The quick-service restaurant industry technology requirements are evolving faster than ever before, but its margins are getting thinner. As a result, these companies are facing business-wide challenges that threaten the potential long-term sustainability of their organizations. One of the biggest priorities right now for many quick-serves lies in maintaining and protecting the operational flow of the supply chain into restaurants and providing enhanced traceability of inventory. For example, bad or damaged lots, expired products, inaccurate shipments, stockouts, and surpluses due to restaurant inventory inaccuracies can make day-to-day operations difficult.
The use of radio frequency identification (RFID) has been growing in the soft goods retail sector. Retailers can easily view and manage their inventory with up to 98% accuracy in minutes by tracking products that are tagged at item-level. This frees the associates’ time to better serve customers in-store and enables brands to provide convenient services, such as buy online sales floor replenishment and pick-up in-store (BOPIS) to deliver an even better customer experience.
However, this technology isn’t exclusive to retail. It is now helping the industry to evolve beyond the current manual inventory systems and is driving to keep products accurate and fresh. RFID is also allow quick-service brands to remain competitive in ordering, speed, and efficiency, especially in today’s environment.
The Operational Challenges of Inventory Management
According to research published by the National Restaurant Association, 96 percent of operators experienced supply delays or shortages of key food or beverage items in 2021. These challenges are expected to continue, and managing inventory is essential for quick-serves to optimize the supplies they receive. With a significant amount of perishable stock, restaurants need to remain on top of their inventory to avoid wastage. However, these checks are typically completed manually, which is time-consuming and creates the potential for human error.
With employees manually managing everything—receiving, inventory counts, replenishment, and warehouse numbers – through pen and paper in such a fast-paced environment, the data collected can quickly become outdated and is often inaccurate. Furthermore, communication between staff is often verbal and only happens briefly between shift changes. This creates much room for error.
Manual stock-taking causes significant inventory management issues and it has a negative knock-on effect for the restaurant as a whole. Instead of spending time servicing customers and providing a high-quality experience for visitors, staff are instead spending time on inventory checks that are essentially useless. The overall lack of visibility can lead to empty shelves at the front-end, prompting customers to leave without purchasing anything—the outcome results in excessive waste and high overheads.
The Role of RFID
RFID is enabling the industry to improve both back-end and front-end operations through practices that create efficiencies in all supply chain stages, from distribution centers right through to food being served.
At the back-end, RFID streamlines in-restaurant receiving, enabling quick-service restaurant businesses to accurately track all items as soon as they are delivered within minutes. From here, regular stock takes in-store enable restaurants to keep visibility up to 98 percent accuracy on stock levels. Warnings can be issued about expired products, restaurants can take daily or weekly stock counts to reduce understatements and overstatements. They can maximize the use of all items and limit orders down to only that which is needed, minimizing waste.
Creating a Long-Term Solution
The foodservice industry is expected to reach $898 billion in sales in 2022. The industry is booming, and growth is only expected to continue. With more quick-service restaurants being developed across the US, restaurant chains and their franchises become harder to manage, the competition is only increasing.
By using RFID, restaurants can completely streamline their inventory management. With improved visibility over stock levels, restaurants can minimize waste and increase their margins in a sustainable manner that allows them to realize long-term cost savings, promoting financial growth and more efficient operational flow.
With a much faster and more accurate solution to tracking inventory, already taxed staff can significantly reduce the amount of time spent on admin tasks. Instead of spending long periods of time manually—and likely inaccurately—taking stock, they can put more effort into serving customers and providing a high quality of service. Alternatively, they can spend extra time on personal or team training, upskilling themselves or their colleagues.
RFID’s growth in the retail sector can act as a benchmark for those operating in the industry. The improvement that retailers are currently seeing—where they have gone from approximately 65 percent inventory accuracy up to 98 percent—is difficult to ignore. The sooner restaurants adopt this technology, the sooner they can begin to gain a competitive advantage.
Dean Frew, Chief Technology Officer and Sn. VP for RFID Solutions, SML Group, and Founder of SML RFID (formerly Xterprise, acquired by SML in 2013). With over 20 years experience of delivering RFID solutions to retailers and brand owners around the globe, Frew is responsible for SML’s overall strategy in driving forward its RFID Tags and Solutions.