Supply Chain Solutions
Even in the challenging age of the novel coronavirus, John Patrone and his crew at Patronies Pizza in Supply, North Carolina, were dishing up more than 500 pizzas on a summer Friday night. That’s high demand the 11-year-old pizzeria would have struggled to meet if not for Patrone’s intense focus on the eatery’s supply chain.
“If you’re not careful,” Patrone says, “the supply chain can bite you.”
As COVID-19 infiltrated the country earlier this year, the pandemic rattled businesses across the supply chain continuum, from producers and distributors to restaurant owners. A volatile market characterized by fluctuating volumes and product accessibility concerns forced pizzeria operators like Patrone to closely monitor their supply chain and unleash new or seldom used strategies to secure goods, appease guests and drive a sustainable, profitable business amid trying times. Patrone, for instance, found himself purchasing excess cheese, adjusting menu prices and substituting items, all while food costs inched up “two to three percent.”
Such nimble moves, especially amid supply chain disruptions, are often necessary to ensure a restaurant is never left empty handed and can continue to serve its guests. Here’s how pizzeria operations can accomplish just that:
Sara Matheu, spokesperson for US Foods, one of the nation’s largest foodservice distributors, urges operators “to stay closely connected with their distributor to help mitigate any concerns” and to be flexible above all else.
“Flexible with using frozen or fresh products or alternative brands and consider rotating menu and specials to accommodate,” Matheu says.
Rigidity or strict adherence to the status quo, after all, can be damaging.
At Farrelli’s Pizza, an eight-unit chain in western Washington, director of kitchen systems Mike Rutledge sourced alternative pepperoni products after a supplier shuttered its factory for two weeks to address a coronavirus outbreak. And throughout the summer, Rutledge found himself in weekly communication with his broadline distributor to find substitutes for two-to-five out-of-stock items, ranging from takeout bags to salad dressings. He considers flexibility and a solutions-oriented mindset essential to navigating supply chain disruptions.
“You have to be flexible to get product in your doors and serve guests,” Rutledge says.
Investigate alternative providers
Steven Rodgers, vice president of business development and global account management at HAVI Supply Chain, a company that helps restaurant brands optimize and manage their supply chains, encourages operators to actively explore opportunities to offset risk and cost pressures by diversifying their supply chain. He suggests starting with local providers first before moving onto regional and national players, especially as the pandemic continues affecting different parts of the country in distinct ways.
To that point, Rutledge encountered a short supply of chicken wings – Farrelli’s second most purchased item behind mozzarella – after his long-time supplier shifted much of its production to the consumer market following a precipitous drop in orders from foodservice clients. In response, Rutledge interviewed five different suppliers and partnered with a new vendor who guaranteed a 12-month supply.
“And we’re saving five percent in the process, too,” he says.
To accommodate immediate restaurant supply needs, Farrelli’s set up Instacart accounts with three major foodservice supply stores in its area. For about an $8 delivery fee, store managers can receive goods like takeout materials, pizza toppings or condiments within hours.
“Most of these stores have comparable products so we don’t have to 86 items from our menu,” Rutledge says.
Simplified operations, something many restaurants employed throughout the height of the pandemic with smaller menus utilizing fewer, more versatile ingredients, stand another antidote to supply chain concerns. Rodgers says simplified operations can “reduce operational complexity and minimize the impact of short supply.” He suggests restaurants focus on serving their most frequently purchased and profitable items, identify alternate sources of key ingredients and remove specialized items that are complex to serve or require difficult-to-procure ingredients.
Based on a simplified menu, Rodgers says operators can then ask their distributor “to monitor demand of key items and work … to centralize the ordering process.”
Having already endured a significant jump in cheese prices – from $83 for a 30-pound case in April to $120 per case in August – and with rumblings that the per-case cost could leap as high as $135, Patrone increased his cheese orders 25 percent this fall and stored the excess product in an extra refrigerator. He considers such forward-thinking purchasing necessary to mitigate risk and cost pressures.
“I look at items we use the most like flour, tomatoes, cheese, beef and chicken because that’s where we can really get hurt,” says Patrone, noting that futures prices on the commodities market and regular contact with providers help him anticipate potential price increases.
Rutledge, who has “bulked up” some of Farrelli’s purchase orders and asked broadline distributors to store excess product in their warehouses, remains in regular contact with suppliers and distributors to monitor the costs of pork, beef, chicken and, especially, cheese.
“When cheese moves, percentages move all over our P&Ls,” he says. “We continue to work with our partners to stay above the market.”
HAVI’s Rodgers notes that an array of factors – local guidelines on restaurant openings, capacity, traffic and customer preferences among them – can also inform operators’ planning and purchasing.
Should you communicate supply chain issues to customers?
As the COVID-19 pandemic disrupted Patronies Pizza’s supply chain and its ability to secure certain items, owner John Patrone did not conceal that trouble from his customers. Rather, Patrone embraced transparency. The restaurant’s website carried this message: “Because of issues in the food supply chain as a result of Covid-19 shutdowns, prices for various items may be higher than normal.”
“By and large, our customers get it because they see it themselves at the grocery store,” he says. “If we keep the quality and quantity the same, then people don’t mind paying for that and we’ll charge what we need to charge.”
HAVI Supply Chain’s Steven Rodgers encourages restaurants to “empathize and communicate” with guests.
“Help your customers understand the disruption,” he says. “Find a way to market that you are still ‘serving the classics.’ Help them understand why you’ve simplified [while noting] that other options will be back soon.”
Daniel P. Smith Chicago-based writer has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.