How Restaurants Can Get Distribution Right

Sponsored by Avery Dennison.

Quick-service restaurants are no strangers to long lists of competing demands. Not only must they provide delicious food efficiently, as well as great service and good prices, but they also face additional complications from rising labor costs, growing turnover, and a shrinking labor pool. Add to these challenges a complex supply chain and demands from health-conscious diners for more information about what ingredients and chemicals are in the foods they consume and their origins, and it’s no wonder that restaurants face tremendous strain.

“Consumers are demanding improvements in the areas of food waste, safety, quality, and the ability to trace food,” says Dr. Bill Hardgrave, provost and senior vice president of Auburn University. “Those demands are driving the need in the restaurant industry for more visibility into the supply chain, but the reality is that it’s a very difficult problem to solve.”

One major supply chain concern is that amid the rise of fresh, natural foods in the industry, restaurants have fewer control steps to prevent foodborne illness, such as freezing and cooking. Not only are there now more dangers in the process, but with a lack of visibility into the distribution process, restaurant leaders don’t always know how to react when an issue is identified.

“When a restaurant sees a recall, leaders have two choices,” says Ryan Yost, general manager of the Printer Solutions division at Avery Dennison. “Because of a lack of traceability, they can either throw away all their lettuce and tell their consumers they don't have any for a short period, or they have to hope that their lettuce isn’t contaminated until it is confirmed whether or not the lettuce they received is affected.”

Choosing to react to recalls costs restaurants money in wasted product, as well as lost sales, but choosing not to do so can cost a brand its reputation, even if the food safety risk wasn’t caused on the restaurant level. “For example, these issues may be caused by lettuce that a restaurant bought,” Hardgrave says. “Because we don’t usually have full track and traceability for each of the ingredients that are used in a restaurant, when the illness occurs, the restaurant is the most visible source and suffers the brunt of the reputational damage.”

Traditional supply chain processes also cause operational risks due to a lack of visibility into inventory management. Without proper counts and insight into real inventory levels, restaurants often over-and under-order product, leading to more waste or missed sales. Manually receiving product costs labor, and relying on employees to not only accept deliveries, but also check that product is in good condition upon receipt takes time away from guest service.

With all these demands, it’s no wonder why restaurant brands are looking for solutions that streamline and provide insight into the distribution process. “The reality is that these are very difficult problems that we’ve been trying to solve for some time,” Hardgrave says. “I think we finally now have the suite of technologies in place to do that.”

Avery Dennison

Avery Dennison’s radio-frequency identification (RFID) technology is positioned to solve many of these supply chain dilemmas. With RFID, hen products, such as meat or produce, are packed at the supplier, a label is attached to the carton. As product moves throughout the distribution process, mounted electronic readers use electromagnetic fields to track labels, and that information is sent to the cloud so that anyone in the supply chain can see where that product is.

“I call it a barcode on steroids,” Yost says. “With a barcode, however, you have to have line of sight to the label, and each product needs to be scanned individually. RFID reads this information seamlessly, even if the label isn’t visible.”

These labels contain more information than standard barcodes to give greater insight into the origins of products and helps restaurants keep better track of inventory without taking employees away from guest-facing tasks to count cartons. It also helps restaurants know where each product has been. This lets restaurants inform their customers of the product’s lifecycle while also helping restaurants keep track of where product is in the case of food safety issues.

Restaurants are also able to use RFID technology to improve product sales and the effectiveness of marketing campaigns. “Once restaurants know they have accurate inventory, they can do flash promotions and feel confident they have the product to support it,” Yost says. “For example, one restaurant chain has a green St. Patrick’s Day milkshake. In the past, they would never do a regional promotion for it because they were uncertain of what inventory they have on the local level. As they have gained more visibility into local inventory, it has allowed store operators to do more promotions when they have a surplus of a component. That increased visibility helps restaurants better serve customers and generate growth.”

This RFID technology integrates with Avery Dennison’s FreshMarx Solution, which uses technology to solve food industry problems for everything from freshness and ingredient labeling to inventory and automated temperature tracking. This allows restaurants to work with one vendor and one solution to take manage of a variety of operational issues at scale. This system also gives leaders on the corporate and franchise levels of an organization insights into food operations inside each restaurant and helps brands save on expenses.

“Avery Dennison has been a leader for a long time because they really partner with the industry and understand it in order to create innovative solutions,” Hardgrave says. “The Freshmarx Solution removes a lot of labor from the equation around inventory management, including proper rotation and expiration dates, so there are tremendous labor savings there, as well as reductions in food waste. It all comes together to ensure food is of proper quality, helps that restaurant's reputation, and increases sales.”

By Peggy Carouthers

Dr. Bill Hardgrave, Auburn University

Dr. Bill Hardgrave is provost and vice president for Academic Affairs at Auburn University. He previously held the position of dean and Wells Fargo professor, Harbert College of Business, Auburn University. He has worked with numerous companies such as Walmart, Macy’s, JCPenney, Dillard’s, Avery Dennison, and Motorola on a variety of RFID projects. Dr. Hardgrave has published several books and more than 85 articles and is considered a thought leader in the field of RFID. In the past few years, he has received the Ted Williams Award from AIM Global as the most influential researcher in the field of RFID and the Special Achievement award from RFID Journal for his overall impact on the field.

Ryan Yost, Avery Dennison

In his role, Ryan is responsible for worldwide leadership of and strategy for the Printer Solutions Division, focused on building partnerships and solutions within the Food, Apparel, and Fulfillment industries. As the general manager of PSD, Ryan is also responsible for the core business functions for the division, including operations, marketing, finance, human resources, communications, legal, and information technology. Ryan joined Avery Dennison in 2001. Since then, he has held various roles in Label and Graphic Materials in Operations and Supply Chain and within RBIS in both Operations and Commercial leadership. Before joining Avery Dennison, Ryan held business positions in management consultancy with Ernst & Young. He received his MBA from Cleveland State University in 2003.