Justin McCarty and Casey Slager: How Restaurants Can Replicate Amazon’s Success – QSR
Justin McCarty and Casey Slager wrote an article that was published in QSR titled “How Restaurants Can Replicate Amazon’s Success.”
When it comes to quick-service restaurants, Amazon doesn’t need to be a category killer. Restaurants must first employ a strategic approach to its supply chain technology and infrastructure.
The quick-service restaurant sector is constantly evolving to meet changing consumer preferences and is driven primarily by millennials—who are more likely to eat outside of the home and demand healthy, high-quality, and organic menu alternatives. The continued shift in preferences is forcing suppliers and manufacturers to evaluate how best to maintain quality, mitigate waste, and maximize value. The real key is managing the supply chain with forethought and vision.
All too often, a lack of communication or integration creates disconnects between supply chain and other functions. When new ideas are discussed it is most prudent to involve all of the functional groups best suited to increase effectiveness. Does the new concept or approach make sense? Will this new endeavor be profitable or too costly for certain foods or ingredients that are not purchased in bulk on a regular basis? Can the process support the “gut” while eliminating the guesswork and uncertainties?
Proximity and Footprint
There has traditionally been no getting around the fact that the farther a product is shipped, the more likely it is that freshness is compromised and costs increase. For example, when In-N-Out Burger scouts new restaurant locations they always do so with easy highway access in mind. This is an important component to maintaining their freshness standards given they don’t freeze any of their products. Alternative emerging concepts, aimed at leveling the playing field, include hydrofarms. Mini-farms can be created almost anywhere (including vertically and/or in warehouses as opposed to cultivating product outside over wide tracts of land). This solution can alleviate the inability to deliver healthy food to areas where a farm and other land is not readily available.
With a similar focus on delivering quick, fresh meals, Farmer’s Fridge, a Chicago-based startup, sells salads and other fresh food out of refrigerated vending machines at airports and retail outlets such as Walgreens. This concept has proven successful in major cities but is particularly interesting for smaller towns where the costs of opening a quick-serve may exceed the return. This marriage of fresh food with self-service technology has proven to be a winning combination for offering an alternative to fast food restaurants and traditional vending. Among the important features of this business model is its flexible product supply chain that allows the company to partner with small, independent foodservice suppliers and broad line distributors. Product waste for cold food vending machines can be as high as 40 percent of the machine’s inventory, however Farmer’s Fridge has a product waste target of just 5 percent. Unsold items with a remaining shelf life are donated to food pantries and expired items are composted. CEO, Luke Saunders, credits low product waste to the short timeline from production to delivery and his company’s cost function algorithm. While this strategy works well for quick-serves, farmers and suppliers may need to explore alternative distribution channels for their produce.