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Summary:

For all the advances to come from the digital age, restaurant businesses are stuck in costly conventions of last century. A techie chef says the industry is ripe for change.

Food supply disruption

In the last decade, most industries, no matter how old and entrenched, have undergone a dramatic revolution in the way they do business. Energy is becoming cleaner, automotive is using robotics, retail is using iPads as point of sale devices, and so on.

Enter the world of food distribution, however, and you all but travel back in time to the last century. Much as it was done throughout the 1900s, food distributors use a largely paper-based system and onsite visits to take orders and payments. Phone orders and fax are widely used, sure, but ecommerce options –  even basic email – are scarcely found.

As a restaurant owner (and technophile) this frustrating situation is something I constantly agonize over. And notably it runs contrary to other parts of the restaurant industry, where automation and efficiency are driving innovation. Owning a restaurant is highly stressful and the margins are slim, so entrepreneurs like myself need every bit of efficiency we can get, and I believe tech is the answer.

Tech assists at the edges

In my restaurant, we have adopted many tech tools that help us run smoothly and reduce the time we spend managing the business. A few of these include:

  • A point-of-sale system that tracks our sales numbers, inventories, staff time and financials and prints our orders around the restaurant.
  • iPads to take orders.
  • OpenTable for taking online reservations.
  • Google Drive for managing employee work schedules.
  • Dropbox cloud storage for saving menus and business documents.
  • Various forms of social media for interacting with customers, community members and media. This includes multiple Facebook pages and Twitter accounts and actively managing comments on Yelp, Trip Advisor and other sites through a paid service called Main Street Hub.
  • Infusionsoft and Base CRM for tracking high-margin banquet orders. (These tools helped me increase sales 28 percent this year over the last holiday season.)
  • Digital marketing (text and email) for last-minute deals – our mailing list of more than 3,500 customers came as a result of Groupon and other deal services we’ve used.
  • And I am currently testing out Swipely to merge anonymous purchasing data with loyalty information to build guest retention. I’m also looking for ways to better integrate other data stores, like our point-of-sale system and our various marketing tools.

Solution still lacking for back end

But when it comes to the ordering of food and related products – around which everything else revolves – our hands are tied by an antiquated system that favors the sellers and makes it hard for smaller buyers to survive. If any industry process is ripe for disruption, it is this one.

Until recently, multiple times a week since my restaurant, Chef Tony’s, opened, I spent close to two hours putting together food orders with five to eight different suppliers. There was no transparency on pricing and everything was done on paper and communicated via the phone or by fax. None of my suppliers offered email and most couldn’t even take a scanned-in order. While larger establishments may have an ordering manager, most sole proprietors do their own food ordering. A mistake in one purchase can be very costly, and chefs like to make personal decisions about possible substitutions. This is a big part of my 70-plus hour work week.

I tried to get my suppliers to use some of the promising tech tools I found, but since adoption is low across their broader customer base, it just didn’t seem to work.

A promising start

The closest I’ve found to a comprehensive tool to make our supply chain more efficient is a product called Foodem. The initial idea was to get food suppliers to put their catalogs online and for food buyers to use the marketplace as a way to compare prices and products among vendors to make better and faster buying decisions. I ultimately became a beta tester for Foodem (note I have no other ties to the company).

Foodem is in many ways a great first step. Using it I can see what various suppliers offer, including prices, which affords me the opportunity to change my menu if something else catches my eye. And I can see whether I’ve ordered enough from a particular vendor to qualify for free or expedited delivery or special pricing – services which greatly impact my bottom line. And because the marketplace concept attracts both large and small suppliers, I am able to test out new vendors to support my menu, which hinges on organic and sustainable seafood and produce.

Limitations still frustrate efficiency

The mixture of online and offline ordering I’m forced to do now actually adds more complexity to my work flow, though admittedly it has taken my ordering time down from two hours multiple times a week to just 20 minutes per order. That’s a huge deal and a great step in the right direction.

Another hole is the lack of social networking features. One of the biggest difficulties with moving the supply chain online is that food procurement has always been about relationships. The marketplace does not allow me at this point to build and sustain relationships with my vendors, and I haven’t yet figured out how to solve that. And while ordering may need to be done primarily through an online interface, mobile should be a no brainer for a number of key functions: approvals, reminders, substitutions, deal offers and more.

The reality, though, is that for any other supply-chain solution to truly disrupt the status quo, it will require the participation of far more suppliers. If the larger distributors don’t participate, then the bigger problem still exists for me. And  smaller suppliers may need help with delivery in order to actively participate in a marketplace.

My vision of a perfect world that marries food and tech is one where software would allow me to input my menu and automatically order the right supplies to create it. If it could then create a workflow schedule for my team and publish the menu, which would then be marketed to my customers, I would truly be in heaven. That may be decades off and it may even be unrealistic in an industry that is as much art as it is business, but I’m positive streamlining the process will benefit suppliers and restaurant owners, and so ultimately consumers, too.

Tony Marciante is the chef and owner of Chef Tony’s in Bethesda, MD,  and helps other restaurant owners figure out technology and run more efficient operations at restaurantownerlessons.com.

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  1. Author, re: your bullet points:

    POS systems to do that have been available for 20 years.

    You don’t need Dropbox. Just use GDrive.

    “…Infusionsoft and Base CRM for tracking high-margin banquet orders…” I really question this. Unneeded. Your POS system should handle this just fine. If not, you chose the wrong POS system.

