“Ask the Expert” features advice from Wade Winters, Vice President of Supply Chain for 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 can restaurant operators do to better prepare for short supply while being responsive to guests?
A: We have all experienced the guest that asks why something isn’t on the menu. It’s embarrassing, and your response is critical to maintaining the credibility of the restaurant and keeping the guest coming back. While the explanation might have valid reasons, the guest doesn’t really care. They just want the item they ordered. The obvious solution is to never be out of anything on the menu, but the reality is there are challenges sourcing products, mismanagement of inventories, delivery and distribution issues, and insufficient preparation at the restaurant level.
So how can restaurants better prepare for supply issues and avoid the awkward conversation on why they don’t have a customer’s favorite dish?
Challenges Sourcing Products
With the advancement of agriculture and manufacturing capabilities, many products are available year-round. However, some products are still only available seasonally or have extreme price variances depending on the time of the year (i.e. avocados, chicken wings). The key to navigating these variances is to make sure the critical items on your menu are not at risk for price volatility or availability. Having a diverse menu that can adjust to market conditions is the key to a successful menu. There also are opportunities to take advantage of seasonal products that are abundant and lower in cost compared to other times of the year. Having flexibility on your menu to add and remove items based on opportunities is critical to surviving in the world of foodservice.
Mismanagement of Inventories
You could have the best price on every product, but it doesn’t matter if inventories aren’t being managed and there is a large amount of waste. All the savings on the front end can be neutralized if not reversed at the restaurant level if inventories aren’t managed correctly. Having par levels, adjusting orders for seasonality, utilizing forecasts, accepting deliveries “in person,” and implementing FIFO (First In First Out) will minimize inventory losses.
Delivery and Distribution Issues
Distributors are the lifeline for getting products to restaurants. If they don’t make a delivery, you don’t have anything to sell. Distributors have constant challenges that are related to weather, trucks breaking down, driver hourly requirements, access and security to specific locations, dock height / truck lift-gates, and let’s not forget about traffic! While just-in-time-inventories is a great method theoretically, be sure to consider possible delays or missed deliveries. Have a contingency plan to consider manufacturers not filling orders, late deliveries, products not arriving on a delivery, mis-picks, substitutions, and let’s not forget mother nature, who can throw anything at you weather-wise. Be sure to have inventories on the most critical items that can support your expected requirements for an additional day beyond your scheduled delivery day, but also adjust for extreme weather conditions that might delay replenishment of your inventory beyond that time frame. Review usage, sales history for benchmarks, and consider weather and holidays for additional adjustments.
Insufficient Preparation at the Restaurant Level
Proper planning for the day’s demands are key. You can have plenty of raw material inventory in-house, but if there isn’t time to prepare the ready-to-cook product from the initial ingredients, you might as well put it on the 86 list (food service industry term to describe an item no longer available on the menu). Preparation and forecasting is something every restaurant is used to; they do it every day. But have you reconciled the amount of meals that couldn’t be served due to availability and were substituted by a higher food cost menu item? Have you evaluated the amount of menu items that were over-prepared, not ordered and wasted? Any cost savings established with competitive pricing agreements, with suppliers on raw material products, can be eliminated by improper management of the prepared items at the restaurant level.
The supply chain is a link of many steps, people and processes. If someone doesn’t do their job or meets expectations, the result can be a loss. Foodservice is a teamwork industry that relies on the grower, manufacturer, shipper, distributor, restaurant, and guest. While nobody has a crystal ball (that actually works), preparation and contingency plans will minimize chances of not having inventories to produce the menu items that your customers want and come to your restaurant for. Customers have high expectations and value their dollar, so don’t give them a reason to go somewhere else because an item they want is on the 86 list.