What are the two things every successful restaurant has in common?
1. Clear costs
2. A reliable Supply Chain
We believe the success of restaurants in the future will be necessarily connected to their control of their supply chain. Here’s why:
Ask any restaurant owner or chef what the most variable expense at a restaurant is and they will tell you food cost. It fluctuates most frequently and can largely be the reason for success/failure.
Most of the time we ask ourselves,
“How do I lower my food cost?”
This is an important question, but another equally important question is
“How do I reduce the fluctuation in my food costs?”
The answer lies in your supply chain.
Food is changing.
If you’re a restaurant in Ontario you’re most likely eating California vegetables during the winter. Historically the supply chain from California worked because they could export tons of food, literally. Yet Californian agriculture is soon to be a thing of the past. California is entering year 4 of a predicted 10 year drought. NASA Scientists are predicting that California could run out of water by mid 2016.
What does this mean for you as a restaurant owner? Unless you’re already purchasing locally, your produce prices, no matter where it comes from, are going to increase because as prices skyrocket in California they will climb everywhere else in the world (though at a lesser rate).
The days of watching your products show up at your back door like magic are over.
The industry who built this system destroyed the environment, put tens of thousands of farms out of business, and have now ruined one of the most fertile places on earth, to the point where they have no more water and can’t grow anything.
We realize that not everything can come locally, but the point is that if we don’t start sourcing closer to home we’re going to exhaust our international options beyond repair, and no one wants to live a life without pineapple or avocados…
Once you accept that the food industry is radically changing, the next question you ask is,
“Okay, how do I own my supply chain to control my costs?”
Roughly 6 seconds after asking this question you wake up, realize that owning your entire supply chain is out of reach for 99.9% of all food businesses, and then go back to panicking about the financial future of your restaurant.
Eventually we start to get creative and ask,
“How do I gain confidence and clarity in my supply chain without owning it and absorbing unwanted risk?”
Now you’re talking.
In an ideal world you would know where your products come from, who grows them, the prices for that year, have your delivery schedule and payment terms agreed upon, and you would focus on actually growing your business, instead of having to adapt at the mercy of an unreliable supply chain.
For most restaurants today gaining this clarity is nearly impossible. It’s tough to build a reliable relationship with a 2,000 acre tomato farmer who’s products end up on a truck and 4,000 km’s later are given to you in a white cardboard box at the back door of your kitchen. In every way you are at the mercy of the grower and the distributor.
The alternative is to focus on local relationships where you have more control.
Very quickly you will realize that this gives you the supply chain certainty you crave. New tools help you identify farms, understand available quantities, lock in on pricing, order at the click of a button and streamline delivery, allowing you to get back to focusing on operational excellence.
Make no mistake, in the future these supply chain models wont just exist, they’ll be demanded. Food businesses will demand them for financial stability, suppliers will demand them for cash flow and consumers will demand them for transparency.
No matter the food business you’re running, the days of purchasing with no regard for sustainability and no desire to have knowledge of production and pricing are quickly coming to an end. In the future local sustainable products win, every time.
Welcome to Supply Chain 2.0. It’s here to stay.