Experts weigh in on supply chain issues

Working with suppliers is all about building relationships. But supply chain issues are plaguing the restaurant industry, from cups and takeout packaging to chicken wings and coffee flavorings.

Four restaurant executives discussed supply chain challenges in a panel talk at the Fast Casual Executive Summit held this month in North Carolina. The summit is one of several foodservice and technology industry events run by Networld Media Group and was well attended with fast-casual executives from across the country. A virtual event, #QSRNext, will take place Nov. 9.

The panel included Zaid Ayoub, founder and CEO of SAJJ Mediterranean; Olivia Bane, director of company operations for I Love Juice Bar; Nour Rabai, founder and CEO of PITA Mediterranean Street Food and Samir Wattar, COO of Layne's Chicken Fingers. The panel was moderated by Vince Purves, president of Consolidated Concepts, which sponsored the panel.

Purves said labor remains the top challenge for brands, but supply chain issues weigh in a close second. He said there are some 70 to 80 tankers off the coast of California waiting to be unloaded, and that's causing a back up for manufacturers and suppliers alike.

"Within our organization specifically, and working with Sysco which is a great partner and they do the best that they can … every product that we have is based on allocation," Bane said.

With corporate and franchise stores so close together, I Love Juice Bar sometimes feels like they're beating out their franchise partners for supplies. Order minimums have been challenging for the company.

"Someone like Sysco, they won't play with the small guys," Bane said, "and the small guys are so important." I Love Juice Bar's orders average about $1,250, but a bigger brand may have a $3,000 order, so working with her supplier is paramount for a successful relationship. I Love Juice Bar has 32 units with 6 of those being corporate owned.

Ayoub said "we build to stock, whether it's in our commissary or it's at the co-packers." They make 20 items themselves at SAJJ Mediterranean. Chicken prices recently doubled and sometimes tripled, so the company's food costs rose by three percentage points over the past six months.

Many brands have had to adjust their menus in response to supply chain issues.

Wattar said Layne's sells one major product — chicken fingers — and the brand was affected by the chicken price increase and shortages earlier this year.

"A supply chain is mainly building relationships," Wattar said. The company took a price increase to source chicken elsewhere when they couldn't get it from their supplier, but it was a necessary hit to keep their top-selling item on their menu.

Layne's Chicken Fingers also had to adjust their packaging when they couldn't source their usual from their supplier.

Rabai said there's pressure from franchisees to keep costs down, and that has added to brand's supply chain issues. Pita Mediterranean Street Food did raise their prices.

"We have had the opportunity to have great relationships with our vendors and create those contracts that we've have over the last year, year and a half to sustain and maintain those contracts to stay at those prices for our franchisees as long as we maintain the level of volume that we're purchasing," he said. "As a Mediterranean concept, a lot of our product comes from overseas like our spices and some of our seasoning blends."

Bane said the relationship built between a brand and a supplier is crucial and the grass isn't always greener on the other side.

"You've got to stick with it. No one's going to pick up your business if they see volatile problems, especially with a lot of fresh products," she said.

She encourages her franchise partners to band together for buying power and avoid, say, running to Costco when they are out of something. "If I source locally, it really doesn't build that relationship" with suppliers, Bane said.

"Work with what you've got to the best of your ability," Purves said. "Being collaborative is critically important because I can assure you being demanding in this climate is not going to get you a lot of places."

Wattar said Layne's Chicken Fingers has been able to utilize propriety software from his distributor. "There are a lot of tools out there," he said. "Instead of waiting for Sysco or US Foods to tell you 'hey, we're out,' you should know that ahead of time … If you observe that on a weekly basis and see where your inventory is at and when you can expect it, this way you can work with the distributor and the manufacturer to make sure that this product is coming online."

Nour said Pita Mediterranean Street Food communicates weekly with its distributor, US Foods, for the company's proprietary ingredients, so they're able to order three to four weeks before an item runs out.

"We're constantly communicating with US Foods and we're constantly communicating with our team members," he said. "We have subs in place for every single item that may run out, especially the commodity items such as lettuce and tomatoes."

All four panelists said it's critical to stay ahead of ordering and "not eat off the truck."

"Take care of your people," Ayoub said. "Make sure your culture is back to where it was pre-COVID."