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3 Ways the Fast Food Industry Fails at Supply Chain Innovation

Posted by Olga Bitsakis

Apr 4, 2016, 11:30:00 AM

Young innovator

The "fast" in fast food refers to agile fulfillment and ordering as much as it does serving speed at the consumer level. One surprising place that quick service restaurants fall behind, however, is in innovation. Watch the trends and promotions carefully and you'll start to see an echo chamber of similar ideas bouncing from one major chain to the next. Additionally, while these offerings may be unique to the fast food supply chain, they're usually on the heels of the same breakthroughs in consumer-facing market segments like grocery stores.

The following are 3 ways that fast food industry often trips over its own feet in the quest to turn heads.

1.  Innovation at the Cost of Consistency

Natural, organic, sustainably-raised — these are the terms that woo customers and keep tables filled, particularly in QSR. Pitted against itself in a years-long war of "unhealthy" sentiments about its menu, sourcing food with these labels can seem like an easy fix. However, terms like "natural" and "organic" are still being hashed out in terms of governmental oversight, which means that partnering with companies that only offer these labels is putting a lot of free-range eggs in one basket. Peter Frost of Chicago Business notes that, at least for foods under these labels, the infrastructure simply isn't in place yet for the type of high volume that multiple, simultaneous fast food chains would demand. This means that the same products would need to be sourced from overseas, driving costs up and potentially compromising product quality en route.

2. Innovation at the Cost of Fluidity

In a supermarket, a customer can make the choice between a specialty product and a normal product without casting the "normal" version in an overly-negative light. Try the same tactic on a relatively limited fast food menu, however, and you risk making the "normal" version seem inferior and unpalatable. In the event that a chain decides to pull a specialty-label product, they'll have to deal with the newly-formed comparisons against their core ingredient or product. In short, they can open that product door with ease, but might not be able to close it quite as neatly. Looking to fluidity on the fulfillment side, a glut of choices can paralyze fast decisions, such as it did during Wendy's 3-year search for adequate blackberry supplies. Rather than looking to price alone, procurement teams have to balance demand for specialty items with availability and shipping speed in every decision, bogging down agility in the process.

3. Innovation at the Cost of Safety

Antibiotics are one of the most persistent villains in consumer perception of food, so chains have naturally worked towards minimizing them. However, a poorly-implemented or opaque solution is sometimes just as bad as not having one in the first place. If conflicting numbers or a hazy timeline emerges, rather than being "stuck in the past," a chain ends up tangled in an all-too-present scandal. Even fast food giants tend to keep their cards close to their vest. Specialty products may also become scarce under high demand, forcing companies to shift to another supplier that may not have been vetted for safety and hygiene as thoroughly as a primary chain partner. When a fast food supply chain breaks down, costs skyrocket, which means "plan B" suppliers are a very likely scenario with such tight margins on the line.

Infusing innovation into a system-oriented fast food business doesn't have to be impossible, but it does require that procurement teams and planning executives alike don't lose sight of core values in a rush to "win" the first-to-have distinction among their peers. Your business and supply chain will be around for much longer than the latest fad or the newest food product, so treat them as what they are: a side dish to the diverse, customer-approved menu that's always been served, rather than an at-all-costs grab for growth.

How Quick-Service Restaurants Can Find Balance

Written by: Olga Bitsakis

Topics: Supply Chain