Despite lingering pandemic-induced, industry-wide setbacks, quick-service restaurants are performing relatively well—many are even outperforming fast casual and full-service dining. However, customers are beginning to pull back. Unless industry leaders act proactively, they could experience another significant revenue decline.
The solution lies in optimizing the QSR supply chain—namely cold chain management—to preserve perishables’ quality and integrity. Since food procurement makes up a substantial portion of operating expenses, addressing warehousing and transit-related waste issues is critical for lowering prices to incentivize customer retention. What do companies need to do?
Why QSRs Must Revisit Their Cold Chain Strategies
The QSR sector’s market size surpassed $387.5 billion in 2023, starkly contrasting its atypical low of $301.49 billion in 2020. At face value, this 28.5 percent increase represents a post-pandemic return to normalcy. Since many companies are eager to leave behind supply chain disruptions, foot traffic fluctuations and safety restrictions, they’re more than willing to treat it as such. However, they shouldn’t mistake short-term success for guaranteed long-term growth.
Business leaders are misinterpreting this recent upward trajectory as financial security when, in reality, it is merely a safety net. Indicators suggest customers are beginning to experience sticker shock at the drive-thru, prompting a pullback. As restaurants begin charging more, this temporary reluctance may become a trend.
According to one survey, approximately 75 percent of QSRs reported their traffic remained the same or increased in 2023, prompting 91.7 percent to raise prices. While increasing promotion value somewhat offsets sticker shock, it only applies to customers who use the company’s app, visit for a specific deal or receive coupons in the mail. Those who take menu prices at face value will likely look elsewhere or choose not to eat out altogether.
Cumulatively, these shifts in consumer demand and pricing expectations represent an increasing desire for value. Since food procurement accounts for a majority of operational expenses, QSRs should consider revisiting their cold chain management strategies. If they can selectively optimize, they gain more flexibility to lower menu prices — while simultaneously influencing customers’ perceptions of product quality.
What Effective Management Looks Like
Even though it has been years since the pandemic caused widespread transportation issues, many restaurants are still recovering—navigating new partnerships, resolving emerging pain points and building resilience to new disruptors has proved difficult. According to a 2022 survey, less than 20 percent of decision-makers with global supply chains felt prepared for disruptions.
Unlike in other industries, delays can prove costly. For example, when shipping overseas, decreasing a vessel’s speed from 26 to 14 knots reduces perishables’ quality significantly. It increases the total waste to 64.34 percent on average, up from 1.82 percent — even this slight delay caused the food products to go from ripening in transit to rotting.
Effective cold chain management proactively addresses these issues by providing industry leaders with comprehensive visibility and regular, data-driven insights. Every stage, from harvest to consumption, should have a clear custody trail and comply with relevant food safety regulations.
For instance, food-grade warehouses must follow strict guidelines, including consistently controlling internal temperatures, following sanitation procedures and having an inventory management system. QSRs should regularly audit their vendors to make sure products remain food safe during all stages of the supply chain. If too many orders fall through the cracks causing spoilage, QSRs should consider finding a new vendor.
How Cold Chain Management Influences QSR Success
Effectively managing the QSR supply chain to ensure the quality of products and timeliness of deliveries can substantially increase brands’ chances of success.
Minimizes Waste
Food waste generates unnecessary expenses. Even if QSRs can write off the costs or negotiate with their suppliers, they still spend more time and money on redelivery. Meanwhile, patrons might not be able to order certain meals if inventory runs out. Since raw material procurement accounts for a considerable portion of total expenditures, these delays quickly add up.
Managing inventory and deliveries helps maintain brand integrity and quality of menu items. Proper on-site storage and food safety practices and increase shelf life, reducing the need to reorder goods frequently. Ultimately, this approach minimizes waste, reducing financial and operating losses.
Satisfies Customers
Perceived quality affects customer satisfaction. If perishables taste fresh and look good, restaurants receive fewer refunds and rejected orders. Considering that 62 percent of people in the United States say they’re cutting back on fast food due to rising prices, amplifying the value of goods by preserving their integrity may result in better customer retention or a higher lifetime value.
Ensures Compliance
If the person accepting the delivery does not thoroughly inspect it for signs of spoilage, they may accept damaged goods. Although the truck may display an acceptable temperature upon arrival, it could have malfunctioned temporarily in transit. Even in cases where transportation goes smoothly, goods are often left unrefrigerated for too long before being stored on-premises.
According to the CDC, foodborne illnesses affect an estimated 48 million people annually, causing approximately 128,000 hospitalizations. To ensure regulatory compliance and prevent brand-ruining bouts of sickness, QSRs—especially large enterprises with multiple chains — must prioritize supply chain temperature safety.
How QSRs Can Perfect Their Cold Chain Strategies
Refrigerated trucks may experience delays, equipment malfunctions or climate conditions that affect their internal temperature. Fortunately, proper packaging can help mitigate spoilage. Since dry ice sublimates at a rate of 5-10 pounds per 24 hours, it isn’t ideal for long-distance deliveries. Instead, businesses should consider solutions like insulation or gel packs.
That said, the very fact that these interventions are necessary should make decision-makers rethink QSR supply chain visibility. How often do refrigerated trucks slip into the food temperature danger zone in transit? Do contractors adequately self-police regarding regulations? Answering these questions may be challenging for medium and large-sized enterprises because their logistics processes are so complex.
Third-party delivery—which grew by around 1,343 percent from 2019 to 2022—is an excellent microcosm of this issue because it lacks safeguards and oversight. Drivers need no food handling certification and often know little to nothing about the food temperature danger zone. However, they account for a huge portion of QSR sales.
Management should adequately train on-premises staff—especially those who accept and handle cold chain deliveries. The vendors, third-party delivery drivers and contractors they don’t directly oversee should be required to provide clear audit trails or use specialized equipment. Numerous monitoring technologies exist for any extenuating circumstances.
Establishments can use various tools to monitor shipments’ locations and conditions in real-time. For example, RAIN radio-frequency identification chips attached to packaging use radio waves to track items without a direct line of sight, generating accurate inventory data. These kinds of technologies make order forecasting possible, reducing food waste.
Looking Forward to the Future of QSR Supply Chains
Major disruptors like third-party delivery channels and a recent resurgence in food-at-home interest puts QSRs in a precarious spot. To incentivize customer retention and stress the value of their products, they must revisit their supply chains and optimize their cold chain management strategies.
Emily Newton is the Editor-in-Chief of Revolutionized Magazine. She has over five years experience writing for the food and beverage industry.
