With all the trouble the pandemic has given the restaurant industry these past couple months, you might be surprised to hear that restaurant franchising opportunities have never been stronger. There are brands that are outpacing the overall industry. From an interview with Restaurant Business Magazine, Bruster’s Real Ice Cream reported selling 18 franchise agreements this year and now has 56 stores under construction or in development out of their 200 units (1). Up-and-coming restaurants like Fajita Pete recently announced it will triple locations from their new franchise deals (2). The fast-casual brand Dave’s Hot Chicken has now more than 200 units committed despite its franchise initiative being just launched in October 2019 (3). “When the pandemic hit just a few short months after we launched the franchising initiative, we weren’t positive how it would affect our franchise growth, but we were pleasantly surprised,” said Shannon Swenson, Vice President of Franchising for Dave’s Hot Chicken (3).
According to Jonathan Maze, Restaurant Business Editor-in-Chief, what we’re seeing in the franchising side of the business is not altogether unexpected (1). “Nothing fuels franchise sales quite like a recession, as unemployed workers look for their next career and frequently take a stab at buying into a restaurant or other business to become their own boss,” he said in a recent Restaurant Business article (1). As COVID-19 has dramatically upended employment, more people are making big decisions and considering entrepreneurship as an option. But is mid-pandemic even a good time to buy a franchise? There are a couple of reasons why we can say yes, it is.
Whether you’ve just lost your job or in jeopardy of losing one, finding a new position can be a challenging task. According to Don Daszkowski of the Forbes Business Council, “the competition [for jobs] will likely be fierce” (4). The unemployment rate for the industry is at an all-time high. According to the U.S. Department of Labor, 20.5 million people abruptly lost jobs in April alone. “Your employment may not be stable,” said Daszkowski. That’s why many people will be using this time to reassess their options.
There are good reasons why buying a franchise is better than starting a business from scratch. The latter is riskier and requires the owner to build the foundations from the ground up. “With a franchise, you have the security of a proven concept. The franchisor already went through the pains of trial and error and the expense of branding, marketing and putting systems in place,” says Daskowski (4). Of course, no success is guaranteed and your homework will be to do your research—it’ll go a long way to helping you make an educated decision about which concept will come out strong after the pandemic.
BETTER REAL ESTATE
According to a recent Yelp Report, permanent closures continue to increase across all industries—with the restaurant industry now reflecting the highest total business closures (5). The report shows that as of July 10, there have been 26,160 total restaurant closures, with 15,770 (60%) now permanently closed.
Moreover, other restaurants have shifted their operating models, converting to ghost kitchens, curbside pickup and online ordering, and as a result, there have been more sites available across the US—not only in retail strip malls, warehouses, but also office complex-type spaces (1). “Because restaurants are closing, there are locations we can go in,” said Jim Sahene, CEO of Bruster’s Ice Cream in an interview with RestaurantBusines.com. “End caps, drive-thru, freestanding building. More sites will become available” (1).
With more restaurants feeling increased pressure from further lockdowns and another wave of businesses expected to close in the coming months, the market has become favorable for brands that have been waiting to take advantage of a better real estate market. The same benefit would apply to new franchise buyers.
“Buyers are seeing this as a huge opportunity,” said Jackie Lobdell, VP of Franchise Development with Slim Chickens, a fast-casual restaurant chain that has greatly exceeded franchise growth since the pandemic (6). “Those who are able are taking advantage of the open real estate.”
Thanks to the Coronavirus Relief Funding options (such as the CARES Act), starting or expanding your business has become more feasible with loans guaranteed by the Small Business Administration (7). 2020 and 2021 will be optimal years to take advantage of low interest rates and better deals with the franchisors.
In addition to funding, Daszkowski says new types of resources have recently cropped up online for potential buyers to explore and educate themselves on franchising opportunities—virtual tradeshows, magazines and franchise portals, you name it (4). Franchising has become a popular subject in recent months, and there’s never been a time where so many people could connect and learn the ins and outs of franchising, all in the comfort of their homes.
