3 New Year's resolutions to improve profitability, optimize sourcing, reduce risk

Dec. 29, 2016 | by Vishy Visweswaran

Volatility and margin pressures are here to stay, but with restaurant industry leaders granted the proverbial ‘clean slate' in 2017, it is imperative to make New Year's Resolutions that will ultimately improve profitability, optimize sourcing and reduce risk.

All restaurant brands need to make sure they have a strong supply chain and a well-developed risk management strategy. You may not be able to predict the future of your growing company, but you can ensure visibility and risk reduction are on the agenda.

Below are three New Year's resolutions that need to make it to your list as a restaurant industry leader:

1. Be more strategic — and collaborate more — with your suppliers

Insist on transparency, tracking and collaboration to optimize your supply chain end to end in 2017. By using a systematic, strategic approach with your suppliers, you can consistently review supply chain performance and work together to find opportunities to cut costs and improve efficiencies from farm to customer.

There are tools available to help restaurant leaders in purchasing, operations, marketing and finance optimize costs and improve margins by providing a platform for better decision making for billions of category spend each year. They provide visibility to supply chain costs and capacities and allow you to assess how changes in one area such as ingredient bill of materials affect the enterprise all the way to individual store or franchisee.

With the tools to effectively increase visibility, reduce risk and manage volatility, this should be the first New Year's resolution you check off your list.

2. Drive innovation in products and sourcing; don't be a supporting cast

Many restaurants diminish profitability with knee-jerk reactions to shifting consumer demands. The customer of 2017 will want to customize, scrutinize and optimize his or her restaurant orders and will insist on more fresh, local and digitally ordered menu selections. This will result in not only more SKUs but also more complexity and volatility coming from a manufacturing landscape that is also rapidly changing.

The supply chain department of the coming years must invest in solutions that leverage demand data, enable proactive planning across the enterprise, and increase supply chain agility. They can bring forward new ideas to menu management and marketing, for example, to introduce new ingredients, suggest promotions alternatives, or suggest innovative sourcing solutions that deliver on the brand's sustainability commitments.

3. Focus on profitability as well as lowering food costs

Restaurants are expected to promote more products and faster than ever before. Gone are the days where 12-to-18-month market tests could be used to plan promotions. Limited-time offers and new product introductions are moving at warp speed. This, coupled with ingredient prices that are predicted to start rising again in 2017, will make solid promotions planning and execution a business imperative. The coming year will require restaurant leaders to filter through an incredible amount of data in order to make decisions quickly and intelligently.

This tremendous responsibility can't fall just on the shoulders of marketing.  Restaurant leaders from supply chain, risk management, finance and restaurant suppliers will need to leverage smart technology solutions that connect all parties to provide consistent, real-time data for commodity prices, volume, supplier costs and capacity to decide what to promote, when to promote it, where to promote it and where to source from. Doing so will protect the bottom line from obsolescence and the top line from shortages during these volatile times.

Keep your company's business goals front and center by tackling these three resolutions in 2017. 

Photo source: istock.com


Topics: Operations Management, Sustainability


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