Cowboy Chicken, Elevation Burger execs: Pay supply chain due respect or pay consequences
Moderator Trevor Hansen and Elevation Burger Supply Chain Chief Michael Berger listen as Cowboy Chicken CEO Sean Kennedy discusses supply chain challenges
The ultra-competitive nature of the restaurant industry makes knowing and meeting customers' demands more critical to survival than ever. And In a world, where customers are demanding that restaurants use ethically produced, sustainable and healthful ingredients, supply chain management has grown in its importance.
Perhaps that explains why so many attendants chose to sit in on a breakout session at the 2017 Restaurant Franchising and Innovation Summit in Dallas. The panel for the hour-long discussion included Elevation Burger founding partner and Acting Head of Supply Chain Michael Berger and Cowboy Chicken CEO Sean Kennedy, who candidly responded to questions from the session's moderator, Trevor Hansen of Visualogistix, a company focused on managing marketing supply chain for brands of all sizes.
Berger and Kennedy said they source superior-quality meats for the mainstays of their menus. At Elevation Burger, that includes supplying meat for its organic grass-fed beef, organic chicken and a small amount of organic pork bacon. Meanwhile, the menu and supply chain for Cowboy chicken's 22 locations U.S. locations is centered around all-natural wood-fired rotisserie chicken.
At both chains, however, supply chain management has become an increasingly critical component of operational success, demanding more time, expertise and labor than ever before, as was relayed in detail through the following question-and-answer session with the restaurateurs.
Q: At what point in time did you realize you needed a dedicated manager for your supply chain?
Berger/Elevation Burger: As a representative sample of the global meat market, organic meat is about 0.4 percent of the market … and we found out at Unit No. 1 that we needed to go to our farms directly to buy the meat. In fact, we had a scare really early. That, of course, set off a mad dash scramble to find a replacement farmer, and so we also realized we were going to have to get really deep on our supply
|Pictured from left to right: Moderator Trevor Hansen of Visualogistix and Elevation Burger co-founder and Supply Chain Chief Michael Berger listen as Cowboy Chicken CEO discusses supply chain challenges.|
chain, sourcing all the way back to the farm and bringing it back to the distributor. So today we now buy from 100 different family farms with locations all around. … But I think we are kind of unique in that, though.
Kennedy/Cowboy Chicken: We took the opposite approach. In fact, we had a very good supply chain provider and didn't think it was a big issue until we started started moving outside of Dallas. That's when we realized we needed to start thinking more about our supply chain.
Our approach is that we want to work with the best people in the industry, regardless of geographic, and now, we find ourselves getting ahead of our growth and building relationships to make sure that when we get in a market, our suppliers are there. That's why I decided to get somebody to do it (supply chain) full time, … and now we're opening in Atlanta and elsewhere this year and we'll be coast-to-coast soon.
Q: How do you control the quality and consistency of your product, particularly for Elevation Burger, when you are sourcing across international boundaries.
Berger/Elevation Burger: I'd say the biggest one is that we're buying from 100 different farms, instead of one of the big processing facilities. … So we're flash-freezing beef trimmings, which helps centralize the processing. Then we also have other services to consolidate at points along the chain through strong distribution partners. And we've been fortunate to have restaurants in Texas who are willing to go out like two or three months on products.
Kennedy/Cowboy Chicken: I'd say we've worked hard to minimize the number of suppliers we are using for our stores.
Q: So what kinds of steps do you take for cost control in your supply chain?
Kennedy/Cowboy Chicken:I would say one of our big strategies is sort of like, 'Hey, let's all buy the same product." We're pretty disciplined about that now, and everybody has to use them, so that that way we can get good prices.
Berger/Elevation Burger: We take the approach where we really go all the way back to the farm and we've done that the last seven or eight years. In fact, the first thing I did was to develop tight relationships with every manufacturer we have for everything we use.
So the good thing at this point is we have direct contracts with all of them, which we take from the point of origin and establish FOB (free on board ) pricing (meaning sellers pay to move goods to shipment port, and load, while buyer pays for shipment from there as well as insurance, unloading and delivery). Then we try to minimize freight costs and most of the time weget that as part of a deal.we negotiate with manufacturers … and at the distribution point also through having a national contact. … That way we know what the cost is, what the mark up is and I can calculate by that.
Q: How do you enforce that people (franchisees) purchase through the channels that you set up and how?
Kennedy/Cowboy Chicken: We work to make sure all stores understand why we do that, and second, we institute some controls with our distributors. Anything outside that list then needs approval from corporate.
Berger/Elevation Burger: That's the exact same approach we take, even though we do have the right to mandate that they do those things. But once you do that really, your relationship with your franchisee is essentially done.
Q: Within your system, do you allow franchisees to have unique regional products?
Kennedy/Cowboy Chicken: Yes and I have an example. We have a store in Lincoln, Nebraska, and they have this salad dressing that's really big there, but we're open to that kind of conversation (allowing its use in-restaurant there). So, I think at times you have to bend some to handle those types of situations. Usually, though, our rule is that if it's good for one store, it's probably good for the whole system.
Berger/Elevation Burger:The same is generally true here. I mean you're trying to convey the same brand in every single market, so when we launched in the Middle East, it was the same as in any U.S. store. … We have started to allow some regional variation. For instance, in Portland, Maine, in the touristy area in the summer, our franchisee is selling a fresh lobster burger that would not sell that well anywhere else, nor would you want to try to source that in Texas or Ann Arbor.
So we've made some exceptions, but, instead I think we really have a lot more LTOs now … with some regions having more success than others. … Our internal metric is if it doesn't reach 3 to 4 percent of gross sales, it's not re,ally worth keeping it on the menu.
Q: If there was one thing you could fix in your supply chain, what would it be?
Berger/Elevation Burger:It's still hard to service restaurants when there are under five (locations) in a market, but once you have five, it gets a whole lot easier to source. For example, we have a store in Miami that we are constantly having to innovate to get them product. So I'd say, I'd want more restaurants in (some) markets.
Kennedy/Cowboy Chicken: Honestly? I'd like to see prices of everything come down. That's my wish.
Please register herefor the Restaurant Franchising & Innovation Summit, July 18-20 in London. The 2018 RFIS will be in April in Louisville.
Topics: Business Strategy and Profitability, Chicken, Customer Service / Experience, Equipment & Supplies, Food & Beverage, Food Safety, Health & Nutrition, Operations Management, PCI Compliance, Software - Supply Chain, Sustainability, Systems / Technology
Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.