There are blog posts like ours, too, that discuss trending topics and cover important factors that make concepts recession- and pandemic-resistant. That’s why we recommend you take some time to do research and figure out what kind of franchise would you like to own. Would you make a great franchisee? How much can you invest, or how you will finance the franchise? There are plenty of affordable franchises that you can start with, and if you need more assistance, hiring a consultant can help guide you to make a decision by pinpointing brands that interest you, as well as directing you to financing options you may not know about (6).
The next 18 months are a great time to buy a franchise, but having said that, buying a franchise does not come with a guarantee of success. Like any business venture, becoming a franchisee is hard work, and you’ll need to invest your time, commitment and energy to make it successful. But if you’ve previously considered buying a franchise and have a vision for yourself to become your own boss while still belonging in a larger network, this is an optimal time to figure out your financials, do research, and invest in something new for yourself.
*Special thanks to Jackie Lobdell, Vice President of Franchise Development with Slim Chickens, for providing her expert insights
COVID-19 is redefining jobs (1). Social distancing has radically changed the way restaurants work, causing a spike in delivery and take-out orders, and employees are taking on different responsibilities to fit these new roles in the workplace (2). Another profound shift in the industry is the way staff is now expected to interact with their customers. Soft-skills, defined by the Oxford Dictionary as “personal attributes that enable someone to interact effectively and harmoniously with other people”(3), will be more important than ever, and managers with a long-term vision for their restaurant are using this time as an opportunity to build and strengthen their team. Here are some skill sets we think will help managers manage in today’s environment and how they can teach them.
Conflict Resolution (Guest Relations)
“Conflict Resolution” refers to the way one resolves an issue or problem between two or more people (4). According to the American Management Association, a non-profit educational membership organization and leader in professional development based in New York City, conflict resolution is a core skill for managers and supervisors, not only for handling disputes efficiently, but also for leveraging potential conflict situations as opportunities for critical conversations that enhance work relationships, increasing overall performance, and preventing conflicts from hindering employees’ professional growth (5).
This skillset will hold more significance now during the COVID-19 pandemic. People (guests and staff alike) are on edge, and more sensitive at this time of uncertainty. For example, a guest might refuse to wear a mask; a guest may file a complaint on a poorly handled order via third-party delivery. Conflicts, especially concerning the new regulations around safety and sanitation, are more likely to arise and staff should be aware and prepared so they can handle situations professionally.
You can visit a step by step guide to conflict resolution in the AMA article here (4, 5), but we recommend supervisors to first create opportunities for awareness and open dialogue with their staff. It is natural for people to react instinctively and not think through how they respond, but they can also prepare and practice handling these situations beforehand and practice stepping out of their comfort zone and putting conflicts into context (12). This is why we recommend role playing as part of the staff training—so that managers can first become comfortable with conflicts and practice resolving them in a controlled space. Practice will also help to build empathy for the guests and to handle difficult situations more quickly and readily.
Internal Conflict Resolution
Internal Conflict Resolution is focused more on building trust between staff (or between staff and managers) by addressing and resolving commonly encountered conflicts within the workplace. The same guidelines apply when teaching internal conflict resolution, except that supervisors should be prepared to play a mediator’s role. Open discussion, while it may be an opportunity for the team to open up, connect and clear up misunderstandings, may also stir up emotion and create tension. As with external conflict resolution, role playing and practicing situations will help build trust and credibility with team members, create team resiliency, and help team members gain confidence in holding difficult conversations calmly and assertively (5, 6).
Worksheets can come in handy. Choosing a particular conflict to discuss and dissect as a team can help staff reflect on ways emotions affect their perception of a particular problem. By considering both sides of an issue and feelings one may have experienced, they may be able to find ways to resolve conflicts logically, or else, find a good compromise that satisfies both parties.
We mentioned earlier how the pandemic has been redefining jobs. According to Arran Heal, the Managing Director of CMP Resolutions, the sudden shifts of workload and responsibility have been making it difficult to keep a grip on workplace relationships (7). There’s more potential for misunderstandings, silences, unconsidered messaging; existing interpersonal problems are coming under renewed pressure and new conflicts are being created between employees (7).
