SugarCreek: Brandworthy Food Solutions

When the media first began covering sustainability with regularity, the fast food industry was one of many that was slow to react. Perhaps corporate executives thought that consumer interest in the idea was a passing fad, and that it would soon be forgotten. Sustainability has, of course, worked its way both into the mainstream consciousness and into the mission statements of many corporations as it becomes increasingly obvious that it is a concept that is not going anywhere. Indeed, it looks to become even more important in the decision making process of consumers as time goes on.

With all of this in mind, it would be wise for the fast food industry to try to keep up with the trend and provide the sustainability that consumers seek. To do this, fast food supply chain managers need to check their fast food supply chain sources to make sure they provide the sustainable solutions they need.

In the last decade, food trends and consumer spending habits have gone hand-in-hand. Movements like low-carb, paleo and clean eating influenced not only the menus of existing QSR chains, but inspired the creation of new, niche QSR brands as well. The latest shift in consumer demand has proven a little more challenging for the fast food supply chain, however, forcing procurement teams to go beyond finding an exotic new ingredient or recipe and subverting the very concept of the supply chain as it stood.

While price remains, necessarily, a large deciding factor, it is no longer the sole motivator behind provider selection. That honor increasingly rests with sourcing. Can the demands of a supply chain in the fast food industry outpace the looming sustainability issues from largely untested specialty suppliers?

We hear a lot about farm-to-table eating. But what has been its impact on the fast food industry?

Adapting to the farm-to-table trend can be a tricky challenge for QSR chains. While value is still driving many fast food decisions for Americans, brands must make an effort to begin offering options that cater to diners’ more ethically driven and health-conscious decisions.

Today, let’s take a look at some of the challenges fast food chains face and at some of the practical ways that QSR supply chain managers and chefs are meeting them.

What is it that hinders innovation in the fast food industry? We’ve seen many QSR companies publically state that they recognize the need to change in order to compete in tight market, but are they making the right changes?

They’re starting to.

Results haven’t been that great of late for some of the venerated names in QSR. McDonald’s, for example, saw two consecutive years of declining sales heading into the last quarter of 2015. Restaurant Brands International (parent company of Burger King and Tim Horton’s), Wendy’s and Yum! (parent company of Taco Bell, Pizza Hut and Long John Silvers) all also experienced sluggish sales in 2014 and early 2015. Now there are signs that they’re all starting to turn things around.

McDonald’s reported global sales were up 5 percent in Q4, which the brand attributed to the launch of its all-day breakfast menu and a new Buttermilk Chicken Sandwich.

Meanwhile, Burger King’s sales were up 4.4 percent in the first quarter of 2016 — a result Restaurant Brands International told its investors was likely due to its new “four pillar” strategy, addressing “menu, marketing, image and great operations.” And Wendy’s reported same-store North American sales were up more than 3 percent in Q1.

Cost per unit, consumer satisfaction, shelf life of ingredients: for a busy QSR chain, the idea of supply chain sustainability can easily be eclipsed by more immediate concerns. The desire to cross a nagging line off the to-do list can make the idea of a one-and-done solution understandably attractive. In all other aspects of the business, a firm price tag or goal drives the method, not the other way around. Sustainability isn't "checked off" quite so easily, however. It's much more of a moving target than a finished line to be crossed. 

We’ve heard a lot about fast food chains sourcing cage-free eggs, organic ingredients, non-GMO foods and sustainably raised meat. But another growing trend in the industry has been a move toward serving only antibiotic-free meat.

Late last year, for example, the deli sub chain Subway announced that it would begin transitioning to serve antibiotic-free poultry by the end of 2016, with a complete switch to antibiotic-free beef and pork by 2025. In doing so, Subway joined Chipotle, Chik-Fil-A and even McDonald’s (which has promised to source antibiotic-free poultry) in making a commitment to make such a switch.

Why the trend? Much of it has to do with consumers’ demands.

With the rise of ethical consumerism over the past decade, many QSR companies have been scrambling to build sustainability and transparency into their supply chains. Panera Bread, which boasts an operation that is ranked among the best in the market today, offers an example of what could be done. Why is that? For one, they’ve been steadily improving their food safety practices for years. For another, they have upped their game on the consumer-facing side to promote new sales channels and same-store sales.

Here's how Panera is setting an example that other quick service restaurants are quickly starting to follow.

One of the biggest problems fast food supply chain managers and procurement directors have historically faced has been a lack of transparency within the supply chain. In a consumer environment in which we are seeing more demand by the day for increased transparency, the lack of knowledge about what is going on upstream is a real dilemma.

No one wants to be in the position of being caught in the middle of a social media-fired bad PR frenzy because of a supplier’s missteps or misdeeds. Companies, like Chipotle, have so far been able to stay ahead of them; other companies — Adidas, Nike and Apple for example — have found themselves in some cases behind the curve.

So how can procurement directors and supply chain managers keep better tabs on their suppliers and logistics vendors? For that matter, how can they find cheaper, more efficient and more ethical vendors? Technology offers us many capabilities that can be leveraged to do just that.

From greater visibility to better vendors, technology plays a critical role in ensuring sustainability in the fast food supply chain. Crowdsourcing software, data analysis tools and tracking technologies offer managers better top-to-bottom visibility over a fast food company’s entire supply chain.

Achieving true sustainability in a fast food supply chain takes careful planning and forethought, smart investments and ongoing attention to detail. But it doesn’t necessarily have to be an all or nothing affair.

What are the reasons that sustainability has now become a necessary investment for QSR? For one, younger consumers — Gen Xers, Millennials and Digital Natives in particular — demand it. Second, it’s more profitable over the long-term. And third, because ethical business practices are also best business practices.

That all adds up to mean that any steps taken toward making a QSR business more sustainable are positive steps. You don’t need to become carbon-neutral, zero waste and completely green in the next year. But you do need to show that you’re willing and able to make changes.

The fast food industry is, for the most part, present-focused. Brands gain a competitive advantage by being the first to adopt the latest trends, to work with the fastest producers. It’s all about who’s bigger, better and faster.  Sustainability, which champions a "low and slow" approach, seems better suited to the artisan pulled pork sandwiches of fast casual than the bacon double cheeseburgers of the drive-thru window. For the fast food industry, expediency will always remain a core goal in supply chain performance, but that is — almost ironically — exactly why sustainability is so important.