DENVER--(BUSINESS WIRE)--With restaurant sales weakening amid growing concerns about rising labor and healthcare costs, smart operators are finding ways to drive traffic and protect their profit margins with new supply chain strategies, according to Maryanne Rose, president of SpenDifference, a national restaurant supply chain management firm.
When faced with economic hardship, chains often are pushed into a corner and become extremely reactive, cutting costs to survive and damaging the brand in the process, she said. Forward-looking operators, however, use the supply chain as a higher-level, strategic operation to help weather any financial storm.
“It’s tempting to lean heavily on the supply chain to recoup lost sales by only focusing on saving money. However, driving innovation is a larger responsibility which can result in a strong brand,” Rose said. “It’s a collaborative process that involves the culinary, R&D, marketing, operations and finance teams with the same goals to deliver more sustainable results.”
The information provided by the supply chain is data rich. Progressive chains use predictive analytics to drive collaborative strategic planning. Data, if used effectively, can help restaurants better engineer changes in their culinary, promotional and service operations, Rose said.
“A vast array of business intelligence is available that provides a look into the future, allowing operators to predict what their costs will be, even a year from now,” she said.
Near term, restaurants are in a strong position to stimulate foot traffic if they take advantage of today’s low costs for beef, pork and poultry, all at the lowest prices in the last five to 10 years, according to DeWayne Dove, vice president of supply chain for SpenDifference. “This is the perfect opportunity to use those products for LTOs,” he said. Dove also offered these cost-cutting suggestions:
- Optimize product specifications. Identify how products are currently used on the menu, and be flexible in choosing options that meet quality standards. For example, restaurants that use top sirloin, priced higher now because of demand, can switch to lower cost tri-tip while maintaining the quality of menu offerings.
- Increase buying power by outsourcing the supply chain management to a third party, which can negotiate to take full advantage of lower commodity prices. The savings will offset increases in such overhead costs as labor and healthcare. A partnership also provides access to business intelligence and supply chain expertise that the operator may not have.
- Although commodity costs next year are projected to be near current levels, some products are expected to rise in cost. Based on need, a wise strategy now is to take full or partial positions in soy oil, wheat and cheese for 2017.
SpenDifference offers restaurant chains customized solutions that provide leverage, expertise and transparency to ensure their supply chains deliver maximum value. SpenDifference manages costs and risks, delivering actionable intelligence that supports brand growth.