Four Key Trends from our Restaurant Clients and the Industry

April 9, 2022- Julie O'Hara

Our expertise is in the managed services of sourcing, fulfillment and execution in print and promotional marketing materials. We have found that our clients have not only acted with agility to re-scope priorities to meet customer needs but shifted operations to increase revenue and reduce costs. To prosper, how will leaders think differently and creatively adapt to shifts in the restaurant industry?

First, more efficiency: A variety of restaurant segments got lean fast since March 2020, reducing inventories and developing items to do more with less staff, due to changes in foot traffic and meal delivery. In response, our restaurant clients are focusing on reducing variable costs, such as marketing print and POP materials and outsourcing specialized sourcing and program management to managed services experts to improve their gross and operating profits.

Second, higher labor costs & turnover: Higher labor costs and less supply place added pressure on restaurants to further reduce costs in SG&A and marketing operations, including everything from print, point of purchase, branded merchandise, onboarding and training materials to greater use of technology to streamline ordering processes. Also, the hidden cost of front-line employee turnover is high and growing. A recent study by The Hospitality Center at Cornell University puts the total cost per employee turnover at $5,862. The fastest growing QSR chain in the U.S. uses a unified platform from SupplyLogic to allow local franchisees to reward employees with SWAG/Gift card credits helping to drive down attrition to an industry low of ~50%. For one of our clients just a 5% reduction in turnover equates to an extra $10M annually to the bottom line.

Third, “optimizing” operations & hyper-localization of marketing: Restaurant’s operators have doubled down on operational improvement as a driver of EBITDA value, and are pursuing innovative changes to “optimize” marketing supply chains. Recently a nationwide chain increased same store sales 5.6% and attributed much of the credit to the hyper-localization of promotion and marketing efforts by geography/store footprint/local demographics to build local relationships and repeat patronage. Partners like SupplyLogic have the platforms and the expertise to help restaurants reach and connect with customers at a local level to bring in more sales.

A leader in the food service industry has just shifted its internal marketing supply chain to an external managed services model with best-in-class suppliers helping to facilitate geo-local and optimized marketing campaigns. This leading food service distributor with $28 billion in sales, 350,000 products and 25,000 employees, created a custom branded digital e-store to help more rapidly personalize its communication content, and launched innovative industry social impact efforts, as described here https://www.youtube.com/watch?v=CedZsOaqglE.

Another example is a fast-growing QSR segment that relies upon a marketing managed service solution to help address its multiple challenges faced by this new market. It transformed six key areas of marketing operations, including digital asset management, online brand stores, automated bid/buy procurement solutions, campaign program management, warehouse and fulfillment solutions, and supply chain logistics management services. This led to an increase in operational efficiency and cost reduction of 20% in these categories.

Finally, innovation catalysts: According to National Restaurant Association’s, “State of the Restaurant” Industry report, with survey results from 6,000 operators (+ 1,000 adult consumer preferences), half of all adults surveyed would likely purchase an innovative meal kit (featuring packaged kits pre-measured ingredients and cooking instructions) offered by their favorite restaurants. Results jumped to 75% among millennials and Gen Z’s. With more investments in meal kits, new printing tactics are also adapting to market changes. Larger format signage banners and point of purchase materials now help woo meal kit customers and increase traffic visits.

2021-2022 Implications

The implication here is there has never been a better time to rethink the status quo and bring fresh thinking to your traditional marketing and operations practices, especially in restaurant and food service marketing in indirect categories that support creative reinvestment of top line growth. Consider managed services as a transformative path forward.

Cornell University Study: https://www.workpulse.com/qsr-employee-turnover-cost-in-2021/

SupplyLogic Benchmark Analysis

By Julie O'Hara

As marketing and procurement leaders work to drive results and value for their business, the print and marketing supply chain can be easily overlooked. A small minority of these supply chains are fully optimized – representing a big opportunity for brands to streamline costs and optimize budget allocation.

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