How Do Food Franchises Source Ingredients?

To overcome ongoing supply chain issues, franchisors need to ensure franchisees have access to reliable vendor partnerships, flexible procedures and rock-solid brand standards.

By Luca Piacentini1851 Franchise Managing Editor

Updated 9:09AM • 03/29/22

When franchisees sign on with a restaurant concept, a major part of that investment is going toward accessing an established supply chain – a guaranteed process for sourcing high-quality ingredients. But right now, chicken, beef, ketchup packets – and even cups and straws – are all in short supply, and with supply chain issues expected to last well into 2022, it is becoming more and more difficult for food franchises to source the materials they have been able to expect to have on hand. Restaurant franchisors need strong, well-established relationships with vendors, and they must be willing to adapt in order to ensure ingredients are being successfully delivered to franchisees.

Samir Wattar, COO of Layne's Chicken Fingers, has worked in the restaurant industry for thirty years, including 15 years in roles overseeing supply chain, operations, training and franchise development. Wattar recently explained to 1851 Franchise how Layne’s has been able to accommodate high demand even during supply shortages and lend support to franchisees amid uncertain times.

For starters, the supply chain is a “relationship business,” Wattar explained, and franchisors need to build those solid relationships and connections with many different companies in order to safeguard a backup plan.

“For example, this year we had a deal with a chicken processor, but because of the way the chicken market was [experiencing shortages], he broke the agreement with us with only two weeks' notice,” Wattar said. “So, I reached out to my contacts, and within two weeks, I had a chicken agreement back in place with another person. This was possible because the people I work with know that I look for partnerships, not just transactions.”

Those long-term relationships can also make the supply chain more profitable for franchisees. While the person needing the supplies generally favors a discount, and vendors typically want to make a profit, Wattar is of the mindset that a successful supply chain is one where “they can meet somewhere in the middle.”

“I'm very loyal to my partners, so we can have that ongoing, beneficial relationship where we both profit from consistent business,” Wattar said. “And we don't make a deal and then charge the franchisee money. We pass the savings to the franchisee because we consider the supply chain one of the main services the franchisee invested in when deciding to join Layne’s.”

Andrew Gruel, the founder and executive chef of seafood franchise Slapfish, says franchisors also always need to be flexible to ensure franchisees can not only source ingredients reliably and affordably, but also consistently meet brand standards.

“Eighty percent of the seafood we eat in the U.S. is imported,” Gruel told 1851 Franchise. “I have been pounding the drum about the domestication of our seafood supply, both farm-raised and wild. We have a great seafood supply in the U.S., which we ship overseas to China to process and then buy back. So we knew we were going to have these shortages, and we on the corporate side needed to figure out how we could be flexible and help franchisees so we could maintain our brand standards. Franchisors have to provide a template so franchisees can understand the why behind everything they do.”

For example, due to the supply chain, Gruel said the only affordable to-go containers Slapfish could find were Styrofoam containers, which are the worst for the marine environment. “So, do we use plastic or do we opt for a much more expensive container? At the end of the day, you stick with your principles and buy the more expensive container,” he said. “You don’t give up on the business model and core values because of the price.”

Layne’s has also had to adjust some processes and pivot this year, Wattar said, while making sure to maintain consistency among consumers. The brand needed to swap materials for cups due to shortages, for example, with material variations for packaging and drinks. But Wattar says the primary focus was on maintaining food quality and keeping food in stock. Because of this, the brand has been able to maintain its chicken-loving customer base.

So, how can the industry adapt to avoid another supply chain crisis in the future? Gruel said one of the primary takeaways is that the industry needs to start really looking at where it buys ingredients.

“A key part of that is deregulating local food economies so we can buy more food locally,” said Gruel. “We need to get rid of those barriers that allow the big manufacturers to just get bigger at the expense of the little guys. We don’t want to get stuck in a situation like we’ve been in with this current supply chain because only one conglomerate is in control of an entire supply. We saw that with the meat shortage, for example. We need a community-driven, sustainable food supply.”