A flexible leadership style is crucial in this current environment. One model that we’ve been introducing to our GMs is “Situational Leadership,” a leadership theory that encourages leaders to take stock of their team members, weigh the many variables in their workplace and choose the leadership style that best fits their goals and circumstances (8).
The Blanchard and Hersey model of Situational Leadership is based on two dimensions: leadership style and development level of the employees (8). Directing leaders (S1) should use specific guidance and close supervision and best paired with employees who are of a low development level (D1: low competence and high commitment); Coaching leaders (S2) explain and persuade and best when working with employees of the D2 level (some competence, low commitment); Supporting leaders (S3) share and facilitate and should work with D3 employees (high competence, variable commitment); while a Delegating leadership style (S4) should be used with D4 employees (high competence and high commitment).
While situational leadership is not traditionally categorized as a soft-skill, this particular leadership model is an excellent tool for managers, helping them to modify their leadership styles based on their evaluation of a staff’s competency and commitment levels. No one size fits all, even in leadership, and managers who can understand and utilize different leadership styles will find it easier to effectively drive behavior change, accelerate employee development, as well as manage their employees in the COVID world, where roles are constantly shifting (9).
More information and teaching materials can be found here on the main site (9). We found that situational leadership is a valuable addition to managerial training, particularly if used in conjunction with exercises to help identify leadership styles, worksheets to help define development levels, and role playing.
Good communication is the foundation of good leadership, and the need for this soft skill has become more significant with the pandemic. According to Nicole Dehler, vice president of StayNTouch, a mobile hotel property management system (PMS) company based in Bethesda, Maryland, restaurant staff, especially those in front of house, literally compose the “front lines” when interacting with guests and implementing hygiene and social distancing measures (10). “If [staff] aren’t informed of your brand’s messaging on sanitation guidelines and response strategies, management will be more difficult and people could be put at risk,” she said. “It is absolutely vital that you communicate with your employees early and often, and are as upfront and transparent as possible, even if it means having difficult conversations or conveying bad news” (10).
Just as with conflict resolution and leadership skills, supervisors can teach effective communication by initiating hands-on practice, role-playing and introspection (11). To measure the effectiveness of communication, supervisors can collect qualitative information by studying employees and asking them for feedback. Long term measurements could also be taken by considering turnover rates, productivity and employee satisfaction (11).
Many of the soft skills overlap in that they aim to reduce friction between relationships through building emotional intelligence and flexibility. Conflict resolution (external and internal), situational leadership and effective communication will all be critical to harmonizing workplace relationships until the return to normality post-pandemic, and supervisors should consider training their team these crucial skills to improve team building and solidarity.
Goliath Consulting Group offers management training and a host of other services for independent, chain and franchised restaurants. Learn more at http://www.goliathconsulting.com or contact us at firstname.lastname@example.org
By Bora Kang and Colin Kopel
Despite your best efforts to adhere to CDC’s safety guidelines and to make your guests feel safe and comfortable dining in your restaurant, you may face an unavoidable situation where your employee tests positive for the novel coronavirus. According to Will Eadie, Global VP of alliances, WorkJam, foodservice workers are essentially on the front lines and at high risk of getting sick (1). Workers may also be exposed to the virus elsewhere and may be in a situation where a family member contracts COVID-19. So, what can do you when your staff tests positive? Here are resources and advice on what to do when it happens.
First things first. The CDC is your best source for guidelines regarding COVID prevention, intervention and control, and you should consult the website for instructions on what to do when you are faced with a sick employee. Here is a brief overview of the CDC’s content (see website for more details https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/business-employers/bars-restaurants.html ).
1. Advise Sick Employees of Home Isolation Criteria
2. Isolate and Transport Those Who are Sick
3. Clean and Disinfect
4. Notify Health Officials and Close Contacts
Once you have followed these steps you can proceed to damage control. While it is recommended that restaurants temporarily close so that the business has time to clean and disinfect the restaurant, as well as having the rest of their staff tested, the rules regarding closures vary from state and region. For example, the State of Massachusetts now lawfully requires restaurants to immediate shut down for 24 hours (3). Some restaurants opt for closures voluntarily, even though they are not bound by law to close. A running list of restaurants and bars that are temporarily closed in Atlanta, GA, are listed here (4).
