Cost Reduction

How Outsourcing Supply Chain Will Boost Your Restaurant’s Bottom-line

The global hotel industry is getting tougher than ever before. There is growing demand for more diverse foods, stringent health and safety regulations which require more investment while labor costs are on the rise. There are also cataclysmic changes in the global economy such as Brexit, which have forced even big brands such as McDonald’s to abandon some markets.

To ensure profitability restaurants are now being forced to think outside the box. One area that has witnessed a revolution is in the supply chain. While the supply chain was hitherto the mandate of the restaurants, there is increased adoption of outsourcing of this area.

From procurement to distribution the need for a more efficient supply chain has seen more brands embracing outsourcing as a cost-effective alternative. This is also a viable option to avoid disruptions in operations while also mitigating risks involved.

McDonalds is one of the best case studies as it is 100% outsourced. Little wonder then that it has been ranked 3rd in the Gartner Supply Chain Top 25.

As a restaurant owner it is imperative to get more insight on supply chain outsourcing before making a decision. Here are some pointers to guide you in the decision making process:

 

Is Outsourcing Viable for You?

Before making the leap, consider these factors:

  • Is your restaurant stagnant? You might be making sales but if there is no growth it is likely your supply chain has a big problem. For heightened cost efficiency you need experienced supply management experts to boost your profits.

  • Is your small sized chain of restaurants primed for fast growth? If your hotel business is growing rapidly you might find it costly to keep up with the cost of laying down a supply chain infrastructure. By appointing someone to provide the infrastructure you will avoid eating into your profits.

  • Do you have the expertise required for effective supply chain management? This applies to all restaurant sizes. At one point you will have to consider whether you have the resources and expertise to focus on supply chain management and at this point outsourcing makes a lot of business sense.

 

When is Outsourcing Not Right?

Very small independent local chains need not outsource their supply chain as there is little ROI. For very large chains they already have the expertise and resources to boost their supply chain which again makes outsourcing out of the question. The trend today is to combine in-sourcing and outsourcing based on capability of the restaurant chain.

 

Why Outsource?

Outsourcing cuts operational costs while also giving your restaurant access to high quality BI to build a strong risk management strategy. There is more customer satisfaction through timely delivery.

 

What Next?

Now that you appreciate the importance of supply chain outsourcing remember to ensure clear communication in the contract, well stated goals, cutting-edge technology from the provider, and ensure the provider understands your brand fully.

 

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