In 2022, the quick serve restaurant industry looks much different than it did before the COVID-19 pandemic. Drive-thru access, delivery and digital ordering are a must. Simultaneously, nothing is certain in the harrowed global supply chain.
As part of the 2022 Chicken Marketing Summit at Chateau Elan in Braselton, Georgia, supply chain executives from international and regional restaurant operators explained their experience in the post-pandemic world. The panelists were:
- Tom Healey, vice president of international supply chain at Dairy Queen
- Jon Musser, director of supply chain at Chicken Salad Chick
Supply chain chaos
Healey said the international, treat-focused franchise found out the supply chain was not as dependable as it thought.
As the pandemic raged, choices dried up and leverage with suppliers diminished as global commerce became less reliable. Now, suppliers are more powerful than buyers and can dictate the terms of how Dairy Queen restaurants operate, he said.
Dairy Queen, founded in 1940 with about 5,000 restaurants in the U.S. and Canada and more than 2,100 elsewhere around the world, relies on an international supply chain to provide the chocolate, candy and ice cream machinery it needs to maintain product availability and continue to add stores.
Global logistics, formerly an afterthought, became a critical issue for the quick-service restaurant (QSR) chain. Now, it expects its supply chain to move about two or three times slower than it did before the pandemic, it dual sources all its ingredients if possible and maintains safety stocks of certain ingredients.
Chicken Salad Chick, founded in 2009 with more than 200 locations in 17 states in the Southeastern and Central U.S., is a new concept in QSR focused on chicken salad. Other menu items include pimento cheese, fresh salads, fresh fruits, vegetable and pasta salads, sandwiches and treats.
Musser said as the company grew ingredients shortages went from a crisis to business as usual. The restaurant operators know what to do if certain items aren’t available and the supply chain finds back up options.
At the 2021 Chicken Marketing Summit, supply chain panelists predicted new behaviors learned in the pandemic would last and create a digital revolution in the QSR industry.
Healey said Dairy Queen learned its drive-thru, digital ordering and delivery platforms were revenue drivers and needed enhancement. Now the chain is renovating many older restaurants in North America to match consumer expectations.
Musser said this inflationary environment forces restaurants to frequently evaluate whether it should raise costs. If it plans on raising costs, it must determine where and how much.
“How much can the consumer take before we start losing transactions?” he asked.
Comments for the industry
Dairy Queen is a major retailer of fried chicken tenders. In the current environment, vendors dictate the terms of business, Healey said.
He said a customer can make a specific order and want it delivered at a specific time, but the vendor chooses what it can provide based on their limitations. Healey said he understands everyone is dealing with the same supply chain issues and rising costs.
At the same time, the current market is forcing Dairy Queen, and possibly others, to reconsider their suppliers. He said his company aims to maintain long-term relationships with its suppliers, but if the processors’ size of bird isn’t right or if Dairy Queen changes its specifications, it may need to find a new supplier.
Online ordering is here to stay for retail www.WATTAgNet.com/articles/43415