Unfortunately, not all restaurants can afford to shut down operations. Most restaurants do not have any form of a safety net left and closing can be devastating. Many operators will close for a few hours to disinfect the restaurant. There are third party companies that will come in and spray the entire facility with bio-friendly solutions. If they do close, restaurateurs leverage programs like Unemployment Insurance to hold their staff over on wages.
Overall, being flexible and prepared to act quickly and take necessary steps to sanitize the workplace will help operators expedite this process.
Notifying the Public
Transparency may be a difficult decision to make as an operator, especially given the financial loss that comes from temporary closures and the possible negative profiling of restaurants that report cases of COVID-19. First consider your number of staff and where their exposure came from. For example, if you have a small number of employees you may be able to narrow down the path of contact, isolating the cases so that you can prevent further exposure; if you discover that one of your staff has had close contact with someone who contracted the virus recently while outside of the workplace, you may be able to manage and contain the situation by asking the employee to stay at home until they fully recover.
Many experts have expressed a more positive outlook for restaurants that have chosen transparency. According to a social media survey by Taylor Adams, “Would You Eat Where Someone Tested Positive?” some diners showed support for restaurants who were honest with their customers (6). One commented: “There are most definitely restaurants that have remained open despite employees testing positive. I am thankful for those that have been transparent and are clearly taking this issue seriously. I hope that we collectively support them” (6). Meanwhile, one prominent restaurant in Colorado faced scrutiny when they failed to report their first COVID positive case to their guests (7).
The topic of transparency can be a difficult issue, and what works for one restaurant is not always going to work for another. Communicating a commitment to sanitation and promoting any vendors that are hired to sanitize the building or additional programs the restaurant is undertaking such as ServSafe Covid-19 Training is key. A restaurant’s commitment to extra safety precautions is a cornerstone to showing guests you are providing as safe as possible dining experience.
Reinforcing Safety Protocols
A staff testing positive can be a much-needed wake-up call for businesses. Operators should use this opportunity to remind your staff about safety and re-training them so that they adhere to the sanitation policies in place, most importantly—masks, gloves, hand-washing and social distancing, such as one provided by the CDC (2). Some operators have added regular temperature checks and deep cleaning into their routines because of growing concern among their employees (8). The Centrolina Restaurant in DC, for example, are enforcing stricter safety policies such as hand washing every 30 minutes, hourly cleaning, and twice-daily temperature checks for staff, after reopening after a positive COVID-19 case (8). Managers should accept staff call-outs due to medical reasons, allowing them to be excused from work if they are not feeling well. who express concerns they may have been exposed should be taken at their word. Many states require wellness contracts that outline symptoms such as fever that require them to stay home until they have recovered.
Collaborating with your employees is the key to effectively communicating important COVID-19 information, according to the CDC (9). We recommend operators to communicate with their employees about planned changes and, most importantly, seek their input. It may be difficult at first to balance an appropriate level of communication, to decide whether you tell your staff if an employee was exposed or tested positive, even after getting the employee’s written consent to share their personal results. Communication transparency is important for good company culture. While restaurants are open during the pandemic there is already an unease among staff and, coupled with another negative industry history of undervaluing hourly employees, there is a certain amount of skepticism towards management.
If someone tests positive, remind them of the environment we are in and that vigilance is their best tool to protect themselves. Let them know all the additional safety measures the restaurant is taking and, most importantly, listen to them. Ask them what would make them feel safer and, when feasible, accommodate the staff. They are the ones on the front line, and you cannot run a successful business without well-trained staff. They need to feel safe and know that the restaurant is here to support them.
Returning to Work
Individuals who have tested positive can return to work when they have fully recovered. There are certain tests individuals can take to determine whether an employee can safely return to work, but go-to resource should be this CDC website where a “Return to Work Criteria” is listed for businesses (10).
