Harvest America CUES BLOG

There is another casualty in the restaurant business – one that is far more detrimental than the loss of another corner operation.  This casualty has been in the making for some time but adding point of origin supply chain issues has made the loss even more significant.  We are witnessing the death of service to those who service the end consumer.  The supply chain link that most vividly impacts restaurants is that connection between the manufacturer, wholesaler, and restaurant. 

Restaurants, for decades, have depended on the intermediary wholesaler to identify, source, communicate, train, deliver, and support their needs. The menu cannot be driven by the chef’s desires, or the operator’s determined concept without a strong partnership with wholesalers.  Once an item makes its way to the menu it is up to the wholesaler to deliver a consistent list of ingredients, at the specifications that are important to the restaurant, on time and at a price that makes sense for the restaurants price point.  If any part of this service formula is broken, then the chef’s hands are tied.

Over the past few decades, restaurants have become increasingly dependent on one-stop wholesalers – providers that offer a complete line of ingredients from perishables to cleaning supplies, small equipment to frozen goods, and baking supplies to non-alcoholic beverages.  “Everything you need” with one invoice makes sense in a world that increasingly looks for ways to streamline work and process.  These large vendors were also able to support the restaurants financial needs with extended credit and quantity discounts when chefs committed to purchasing the lion’s share of goods from that one source.  It all seemed to make sense – a service was provided.

Over time, wholesalers felt the pinch of competition from other one-stop providers, sometimes regional and not terribly large, but large enough to cut into the share of business that the larger vendors had come to expect.  The only solution was to partner or purchase the little guy and minimize competition.  It makes sense in a system that rewards the largest players.  Big is better and getting larger equates to survival.

Suddenly choice is at a premium and restaurants no longer have the ability to look for options – if they want product, they are only able to look to a single source, or very few alternatives.  The larger the vendor, the more control they have, and need to have with the product, brands, delivery times and requirements, follow-up service, and price.  That neighborhood Italian restaurant that featured a homemade marinara dependent on a particular brand of canned tomato might now be forced to purchase a less desirable brand.  The seafood restaurant expecting to purchase fresh langoustines from the French Atlantic coast may find that the one-stop vendor no longer finds it economical to import a product this exclusive.  The smaller corner restaurateur that is essential to a community can suddenly find that minimum orders with the vendor have been doubled making cash flow an increased challenge for the restaurant.  In some cases, if a vendor deems that a town or rural region is not financially viable, they can and will simply decide not to service restaurants.  And the vendor that once would extend billing for 60 or 90 days during the slower season has suddenly cut the restaurants credit and now demands cash on delivery.

There was a time, not too long ago, when a sales rep would visit the chef of even the smallest operation and physically take an order, communicate specials, answer questions that a chef might have about products, and serve as an advocate when orders were short, timing was critical, or credit extensions were in need.  That time is long gone.  Chefs may not know of short orders until the minute the delivery arrives.  Oftentimes orders are made on-line without any face-to-face interaction, and don’t even think to ask a question about a product ingredient and its benefits.  It is likely the chef will always know more about the vendor’s ingredients than any salesperson (if one ever visits an operation).  Extended credit?  Not a chance.  Pay now or we cut your service.

What was once a symbiotic relationship between vendor and restaurant is now adversarial and lopsided.  Once upon a time it was the restaurant who sat in the chair of “customer” and was in control of the relationship.  Now, the vendor has the upper hand.  My how things have changed.

This is the environment that restaurants live in today.  Their menus must be fluid since availability and affordability of ingredients will always be in question.  Unless a restaurants’ cash flow is positive twelve months of the year, then it will be either at the mercy of a bank line of credit or unable to service its guests.

There was a time when it was in the best interest of the vendor to help ensure that their restaurant clients were successful.  This meant doing whatever they could to boost a restaurants business savvy, go the extra mile to make sure the chef had what he or she needed in a timely manner, or guiding the chef through the next menu change.  Not anymore – the vendor has become a means of getting a product from point A to point B. 

There was a time when a sudden change in business meant that a chef needed extra product on the fly.  A call to his or her sales rep would result in a salesman driving his or her own vehicle in search of the needed product.  Chefs could depend on this when challenging situations arose.  Not anymore – sales reps are not allowed to engage in this level of service.

So here we are, at a time when pandemic related shutdowns are always on the horizon, staffing is very challenging, seating limitations are enforced, and customers are leery about leaving their homes – vendors are suddenly no longer on our side.  What is the solution?

When our faith in the supply chain is at an all-time low there is a real case to be made for buying local and regional, buying directly from the source, and moving back to where we were just a few decades ago.  Maybe the convenience of buying from one source is no longer ideal and counter-productive for the small to medium single unit proprietorship.  Maybe, just maybe, the solution to move to a “producer-to-table” business model makes sense and trumps the convenience that the large vendor had provided for some time.  Maybe, just maybe, the set menu model that restaurants and consumers grew to expect is no longer viable and a constantly changing menu must make a comeback.

If this is the death of service-to-service, then maybe it’s time to adjust and not succumb.  The end consumer is always best served when a collaborative service environment exists behind the scenes.  Chefs need to depend on the ingredients they buy to produce the food that carries a restaurant’s signature.  The small business that our country has always held high as its strength needs a symbiotic, dependable relationship with the supply chain if it is to survive.  When the system no longer works it’s time to change how we view the system.  Let’s rebuild those relationships with regional providers and create a workable business ecosystem again.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

www.harvestamericacues.com  BLOG

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