DIGITAL TRANSFORMATION IN THE RESTAURANT INDUSTRY: A CUSTOMER PERSPECTIVE
Hear how a One Network customer has gained visibility across their supply chain, improved efficiency, reduced waste, and increased collaboration with its supply chain partners across a global business with more than 1,500 restaurants and about 100,000 staff members. The following remarks are by the company’s Chief Supply Chain Officer in 2018:
Today I will be sharing with you how Bloomin’ Brands is transforming its restaurant supply chain with the One Network cloud network solution.
Bloomin’ Brands (BBI) is a company of founder-inspired restaurants, and it’s one of the world’s largest casual dining companies. We are headquartered in Tampa, Florida and our portfolio of unique restaurant brands includes Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and my favorite, Fleming’s Prime Steakhouse and Wine Bar. We operate nearly 1,500 restaurants throughout the U.S., including Puerto Rico and Guam, and in 19 other countries; and are a publicly traded company, under the ticker symbol “BLMN.”
Bloomin’ Brands’ supply chain has been transformed as part of our overall transformation, because of the challenging, competitive restaurant landscape. There are extremely low barriers to entry in this industry. No longer does it require the backing of a large chain or franchisor to open a restaurant. How to operate a restaurant is well-documented, accessible, and easy to replicate.
The gap between people eating at home, versus in restaurants, is massively widening. People see food at home as more convenient, healthier or higher quality, and less expensive than restaurants. (editor’s note: These comments were pre-pandemic and this gap has only widened since then.) That has given life to a new set of competitors such as Blue Apron, and prepared food at grocers like Publix.
When people want prepared meals, they still prefer eating at home, and have food delivered to them. Hence, we have a huge surge in the delivery market, with competitors like Uber Eats, DoorDash and Grubhub, among others. With this competitive landscape, you see the increased desire for various digital capabilities.
Of course, 79% of customers trust online reviews as much as personal reviews, and a one-star rating boost on Yelp correlates to about a 5 to 9% increase in revenue.
We also have 40% of frequent visitors preferring online ordering, and spending more on those online orders than they do in-store. We have seen this in our own off-premise journey. For the millennial generation, who values experiences over things, dining serves as a daily experience they want to share. In fact, restaurants are the top location-sharing category on social media. Customers don’t see restaurant apps as a payment method anymore, but they also expect loyalty programs, and they expect to be delivered a personalized experience.
The modern guest has a myriad of concerns around diet and nutrition, food allergies, and the environmental impact of their dining choices. They want easy access to nutrition information. In addition, governments are beginning to mandate laws around availability of nutrition information, whether it be printing it on menu, or having it available in stores, ranging anywhere from calories to sodium, to other allergens.
Fulfilling the “digital cravings” of restaurant customers
In order to fulfill the digital cravings of customers, and to compete in this competitive landscape, we require high quality and complete data. Prior to the digital age, the only channel you had to worry about was print. Now you have automated POS, you have e-commerce, you have web. We also have the app, and it is critical that all of these channels stay synced, to ensure customer satisfaction, as well as profitability.
Trends in what customers are looking for from a menu offering change rapidly. We need the ability to quickly capture those changes and pivot. We also need to be able to quickly react to unforeseen forces, which can impact menu items and customer satisfaction, such as weather events.
Local preferences are also an important trend. In the U.S., the expectations of consumers on the west coast are very different from those on the east coast. They tend to want lighter options with a greater Asian influence. We need to be able to capture all of this data and react accordingly.
Consumer expectations vary even more greatly when you look in international markets. For example, in China, Outback does not have the Blooming Onion on the menu.
Of course, we have supply chain traceability. We need to be able to tell our suppliers how to procure and distribute our product, and how much inventory to keep. We need to know where we are getting our food, and set expectations around quality and food safety. We need to be able to quickly identify where food is, and pull it back in case of a recall.