Exposure to the COVID-19 virus is possibly unavoidable given the spread of the pandemic, and there is no one right strategy to prepare for its impact on businesses. Overall, operators who can act quickly to employees testing positive, as well as possible closures, will benefit by avoiding further confusion and panic (1). Our recommendation to operators is to keep your staff informed about updates, ensuring that the communication lines are open and streamlined so that staff can be up to date on new safety policies, scheduling, as well as hours and staffing.
Contact us at email@example.com or visit our website at goliathconsulting.com to get information on our training and consulting services.
Every bar manager experiences recurring nightmares of that one delivery day. We all know the one. It is the middle of the lunch rush and trucks keep showing up at the loading dock during times the restaurant has deemed inappropriate for deliveries. The cases of product continue piling up and floor management responsibilities are preventing the bar manager from vigilantly checking in each order. When the dust clears and a proper inventory of each order is finally manageable, the frustration of back ordered product sets in. How can the restaurant operate without a domestic light beer on tap? Does the bar just 86 top shelf tequila for the weekend? Reopening restaurants with current supply chain issues makes this once rare scenario seem to be a weekly occurrence.
With the increasingly frustrating variables in the current restaurant industry, beverage supply chain does not need to be the straw that breaks the camels back. With modified inventory procedures, increased communication and planning, and appropriate training, bar managers can rein in the uncertainty and provide their guests and staff with a consistent product.
Start with the basics of operating a bar. How often are you counting a detailed inventory? Most bar managers will cite a monthly inventory and order each week off either a product mix or visual count. The thought of increasing inventory to a weekly process is daunting and time consuming. The dilemma of limiting inventory counts is outweighed by necessity of knowing what the bar always has on hand and the inventory of comparable product in the event the restaurant runs out of a customer favorite. With the current supply snags, the concept of inventory can readjust to consider like products as a single count. For example, if you carry the same domestic light beer on tap as in a bottle, count them together and reconcile the number with your average weekly combined sales. Compartmentalize top shelf spirits into one count. The restaurant can use a strategy of guaranteeing an equivalent product is always in stock in the event a popular item is back ordered. Consider adding platforms like BevSpot or Barkeep to decrease the amount of time spent counting. Most modern POS systems such as Toast and Revel have built in Inventory options for operators looking to consolidate their programs.
With an inventory consolidated, look for holes in product areas. What products does the restaurant lack a comparable alternative? Are you able to stock up on inventory or bring on an additional alternative to prevent a menu hole? Do your sales reps have any feedback on short-term availability of the product?
Sales representatives from distributors are one of the most under-utilized resources in times of supply shortages. Distributors possess the ability to maneuver delivery days and are more than willing to provide restaurants with weekly warehouse inventories of kegs, wines, and other products. They are also in tune with estimated inventory shortages at the beginning of the week and can advise customers on alternate products. Keep in mind if a distributor is out of a popular product, the restaurant may need to seek a product from a different distributor. My recommendation to our clients is to order product on Mondays and move delivery days to Tuesdays. This provides an additional three days to work with distributors on off-day deliveries for any products that are out of stock and keep the restaurant well-prepared for volume weekends.
Training is the component that brings the tumultuous supply chain together. Staff appreciate transparency and frequent updates that prevent them from feeling the fool when they are unaware of lack of inventory. Maintain an 86 board that is easily available to all staff. A dry erase board in a well-traveled area works great. While it is tempting to scribble the 86’d item on the board, take the time to write out an alternative item. Secure time during lineups to cover the out of stock items and educate on the alternate options. Keep management proactive in updating the restaurant’s point of sale to reflect current inventory levels. Management will find consistent staff training and communication appreciated and reflected in staff morale. Bartenders and servers thrive on consistency and minimizing variables.
