Effective supply chain management is one of the most important factors in your restaurant’s success. A smooth, high-functioning process ensures your business always has a steady supply of fresh, delicious ingredients. It also cuts costs and creates a more sustainable operation.

In the competitive restaurant industry, managing a complex network of suppliers, distributors, and partners is critical. With the right tools and strategies, you can build a smooth flow of ingredients and supplies that prepares your business for the inevitable ups and downs of the market.

What is restaurant supply chain management?

Restaurant supply chain management is the process of sourcing, ordering, tracking, and managing the ingredients and supplies you need to run a successful restaurant. Done well, it can give you control over every aspect of your operation; it also helps you network with vendors and suppliers and build strong, productive relationships.

At a glance, restaurant supply chain management involves:

• Sourcing raw materials
• Managing logistics
• Production
• Distribution
• Quality control
• Inventory management
• Information technology

Good restaurant supply chain management should enable you to meet the demands of your customers and internal team, all while minimizing costs and maximizing quality.

Breaking down your restaurant’s supply chain

As unique as every restaurant is, the supply chain looks pretty similar for most businesses. What’s more, most restaurants that build solid supply chain management procedures find success. 

So what is a restaurant supply chain, and why is it so important? A supply chain refers to the process of getting raw materials to a restaurant and onto customers’ plates. It includes raw-material sourcing, delivery logistics, production, distribution, and inventory management.

The restaurant supply chain is critical — it determines the quality of food you serve, how much that food will cost, and how much profit you’ll ultimately make. It also improves customer satisfaction by enabling you to serve the menu items people want for a price they’re willing to pay.

Let’s break down the restaurant supply chain process.

1. Sourcing raw materials

Before you procure goods, you have to source them. Sourcing is the process of finding and selecting suppliers to provide you with the ingredients you need to run your business. It involves testing food suppliers for quality, negotiating prices and contracts, and establishing standards. 

2. Logistics

Logistics is the part of the supply chain where raw goods are delivered to your restaurant. It’s the logistics team’s responsibility to get items from point A, the source, to point B, the restaurant, as quickly as possible for an affordable price. Delivery speed is important; it reduces the risk of rotten or spoiled food. 

3. Production

Production is the process of turning the delivered raw materials into your restaurant’s menu items. This is where your kitchen crew — chefs, bakers, and culinary artists — comes into the picture.

4. Distribution

Once the raw inventory has been turned into a finished meal, it’s time for distribution: serving the meal to your customers. It might be served directly to the table from the kitchen or via takeout or delivery. The customer is part of the supply chain. 

5. Inventory management

The last step of the supply chain is inventory management — tracking ingredient supply levels, maintaining food quality, and reordering when raw materials are running low. The goal is to have adequate ingredient levels on hand to suit customer demand, all while minimizing spoilage. To master this process, you must create and monitor sales forecasts and anticipate the needs of your chefs and staff.

Why is supply chain management important?

Whether you’re running a small deli or a full-scale fine-dining establishment, the quality of your restaurant supply chain has a direct impact on your operation. The benefits of effective management include:

• Reduced operating expenses. Effective supply chain management helps reduce costs across the board. It optimizes processes to ensure efficiency and tracks inventory closely to minimize food waste and control food expenses. By tightening up each part of the supply chain, you can improve resource utilization and eliminate unnecessary expenses while improving operations.
• Improved customer experience. Well-managed supply chains ensure products are delivered on time and in the right quality and quantity. That way, you rarely need to cut items from the menu, and your customers can always order their favorite meals with ease. When you can predict costs and inventory availability, it’s easier to price menu items properly and maintain them consistently.
• Sustainability and ethical sourcing. When you’re in control of the supply chain, it’s easier to build an ethical and sustainable operation. Optimizing raw-ingredient deliveries helps reduce vehicle emissions and fuel usage, while better inventory management helps prevent food waste — a big concern in the restaurant industry. Plus, as a responsible and trusted restaurant partner, you can promote more ethical and sustainable practices throughout the supply chain.

Common challenges across the supply chain

According to the National Association of Manufacturers Q1 2024 Manufacturers’ Outlook Survey, 33.8% of respondents cited supply chain challenges as a primary business challenge. These are problems businesses of all sizes are facing — and the restaurant industry is no exception.

With many factors playing into the restaurant supply chain, problems are bound to occur. Knowing what challenges might affect your restaurant can help you predict and manage supply chain issues.

Raw material shortages

When there’s a problem at one of the farms, manufacturing plants, warehouses, distribution centers, or shipping companies in your supply chain, it tends to affect all downstream entities — including your restaurant. As a result, you may have a hard time getting one or more raw ingredients. When there are no supplies to ship, it disrupts the supply chain; you might need to find a new supplier or adjust the menu until products are available.

Staffing shortages

Staffing shortages put a strain on current employees and can result in customer dissatisfaction. For more tips on how to handle a staffing shortage at your restaurant, click here.

Rising cost of goods and services

To gain the highest ROI, your restaurant must buy raw materials at a lower price than you sell them. Inflation and increases in the cost of necessary goods reduce this margin, which eats into your profits.

Distributor challenges

Food distributors are pivotal to the supply chain, but they also experience issues, including changing consumer habits, staffing shortages, competition from other distributors, and delivery delays. When your distributors are managing problems, it can disrupt your delivery schedule.

Bottlenecks and backorders

When a part of the supply chain lags behind, it causes a bottleneck that slows down the natural progression of business. A bottleneck can be caused by any number of factors, but a big one is backorders — items being out of stock or unavailable for a period of time.

If your restaurant experiences any of these supply chain disruptions, it affects your customer experience and your bottom line.

How to improve supply chain resilience

With careful supply chain management, you can build a streamlined process that ensures your restaurant’s success. Following best practices can improve operations, avoid unnecessary headaches, and cultivate a positive experience for you, your customers, and your employees.

Here are some best practices to get you started:

• Foster a positive relationship with suppliers by communicating clearly and making timely payments.
• Evaluate your vendors often to ensure they’re offering satisfactory support and service.
• Streamline the supply chain with multipurpose partners that can do more in fewer steps.
• Substitute menu items when your restaurant experiences raw material inventory shortages.
• Keep a list of backup food suppliers to turn to when primary suppliers experience shortages or backorders.
• Implement food safety measures to protect your guests.
• Increase inventory visibility to track availability of products in real time and prevent supplies from running low.
• Simplify processes by identifying a trusted technology partner that can offer helpful restaurant supply chain solutions.

How Grubhub can support your supply chain

Your supply chain management depends on high-quality technology solutions. That’s where Grubhub can be an asset — our cutting-edge platform includes tools that help you build a more robust operation. Our restaurant partners gain access to features that include:

• Grubhub marketplace
• Delivery and takeout services
• Direct commission-free online ordering website
• Promotions and loyalty tools
• Tech and POS integrations
• Virtual restaurants
• Merchant portal

The tools and resources on the Grubhub platform empower you to manage the supply chain and run your business like a well-oiled machine. Want to see what a partnership with Grubhub looks like? Try Grubhub free for 30 days.