Supply Chain Planning for a New Restaurant Opening
4 Min Read By Consolidated Concepts
MRM’s “Ask the Expert” features advice from Consolidated Concepts Inc.
Please send questions for this column to Modern Restaurant Management (MRM) magazine Executive Editor Barbara Castiglia at firstname.lastname@example.org.
Q: What is a basic supply-chain checklist for a new restaurant opening?
A: Opening new locations means your brand is growing. It’s an exciting time, but there is a tremendous amount of planning required from a supply chain standpoint to support the growth. The location of a restaurant isn’t just important from a customer count and sales standpoint; it’s also critical to make sure products can be delivered efficiently from the appropriate distributors. This means supplies get delivered at the right time and at cost-effective prices.
Most restaurant chains have a list of proprietary products that must be available to all locations. These are the products that identify their brand and separate them from their competition. If a distribution center only services one or two locations, stocking those items may a challenge due to low usage, minimum order requirements, shelf life challenges, higher freight costs, etc. When possible, the number of distributors should be limited to maximize the volume, costs and efficiencies. However, if a location is too far away from the distribution center, additional costs will likely be incurred due to the extra miles involved, especially if the location is outside the distributors normal ‘delivery zone.’ Order lead times are longer and the ability to recover from mis-picks, missing items, or damaged products are much more challenging. In this situation, it might make sense to set up a new distribution center. Both scenarios should be reviewed to determine which option is most suitable.
There is an extensive checklist of items that should be considered for a new restaurant opening. Here are some of the big ones from a supply chain perspective.
Have your distributors identified well in advance. Determine if a ‘broadline’ distributor will be able to supply all products or if additional distributors are needed for specialty categories such as produce, meat, seafood, dairy, etc. Distributors will be key to the success of any restaurant. They can make or break you so it’s critical to partner with the right distributors. It’s important to have accounts established in advance to avoid any issues with credit and confirm that everything you need to run your restaurant can be supplied by the chosen distributors.
Product List / Order Guide
Have all necessary products, specifications, and supplier contracts identified with the appropriate distributors. If you are using the same distributor from existing locations, this is an easier process since the items needed are already being supplied. However, if a new distribution center is going to be used, the process to match the products, load any established contracts, and bring the proprietary items into stock can have an extensive lead time. A cost analysis should be conducted that considers any pack size variances on alternative items; make sure the cost per unit (i.e. pound, ounce, each) is being compared, not just the cost per case. A minimum of 90 days should be dedicated to getting a new distribution center set up.
Identify delivery restrictions and make sure any necessary accommodations are made to ensure deliveries can be made. Some restrictions may include special equipment for deliveries, dock height/length, stairs, security clearance, hours allowed for deliveries, etc. It is strongly recommended that distributors make a “dry run” to identify and avoid any potential issues that might take place on the routing and initial delivery. Another important factor is to have a consistent delivery driver. Consistent drivers will know the idiosyncrasies related to the deliveries. If the delivery drivers change frequently, there will be relative problems and delays which is never good for the time-sensitive restaurant industry.
For larger chains the construction team usually coordinates the installation of the major pieces of equipment, but supply chain commonly helps coordinate the installation of soda fountain machines, tea brewers, and possibly coffee brewing equipment. Suppliers should be contacted and provided with the appropriate dates for installation of this equipment which needs to be coordinated with construction since electricity and water are required. And don’t just assume that the suppliers just have equipment readily available on the shelf. Be sure to give them as much notice as possible so they can reserve the appropriate models in the appropriate quantities for the required dates. All equipment should be properly tested & calibrated, and training should be provided to all employees that may be involved in the use of the equipment.
Items required for Health Inspection
Prior to opening a new location, specific items will be needed from your suppliers & distributors to pass the health inspection. Nothing can stop progress of a restaurant opening than failing a health inspection. It is critical to know what is needed, when they are needed, and the quantities required to meet the inspection requirements. Outside of the construction responsibilities, typical items needed from supply chain include hand soap, hand towels, dispensers, cleaners/sanitizers and a first-aid kit. These items can be delivered by the appropriate distributor; however, based on the timeline and the limited number of items it might make more sense just to have these items shipped directly to the restaurants via UPS/FedEx from the manufacturers.
Most products will be needed prior to the actual opening for staff training purposes. Unless perishability is a concern, the distributors should have all required products in stock at least one week before the initial order, preferably farther in advance to give more time to recover from any issues or delays in the supply chain. To avoid any items being missed for the opening order, the order should be placed several days in advance with a specified delivery date and time.
Distributors should pick and palletize the order and stage it for delivery to make sure all items on the order are reserved for the shipment to the restaurant. By placing and picking the order several days in advance, distributors have time to recover if anything is missing which is critical to the opening of the restaurant.
There are many unknowns for a restaurant opening. Challenges are inevitable. However, with proper planning and supply chain strategies there will be less opportunity for the unknowns to ruin opening day of your restaurant.