Implementing a solid bar strategy can reduce one of the larger headaches of reopening a restaurant during a pandemic. While most of management’s effort and focus is on sanitizing and maintaining a safe environment, it is common to neglect operational concepts such as supply chains. Curious about the state of your inventory or looking for assistance adjusting menu content/pricing to maximize your brand during these fluid times? Goliath Consulting Group can assess your current food and beverage menus/inventories and make recommendations to set your restaurant up for success. Contact us at GetResults@GoliathConsulting.com
The restaurant industry had to adapt to changes in consumer behavior during the COVID19 pandemic, testing out operational innovations and relying on technological solutions that allowed for social distancing and ensuring sanitation (1, 2). But even after the pandemic, sanitation and safety concerns are expected to remain, and the restaurant business model may have to evolve in a way that utilizes more tech-driven service systems. Here are some upcoming tech trends below:
Social Distancing Tech
With widespread concerns of a pandemic rebound, customers will now be more cautious of eating out in crowded places after the COVID-19 outbreak. According to Restolabs, a restaurant management software that offers online ordering systems, continued social distancing measures are expected to bring about an upward trend of automation for customers (3). New delivery systems are likely to be implemented so that food can be delivered in a faster, more convenient and more hygienic way, like drones and autonomous vehicles launched in some restaurants in California (4). Improved AI could even bring about cashier-less drive thrus—much like Amazon’s cashier-less automated checkout systems (3). According to Technomic, even the automat has returned with renewed interest for restaurants now turning to tech-driven service systems (1).
And clearly, online delivery will start to become an indispensable part of the dining culture as customers dine-in less. More restaurants may pivot to self-delivery instead of third party delivery to mitigate fees and have more control over the safety of their food (5).
Tech for Touchless, Contact-Free Dining
According to Toby Malbec, Managing Director of ConStrata Technology Consulting featured in Hospitality Tech Magazine, higher level of protection and assurance of safety measures are necessary to alleviate customers of their health concerns and persuade them back to dining in (6). Contactless-dining is expected to trend as a result. “Germs can exist on plastic surfaces for several days, and the newly educated customer base will be sensitive to the notion of being handed a menu that could easily be cycled a dozen or so times during this period,” says Malbec (6). “Restaurants should look to providing an option for a guest to pull up the menu on their own device as well as look to leverage digital menu board technology wherever possible.” Anti-Microbial POS Screens and other device surfaces may be another component of using digital menus (3).
Payment solutions will have to change as well. Conventional payment models of cash and plastic credit cards carry a high risk of person-to-person transfer of contagions, and the mitigation of this transfer, according to Malbec, can be greatly reduced when restaurants change to contactless solutions such as EMV, tap and pay, and mobile wallets (6).
A growing demand for hands-free, no-touch equipment will result from the COVID-19 pandemic (7). Automatic doors, motion-activated faucets, touchless soap dispensers, automatic paper towel dispensers have been around for a while in the restrooms, but these touchless options have only been “grudgingly” adopted elsewhere (6). More hands-free options are likely to become increasingly implemented in the kitchen area, from touchless trashcans, doors, glove dispensers, sauce, to beverage dispensers.
While hands-free equipment and systems may certainly alleviate consumer concerns about the safety of their food and dining environment, operators may find themselves more invested in the health of their employees. Hygiene and sanitizing apps may start to appear in the workplace, as sanitation becomes priority for most restaurant operators. For instance, artificially intelligent cameras will soon make it possible for operators to monitor safe practices and verify whether employees or customers are following critical safety measures, including all front of house, back of house and delivery processes (8). Similarly, time clocks may have come with the ability to conduct a temperature check on employees, either through some biometric means as part of the clocking in process (6). And, though not yet proven to work against COVID-19, some restaurateurs, as those in Atlanta (9), may install high-tech air filtration and sanitation systems such as UV lights to purify and filter the air for the health of their customers and employees.
The COVID-19 pandemic has changed consumer behavior as we know it and it has changed the status quo of what is expected out of restaurants—sanitation, automation or otherwise. “The only way for us in the industry to keep pace is to digitize, modernize and monetize the guest experience,” says Christopher Siefken, the head of technology for Xenial, a Global Payments company that serves over 135,000 restaurant and retail locations in the U.S.(2). By embracing the shift in consumer behavior and implementing technology that consumers demand, operators can reap the benefits of staying ahead of the game while keeping people safe.
