With demand high and supply erratic, “it’s a distributors’ market now,” three restaurant supply chain execs agree, with distributors cutting operators off and raising fees because they can.
So how are operators navigating around these challenges? That was the million-dollar question addressed during the session “Solving for Supply Chain” at last month's Restaurant Leadership Conference held in Phoenix by Winsight, the parent company of FoodService Director.
Denise Herrera, VP of food and beverage for Burton’s Grill; Brenda Serrano, director of supply operations for Cheesecake Factory; and Susan Taylor, president and CEO of Juice It Up! shared strategies that have worked for them during the last year.
Deepening the supply chain by adding more specialty distributors has helped keep Burton’s Grill from 86-ing a menu item—something Herrera tries to avoid. “I work with my broadliner to pre-allocate products, especially proteins, and order further out,” she said. “But if the broadliner is out of something, I’ll go to specialty vendors, particularly for dairy, produce and seafood.”
She’s also negotiating longer contracts on certain products, such as cooking oil. After three months, if the price goes down, Herrera can renegotiate.
“Product fill rates by broadliners are typically at least 98%, but currently, they’re around 80%.”
—Vince Purves, president of Consolidated Concepts and session moderator
Taylor also preorders, putting together a list of everything she can possibly need. “Since most of Juice It Up’s products come in frozen, we can order more and store them until needed,” she said.
If substitutions are necessary, Taylor contacts different suppliers to jump ahead of what she may need and “form Plan A, B and C. Plus we have a research scientist on staff who can try various substitutions. There can be successes with alternative products.”
Since Herrera is also the head of culinary for 16-unit Burton’s Grill, she is adept at making substitutions. The menu focuses on scratch-made dishes and allergy-friendly dining, so Herrera has to tap her expertise often. “We get delivery reports every day and are proactive about what to substitute if the distributor is out of something,” she said. “Recently, I couldn’t get gluten-free panko, so I crushed Rice Chex cereal and used that instead.”
That’s not so easy at The Cheesecake Factory, with 295 units and 2,000 SKUs. “Culinary doesn’t understand when we can’t get something,” said Serrano. “And there are few substitutes for some of the ingredients on our menu.”
Serrano works with her broadliner on a skip-day order and delivery schedule so she can see what’s available and give them more time to get it to her. “They’ll tell me ‘this is what I have and can deliver’ so I can solve the issue ahead of time,” she said.
Serrano also partners with a supply chain technology company to forecast, control inventory and expedite the process. “We have 18 supply chain team members and we cannot handle everything,” she said. “Tech can help get information to the distributor and organize orders and deliveries.”
The panelists all agreed that the distributor-operator relationship has to move away from being transactional and price-focused and become more strategic. Right now, distributors have the upper hand—they’re raising fees and prices because demand is strong and supply is scarcer.
“Cheesecake Factory is looking for a new distributor because it’s become more of a price game in the last year,” said Serrano. “Distributors who are price-focused are going to lose. They have to bring value to the relationship and be held accountable.”