For centuries, the farm-to-table operation wasn’t a culinary or social movement; it was a simple fact of every meal. People grew their own food, and that was that.
In time, things changed, and the American food system became one that included several steps—and often thousands of miles—between farm and table. But in the last few decades, the system reversed itself. Many credit Alice Waters for pioneering the modern farm-to-table movement when she opened Chez Panisse in Berkeley, California, in 1971, featuring seasonal and locally sourced fare as well as marketing support for its farm partners.
Nearly 45 years later, a large number of restaurants—everything from fine dining to fast food—have followed suit. As consumers increase their demand for fresh, local, organic, and overall “clean” ingredients, operators are scrutinizing their purchasing practices and supply chain more than they have in the past.
All restaurants face external pressures—unpredictable weather, rising labor costs, outbreaks like last year’s bout of avian flu. But within the limited-service sector, brands both small and large—as well as new and old—face their own challenges when it comes to efficiently sourcing the best ingredients.
“Everybody in the industry is in transition 100 percent of the time. … Just because you’ve been successful with something doesn’t mean you’ll be successful forever,” says Bruce Reinstein, president of Consolidated Concepts, a purchasing partner specializing in multiunit brands. “The days of putting a menu together for the year and forgetting about it is just not going to be done [anymore].” He adds that now is the time for flexibility and innovation from a culinary standpoint.
In recent years, operators have faced a slew of pressures related to weather (the four-year drought in California, snowy winters impeding delivery trucks), market volatility, and yo-yoing fuel prices. Meanwhile, rising wages have left operators eager to keep purchasing costs low.
At the same time, Reinstein says, consumers have increased their demand for healthier foods and produce while decreasing the amount of animal protein on their plates. The change, he says, is fortunate for operators given the shortages of beef, turkey, and eggs in recent years.
David Liesenfelt, president of California-based produce procurement company Fresh Concepts, says demand has evolved within the produce industry, too. For about 30 years, iceberg, romaine, and mixed greens reigned supreme, he says. Now specialty items are getting all the attention.
“Everybody is trying to be unique—I would say that would be the No. 1 thing—trying to bring in items that are new and interesting and not just the same produce items that have always been served traditionally,” Liesenfelt says. “The hottest item right now has been Brussels sprouts, and we’ve seen a lot of farmers jump into growing Brussels sprouts simply because there’s such a high demand for that product. And that’s the nature of produce lately. When there’s an item that gets hot, everybody jumps into it.”
But matching supply to demand can be tricky. Liesenfelt says that a few years ago, baby kale was the produce darling, and thanks to a short growth cycle, farmers were able to grow enough. Avocados have also seen a significant uptick in consumer appeal, but because trees take about three years to grow, they are more difficult to source quickly. For this reason, he says, Fresh Concepts works with its clients to identify the items they want to contract with growers. He adds that one of the benefits of working in produce is that, for the most part, supply can be fluid with farmers adapting to market changes. If necessary, land can be purchased and repurposed to grow a specific crop.
Although suppliers shift to accommodate restaurants and consumers, the field is constantly evolving, leading some brands, like Kentucky-based Fazoli’s, to work with outside advisers in addition to their suppliers and distributors.
“I also work with a third-party consultant to really ensure that we’re staying out in front of some of the opportunities that arise with weather,” says Blaine Adams, vice president of supply chain for the brand. “For instance, durum wheat last year was a challenge … and we were able to get out in front of [it] and speak with Zerega, who is our pasta supplier.” He adds that these relationships help minimize the impact of shortages.
SpenDifference is a supply chain support firm that counts restaurants like McAlister’s, Moe’s Southwestern Grill, and Focus Brands among its client roster. President and CEO Maryanne Rose founded the company after decades working supply management and purchasing on the restaurant side. Rose says she knows firsthand that it can be a struggle for executives at emerging and midsize chains to access the tools and expertise needed to understand the supply chain.
“The bigger you are, the more leverage you have in the marketplace to manage your risks. … Smaller companies can’t really go into the commodity markets and book, so they kind of have to go up and down with the costs,” Rose says. In addition to consulting services, SpenDifference also helps clients negotiate costs. “The supply chain is just not as easy as it used to be. It requires much more sophistication.”
In addition to tapping a third-party consultant as a resource, Fazoli’s also works directly with its suppliers and forms long-term strategic partnerships. Each year, it sends projections for ingredients that are then communicated with the farmers. The relationship works both ways as the suppliers also approach the restaurant to stay ahead of changes.
For example, last year when the price for chicken tenders was at a five-year high, chicken processor Brakebush approached Fazoli’s with an alternative.
“Don’t just come in and present a price increase to us. Have a backup plan,” Adams says. “Most if not all of our suppliers in our system are very proactive. Not only do they come in if there’s a warrant to increase costs … [but] they also present alternatives.”
The need for such alternatives seems to be inversely proportional to a brand’s size: Larger chains have hefty purchasing power, which helps them keep prices low, whereas smaller brands often have less bargaining clout. For these operators, menu flexibility can protect them from the unexpected.
“The field of risk management can give a lot of restaurants—big and small—some tools,” says Russell Walker, clinical associate professor at the Kellogg School of Management at Northwestern University. He offers substituting collard greens for kale as an example of menu flexibility, but adds that it can be more complex than a simple swap.
“Substitution can be an ongoing activity. Instead of serving beef burgers, we’re going to have beef-mushroom burgers. There’s an ability to even manipulate the ingredients in the food items so you build that inherent protection,” Walker says.
Substitutions, or even menu additions, become more difficult as restaurant chains expand. Walker points to when McDonald’s rolled out a line of smoothies in the summer of 2010 as an example. The company had to cut its special promotions and events surrounding the launch due to inadequate fruit supply.
The fast-food giant offers other cautionary tales. While Consolidated Concept’s Reinstein heralds menu flexibility as a viable way to weather unexpected supply changes, he warns that too much differentiation can dilute a brand’s core identity, as it did at McDonald’s.
“What they were doing is saying, ‘We’re going to fight the fast casuals.’ And they brought in smoothies, and they brought in salads, and they started to branch out probably to a point where the consumer was a little bit confused,” Reinstein says. He adds that McDonald’s decision to offer its popular breakfast items all day was “one of the most intelligent decisions” it could have made because it distinguished the brand through existing products.
Reconfiguring the purchasing process and supply chain is not an impossible task for larger operators, but it is often a costly one that takes time.
“It’s like moving a giant cargo ship; you can’t just turn it on a dime. It’s going to be a slow turn. If you don’t start now, in 10 years you’re going to be sitting in the back wondering how the market passed you by,” says Michael Berger, managing partner of Falls Church, Virginia–based Elevation Burger. Despite these challenges, he is confident that larger brands “will figure it out.”