Supply Chain for QSR Brands
 

One of the fastest-growing sectors in India and the world is the QSR sector. In the years 2021-2025, the Indian market for Quick Service Restaurants (QSR) is expected to develop at a CAGR of over 18%, according to a report by Research and Markets. Multiple causes, including urbanisation, food delivery service expansion, the rise of working professionals and millennials alike, and an increase in disposable income, are fuelling a boom in the fast-food industry. As a result, this is the most competitive restaurant-style due to the large a number of new entries and aspirations.

The QSRs also face a variety of issues in their business. External factors like food inflation and agriculture reliance on the monsoon affect the business. Demonetisation also had a negative impact on the firm, resulting in lower revenues. The Indian market is very fragmented. Several local firms compete with larger international firms. This reduces system standardisation and increases dietary variability. So, the buyer demands more choice everywhere. The businesses sell the same cuisine at varying prices. This reduces client loyalty.

Then there are internal business concerns like supply chain, logistics, and warehousing. Training of manpower is vital; it is a major concern due to the high attrition rate in this industry. Inefficient employees produce system inefficiencies. If the company is well-known, then this sector requires greater attention. The supply chain is critical to a QSR’s success. A better supply chain means more value for the company. But the QSR supply chain in India is highly fragmented which means there are many middlemen involved leading to wastage of resources. The supply chain is becoming increasingly important in today’s competitive QSR industry. To compete effectively, QSR brands try to establish formidable supply chains.

 

Traceability

Nowadays, many consumers demand traceability, wondering exactly where all products and ingredients come from. Having trustworthy data on food goods throughout the supply chain is crucial now more than ever. Every step of the food supply chain should be tracked and communicated to ensure quality, product integrity, brand integrity, and consumer loyalty. Lack of transparency and traceability in the supply chain can expose it to undue risk given the fact India witnesses nearly 5-15 % (About USD13 Bn in value) wastage in fruits and vegetables annually. It can harm a QSR brand’s reputation, resulting in lower sales and profits. It can also cause legal issues that delay product launches. Traditional monitoring mechanisms and human inspections are often to blame for food supply chain traceability. A communication breakdown occurs owing to errors and omissions.

In the event of contamination, traceability may allow for targeted recalls. Transparency, traceability, and trust in the food industry have long proven difficult. The supply chain data can give producers, suppliers, distributors, retailers, and consumers with trustworthy product and ingredient origin information. Inventory visibility is improved and stock-outs are avoided, which is critical when giving limited-time promotions. Managers can take action if a QSR store uses too much of a limited ingredient. It also helps with internal shrink and inventory loss statistics.

 

Temperature-Controlled Supply Chain

Fresh, frozen food is becoming an essential menu item for many QSRs. Temperature changes can affect the shelf life, flavour, and sensory experience of refrigerated foods. With a well-constructed temperature-controlled supply chain, QSR businesses may improve their ability to maintain product quality and reduce losses.  Through real-time monitoring and historical analytics of the cold supply chain, including crucial environmental factors for products, a temperature-controlled supply chain assists QSR companies in reducing spoiling costs. A well-maintained cold chain leads to enhanced product quality, safer delivery, and predictive maintenance.

Having a well-designed temperature-controlled supply chain enables the QSR industry to quickly identify and address temperature and humidity issues in the cold chain—before they escalate into larger problems. By partnering with a third-party supply chain specialist who specializes in cold chain management, QSR brands can monitor and manage the cold supply chain more effectively in real-time, distribute products more safely and efficiently, improve delivery quality while decreasing costs, and increase customer satisfaction.

 

Data-driven Forecasting

With technological improvements enhancing the supply chain, QSRs can invest in solutions that bolster supply chain activities such as demand forecasting. A data-driven forecast generates demand predictions based on historical data, economic trends, and market analysis, allowing for more efficient inventory planning and the avoidance of losses. A data-driven demand estimate might mean the difference between profit and loss for a quick-service restaurant brand. Accurate forecasting that takes events, promotions, and other sales-related aspects into consideration is critical to avoiding losses, especially for QSRs that operate on razor-thin margins.

With precise projections, operators at a quick-service restaurant (QSR) can generate data-driven predictive orders, which are critical for inventory management.  An accurate forecasting system reduces capital retained on a restaurant shelf, improves bargaining positions with suppliers, allows for space reduction or reallocation inside a restaurant, and reduces waste. Supply chain professionals with excellent technological skills can help QSRs by predicting labour, ordering, and production needs. This estimate is based on POS transaction data and a complex algorithm that considers seasonality, events, promotions, and other factors. With new technologies, operators can adjust projections to account for both positive and negative consequences, such as increased sales activity due to neighbouring sports events, boosting forecast accuracy.

 

Inventory Management

Technological advances in inventory management systems provide better food tracking. With efficient inventory management, QSR businesses may improve food safety and reduce health hazards. Accelerate the placing of food products on shelves, ensuring that they are still fresh for customers, and optimise transit and packing methods to save money. Inventory management systems can also connect to the QSR supply chain for real-time product information. In the event of a problem, they may track specific shipments. A large amount of data is being shared, which can shed light on safety, delivery, and overstock concerns.

Finding the correct inventory management technology can also assist QSR brands in more successfully balancing their supply. If they have a surplus of inventory, they run the danger of it going bad and being thrown away. However, if QSR brands are unable to fulfil orders due to a lack of food, they risk losing customers and wholesalers. Inventory management enables QSR brands to trace the history of goods sold and estimate future demand. It may run algorithms to establish appropriate levels and compile reams of data to optimise inventory supplies.

 

Streamlined Ordering and Receiving

Organizing is key to successful ordering and receiving. So long as there is no leftover goods or spoilage the next ordering day, QSR brands have mastered the ordering procedure. But this isn’t the case for most brands. The quickest way to determine a QSR brand’s needs is to look at their most recent order, do an inventory sweep to see what they have on hand, and then estimate sales to determine what they will need until their next order. Keeping too much inventory lowers cash flow, invites abuse, spoilage, and even theft. The key to lowering food costs is to keep inventories low without running out of supplies.

An order’s fulfilment is as important as its placement. It is important that QSR brands set delivery times when qualified workers can accept them. QSR brands must also train these resources on how to respond correctly when something unusual occurs. Each case must be opened, inspected, and weighed on the spot. Illegal items can be returned with the driver, which is far easier than trying to return them after the invoice has been signed.

 

Growth and Expansion

According to a survey by Edelweiss Securities, the quick-service restaurant (QSR) segment is predicted to experience the fastest growth in the food services sector over the next 4-5 years. As per their estimate, the QSR chain category will increase at a CAGR of 23% between FY20 and FY25. QSRs can expand their presence in major cities but also diversify into smaller towns and cities, where they will need to tailor their products to the market’s price sensitivity and demography. This creates an excellent opportunity for third-party supply chain suppliers to leverage their innovation in the cold chain, as demand for smaller joints, cloud kitchens, and QSRs will vary significantly between metros, cities, and smaller towns and cities.

 

The food supply system is complex. Whether a QSR has a countrywide business or relies on local suppliers, they must always maintain a high standard of quality and safety for their finished products. In general, the more visibility and communication these brands have over their supply chain, the more effectively they can manage it. Concentrating on a few key areas will yield significant gains. In such a fast-paced environment, supply chain management might be an added advantage for India’s burgeoning QSR firms.

 

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