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    1. Tony Marciante Sunday, August 4, 2013

      Thanks for your feedback, love to know what you suggest for POS, and certainly the reality is that POS is an infrequent purchase, there is certainly many more conveniences in the last 6 years since I got mine. Also tying in all your data is nice, and I’d love to know what is out there now…

      I use Dropbox and Gdrive both for various reasons, each have some points I like, reality is that most smaller restaurants aren’t up to speed with many of this…but you’re right, GDrive could probably do anything I need.

      Thanks for reading….

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    2. Well said ThePhoneMan. Microsoft has a pretty good write up on why switching to such a system might be a good idea… here: http://www.microsoft.com/business/en-us/resources/technology/business-software/7-reasons-to-switch-to-a-point-of-sale-system.aspx?fbid=8s_Y8swv_vC

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  2. Foodem’s link is not working

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    1. @Andrea…The Foodem link is now working properly. Give it a try :-).

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  3. Very well written and great insight into the inner workings of a restaurant.

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    1. Tony Marciante Sunday, August 4, 2013

      thanks for reading, so glad you got a lot out of it…I know how hard we all work, so it’s great to have a few time/stress saving technologies to adopt…

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  4. Some interesting points there

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  5. DineMarket.com is a solution to most of the supply chain inefficiencies described. It is in operation for the last 2 years and already being used by some of the icons in NYC, as well as by single operators.

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  6. Thanks for the article. I currently live in Belgium where there is an amazing variety of Artisanal products available at great prices for restaurant quality food. Let me know if you are interested so I can connect you with the right people.

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  7. As a mere restaurant customer, the only turn off worse than a low inspection score or dirty utensils is seeing the staff filling out order check lists from Sysco or USF or one of the other big distributors. I know it’s hard to make money in the biz but when you turn over your entire menu to whatever you vcan order from a catalog, what about the meal is something people can’t just get themselves from the frozen food aisle? I speak not of this chef but thinking specifically about a place where I eat occassionally. Nothing they serve is original.
    It is all from a bag or pouch or box and merely reheated.

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  8. Ever try crunchtime.com and it’s product net-chef.com?

    PMDR:

    Just because you see Sysco or USF truck doesn’t mean the restaurant is cooking everything from a pouch. Many restaurants use them for their basic foodstuffs (grains, dairy, beef -low to high quality available-, spices, condiments, etc). They then use these to cook from scratch. Also many producers outsource their distribution Sysco/USF; Eddy’s ice cream is a good example.

    Most restaurants will use Sysco/USF for their primary foodstuffs, a produce vendor, a fish vendor, a protein vendor (if beef/game is their primary focus) to lay in most of their raw ingredients. Beyond this will be handful of specialty vendors for niche items and depending on the local liquor laws anywhere from one to a dozen vendors for beer, liquor, and wine.

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    1. Tony Marciante Monday, August 5, 2013

      Very true, there is A LOT to make happen in a restaurant kitchen, and the main line distributors provide a great service in the basics. I don’t use them currently, but each operator needs to understand the advantages and disadvantages of using this type of distributor.

      I think mixing it up depending on what you’re looking for is the key. The more local/organic/unique type of product you want to use sometimes increases the work to get it, and we all only have 24 hours in a day.

      Bottom line is the menu you offer to your guests is your main handshake, make it the best you can!

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  9. Aftan Romanczak Monday, August 5, 2013

    Interesting dilemna. Sounds more like a glass half empty/half full issue. I work with chain purchasing. Can be more stable but an independent restaurant has the advantage of daily deals and can adapt quickly to market fluctuations that are advantageous. Costco and Sams have helped level the playing field. Even chains have issues with franchisees comparing the chain prices to the local sams and costco. The problem will always be the syscos and US foodservices whose street pricing strategies take advantage of individual entrepreneurs. As long as they make tons of money off their sheltered brands nothing will change including stringing out payment terms with operators that makes it next to impossible to ever change vendors.

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  10. Tony-

    Glad we’re on the same page about this problem. I am currently a hospitality student at Boston University and through the experience I have gained in and around restaurants, I have noticed chefs and orderers get frustrated over this same problem. They all look for an easier way to streamline the ordering process, and I went out looking for a solution.

    I came across DineMarket.com and was so impressed on their systems I sought out to get hired by them, and now currently work for them. A previous post mentioned Dine Market and I just wanted to give you further insight on the process.

    Dine Market is a cloud based online Hospitality service. What Dine Market does is it consolidates each restaurants current vendors and allow them to update their prices on their goods in real time, often times twice a day. This allows restaurants to compare and contrast prices on lets say a tomato/scallop/sirloin between multiple produce/seafood/meat vendors and seamlessly order the most affordable product for their restaurant in just a few clicks of the button. Dine Market also provides tools to manage the items you have purchased over the course of time so you can see the fluctuations between the price of the products you have ordered throughout the past year for example, giving the restaurant further insight on vendors pricing. The best part is, Dine Market is completely free for the restaurants. So no more, looking through spread sheets, calling different vendors, and finding out the best deals. The system does it all for you and ordering can be done in less than 10 minutes. Our users see great savings on food cost, a huge reduction of time in the ordering process, as well as reducing the inevitable human error from ordering through antiquated means. Overall, Dine Market enhances the restaurants abilities to communicate with vendors and thus receive the best and most affordable products for their guests.

    All together the best way I describe the service is something like an Expedia.com where you can compare the prices of a flight to lets say New York between 8-10 different airlines, and pick the airline most suited for you. No more calling travel agent’s and seeing the best deals which take precious time. Instead, all prices are right in front of you and are now clicks away from being booked for your desired time.

    Below is a link which will show you the seamless and intuitive process of DineMarket.com, and if you have any further questions I would be glad to assist you–Cyrus.S@DineMarket.com

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