With regard to customer engagement, we have reward programs. In our case, we have dine rewards. We also are targeting personalization. We can learn about our customers and are able to interact with them. It’s amazing what people are willing to let you know about themselves. And of course, there is social media; Yelp, Foursquare, and Facebook.
Finally, the digital experience is another business objective. Our e-commerce platform is important, especially as delivery is becoming so much more important. Whether it’s direct or through a third party, consumers are demanding delivery.
Transforming into a demand-driven supply chain
As you can see, it is fundamental that Bloomin’ Brands’ supply chain transform into a demand-driven supply chain in order to compete in this new digital age. We must bring visibility to a highly complex and decentralized supply chain — a supply chain that includes over 270 suppliers, over 70 distributors, and 1,500 restaurants.
The process we build must be reliable, in order to maintain the confidence of our restaurant operators, and our supply chain response to demand must be profitable in order to meet Bloomin’ Brands’ financial goals.
Selecting One Network Enterprises: We went through a very comprehensive process to select the One Network solution. By far, some of the key reasons we chose One Network were: number one, the ease of deployment and adoption; number two, affordability, due to the cloud recurring fee model; number three, minimal development work needed – we really used the manila method here. And finally, ease of integration with the various ERP systems that we have.
The One Network solution deployed at BBI includes a whole slew of modules; Demand Forecasting, Demand Translation, Demand Sensing, Inventory Management, Replenishment Planning, Order Forecasting, Order Creation, Back Propagation of Order Forecasts and Orders, and Supply Chain Visibility.
All of these solutions were deployed on top of One Network’s multi-tiered cloud network platform, called the Real Time Value Network. One Network is providing a global planning, optimization and execution backbone that our entire distributor and supplier community can leverage to be highly responsive to consumer dining habits. This cloud network has allowed us to realize rapid results, and to leapfrog the results achieved by traditional ERP implementations.
Real-time data, machine learning, and intelligent agents
The One Network solution captures POS data at the store level on an hourly basis, aggregates all POS to the DC level, and computes statistical weekly forecasts. It then disaggregates the DC forecast down to the restaurant level, by using machine learning agents that continuously optimize the allocation of sales from the DC week-level to the restaurant day-level.
It constantly finetunes the demand forecast at the restaurant day-level, by using machine learning agents that monitor the forecast demand against the actual demand. This delivers a level of forecast accuracy never seen before in the industry. It also translates the menu item forecast into ingredient forecasts by leveraging Bloomin’ Brands’ recipes, and maintains a perpetual inventory level for all ingredients at the restaurant and DC levels.
It then calculates the order forecast and replenishment planning, based on the demand forecast, inventory levels, and inventory policies. It then back-propagates the order forecast across all tiers in the network, so that all participants have much better visibility of demand across the planning horizon.
Then it generates automated orders at the store level, based on the daily order forecast, and it communicates these orders for fulfillment. Obviously, it can maintain visibility of orders and shipments across the whole network, for exception-based alerting and monitoring, so it’s a very, very comprehensive system.
Best-in-class forecast accuracy, lower costs, and the freshest product
Now, talking about results, this solution has allowed us to achieve best in class forecast accuracy levels, from the low 60s to the high 80s. We have essentially eliminated the bullwhip effect, and we have improved the efficiency of our inbound supply chain, reducing many, many of our suppliers’ costs.
We have also virtually eliminated inventory transfers between restaurants. We have eliminated expediting from our core suppliers, and we are delivering the freshest product to restaurants ever before. Along with this fresh product, we have been able to reduce inventory by nearly 50% and certainly, we have been optimizing costs all along the way.
We also want to improve chain of custody. We want to know exactly who has what, where and when, and minimize the possibility of mishandling and contamination.
And finally, we are targeting to have a better food recall process. We want to handle all of our recalls with confidence, minimize risk and the high cost of recalls, by pinpointing the problem and executing precision recalls of only the affected items. Speed is king when it comes to recalls.