(5) “Future of Food Delivery” https://www.goliathconsulting.com/blog/
by Bora Kang
The COVID-19 pandemic has proven to us all just how interconnected our food system is in the US if not, the world. The supply chain failure and the domino effect of its impact have been a wake-up call for even the veterans of the food industry. Nationwide outbreaks have forced manufacturers to shut down their plants, leading to disruptions in operations downstream in the supply chain (1). Restaurateurs who were eager to reopen their doors after lock-down only a few weeks ago are having to confront temporary product shortages and price inflation, vulnerable to spontaneous out of stock notices or unexpected shipment delays. Perhaps more unsettling is the uncertainty of it all. It’s just impossible to predict consumer behavior, especially when the pandemic is new to all of us.
So the question is: how do you respond? Here are the top three actionable steps we think will help operators overcome the supply chain crisis.
Multiple Sourcing and Backup
If you haven’t considered multiple sourcing before, now is the time. According to John Davie, CEO of Dining Alliance, “Restaurateurs who are reopening and asking what they should do regarding supply chain should prepare to engage smaller suppliers who have multiple sources of product” (2). This is because “as restaurants open fully, most distributors will experience some shortages. Restaurants wanting to make sure they have everything they need should have a few different channels to rely on, especially when it comes to specialty products” (2).
And research seems to agree. According to Costantino and Pellegrino’s study of choosing between single and multiple sourcing based on supplier default risk, single sourcing has the advantage of a strong partnership between buyer and suppliers while lowering purchase price, but this dependency between the two creates vulnerability and increased risk of supply interruption (3). Meanwhile, multiple sourcing allows operators to “reduce probability of bottlenecks due to insufficient production capacity to meet peak demand.” It has the advantage of allowing the operator to have alternative sources of materials in case of delivery stoppage by the supplier, as well as the flexibility and agility to react to unexpected events that could disrupt the supplier’s capacity (3).
Mahesh Rajasekharan, CEO of Cleo, a software company that provides wide ranging big data integration solutions between businesses and applications, suggests that companies become more agile in their efforts to connect with multiple suppliers for the same product (3). “If Supplier A has 50 cases of [a product] for $800, and Supplier B has 25 cases for $750, the buyer can purchase all 50 from Supplier A, and then source the rest from Supplier B based on prior buyer trends,” he wrote in Supply and Demand Chain Executive (SDCExec) Magazine. The key is to adopt a “holistic view of the supplier ecosystem. A company can find the best price at any point in time and refactor supplier integrations accordingly” (4).
You must consider the worst-case scenario and have backup plans in case your food-supply is unexpectedly compromised, especially for your priority products. According to Yerkes, Vice President of Business Development in Supply Chain at Consolidated Concepts in Boston, MA, operators should consider a wide range of options and communicate with your supplier for when a product cannot be delivered—for example, “if you don’t have this product can you do with another substitute?” (5). Other sources recommend using ready-made pre-cut items to save on labor, as well as shifting to different cuts of meat—for example, moving to ham which is more readily available in foodservice (2). We think the best operational strategy is establishing a contingency plan for the items you know you can’t do without, especially in dairy, meat where we’ve seen shortages; upscale restaurants may be struggling most because they require specialty products and are more specific (5).
Menu Changes and Flexibility
Menu changes have become a widely-adopted solution to a variety of supply issues facing operators. Akash Kapoor, CEO of Bay Area-based franchise Curry Up Now, is simplifying his menu by combining. “We used to garnish with four different microgreens, but now we’ve gotten rid of that,” said Kapoor in an interview with Berkeleyside News (6). “We’re back to a simple mix of cilantro, mint and chives. And whatever we use, we also use in some other way on the menu. It can’t just exist as a garnish. It has to have a purpose on the menu.”
In some ways, the COVID-19 crisis has created opportunities for restaurants to rethink and evolve their menu. “One thing we can do is just go back to being chefs, which I think is kind of cool,” said Kapoor (6). “You can just go to the market and do with what you’ve got.”
