as efficiently as they can.

Adopting Sustainable Practices

What’s particularly effective about smart supply chain solutions is that they’re sustainable in two ways: 

1. They’re easy to implement and use over the long term, so the restaurants get to see significant benefits from the technology.
2. They also make for a more environmentally sustainable supply chain.

It’s not just profit margins that suffer when there’s excess food waste. According to the EPA, the resources required to produce food in the US that is simply wasted is equivalent to the greenhouse gases emitted by more than 42 coal-fired power plants. Adopting sustainable practices that limit food waste helps reduce this issue while also streamlining the entire restaurant food supply chain so that profit margins ease as well. It’s a win-win in terms of restaurant sustainability and financial health.