Like Kapoor, restaurateurs may be starting to think about shrinking down their menu and working with items that are not (yet) subject to volatility. According to Tim Hand and Bruce Reinstein from Kinetic12 Consulting, this kind of simplification “allows fewer moving parts and gives the restaurants the ability to be significantly more productive by requiring less labor, fewer deliveries, lower waste, and improved execution” (7).
Unfortunately, Yerkes says some changes will be difficult because operators are “emotionally tied down to their menus” (5). Differentiation in foodservice is what gives a restaurant its unique identity, and often what gives restaurants its competitive edge. Sometimes, an operator may believe that losing their specialty products and items that differentiates them from the competitors may also lose their competitive edge. “While this is true if you are not careful, the brands we work with are making changes very thoughtfully,” said Yerkes. “Slimming things down a bit and having alternative solutions will help [brands] survive. The reality is everyone has to adjust in some capacity but everyone is very focused on the guest’s experience still and that will get them far” (5).
Likewise, Hand and Reinstein support simplification over differentiation, saying that the former “eliminates some of the emotional decisions that create broad and complex menus that are too big for restaurants to execute profitability and consistently, and results in too many ingredients that only have one use” (7). In conclusion, differentiation “must now go hand in hand with simplification, efficiency, and profitability” (7).
All the working parts of the food industry, as we’ve experienced first-hand, are interconnected and interdependent. As such, communication and transparency is a necessary component of recovery.
The first step operators should take is communicating with their suppliers. According to Hand and Reinstein, operators should “reach out to their top suppliers for assistance on driving both front-of-house and back-of-house efficiencies. This can include streamlining the food preparation process through labor saving products, new equipment innovation, new order-taking technologies, supply chain simplification ideas and finding efficient no-touch solutions for self-serve condiment and beverage stations.” This streamlining process is necessary, as “[suppliers] must have a clear understanding of what each restaurant brand is focused on and support their operator partners with the types of products, insights and innovation that are necessary to help drive revenue while maintaining and improving efficiencies” (7).
Consulting an expert helps, too. According to Yerkes, this is because “partners have a line of sight into what else is going on….we can offer multiple solutions because it wouldn’t be the first time we’d encountered similar issues” (5).
Another important consideration for operators is communicating to the staff about their supply status. For example, if your supply shortage prevents you from including certain items in the employee meals do they understand why? What about issues concerning reducing food waste? Having a transparent, honest relationship with your staff, suppliers and customers will help your business tremendously in the long run.
The food industry has been hit hard by the pandemic and operators may find themselves restless as restaurants reopen and they readjust to the new normal. The good news is that you don’t have to brave this alone. This pandemic has opened up new communication channels for people. “We may have our own agendas, but people have been genuinely helpful, trying to support each other in these times,” said Yerkes (5). “Free resources are being available. New webinars are popping up everywhere like LinkedIn, available to everyone.” She also added that “[these times] have “won me a lot of friends….The silver lining of this is good relationships.”
If the pandemic taught us anything it is that we cannot take anything for granted. “Nothing will surprise me at this stage of the game,” said Yerkes. “The resurgence of the virus is expected, making all this unstable” (5). While we do predict a “semi-permanent” impact on the shortage of sanitary items, such as face masks and vinyl gloves through the rest of 2020, the supply situation can change at any given time, and no strategy is guaranteed to work or fail.
Preparing your business for product shortages and future outbreaks is necessary for the recovery process. It will take some time for us to win back the consumer confidence around safety, and until then, you should consider multiple supplier options, be creative and nimble in your menu changes, and communicate with vendors, staff and your customers about what’s to come.
And remember, no change should compromise quality. The fundamentals still are what they’ve always been and the most resilient of us will find ways to win small victories, even if there have been losses along the way.
*Special thanks to Meredith Yerkes, Vice President of Business Development in Supply Chain at Consolidated Concepts in Boston, MA, for providing her expert insights
(5) Yerkes, Meredith. (2020, June 11). Telephone interview