Restaurant Leadership Offers 2010 Outlook

At the end of April, I attended Restaurant Leadership-a national gathering of industry, business and community visionaries. The mood was upbeat as we heard businesses express their optimism for a profitable year. The consensus is that the restaurant industry is hacking its way out of the thick weeds of the recession, and starting to find room to grow again. 

While it was exciting to debate industry trends (this year the role of social media was a hot topic and one I will cover in a future blog entry soon), the real issue of the event and of this year is the tough competition restaurants have from supermarkets and retail giants like Target and Wal-Mart. With grocers and retailers selling prepackaged meals at very low costs (often much lower than the cost of eating out), restaurants face ongoing price pressure despite improvements in the economy.

At the end of 2009, CREST (Consumer Reports on Eating Share Trends) reported that supermarkets prices had fallen from the year prior while restaurant prices were higher. Wallet conscious consumers have been cooking and eating at home more often and the question is how do restaurants lure them out again? The odds are high that penny pinching will continue among consumers. Americans are saving more than twice the amount they were two years ago according to the Bureau of Economic Analysis. In the fourth quarter of 2007, 1.5% of earnings was going toward savings in American households. By the fourth quarter of 2009, the number had risen to 3.9%.

Rather than waiting for a shift in consumer habits-good habits like saving more-restaurants will need to compete head-to-head with supermarkets and their low-cost, prepackaged foods. That means price is king and efficiency is a must. Restaurant chains will need to squeeze every bit of efficiency out of their supply chains in order to keep prices competitive and attractive to cost conscious consumers. Even grocery and giant retail competitors are loudly talking to the market about supply chain efficiency. Think of Wal-mart’s current TV ads, which speak to making the most of their truckloads in order to deliver lower prices to their customers. The supply chain is your most direct route to greater efficiency and the world’s largest retailer knows it.

Restaurants too must invest in supply chain solutions that provide greater visibility and the detailed knowledge needed to better manage their pricing, spending, logistics and promotions. Only with end-to-end and trading partner-to-trading partner supply chain insight can restaurant chains truly compete in terms of price with grocers and super stores today. And in this brightening economy, restaurant leaders nationwide agree: It’s a good time to get out there and compete.

A decade is quite a bit of time, but when you are trying to create a new paradigm it can seem like an instant. That’s my perspective these days as I consider our first 10 years in business and plan for the next 10 ahead. ArrowStream was founded in 2000 with the goal of transforming a transactional supply chain model into a collaborative network of trading partners that allows businesses to help each other succeed and share in the benefits.

I realized that greater transparency and widespread information sharing could redefine success for businesses all across the foodservice supply chain-manufacturers, distributors and restaurant chains and operators. By working together and increasing visibility into the supply chain operations, trading partners would all see substantial gains in profits, efficiency and agility to make informed, strategic decisions. Certain that increased supply chain information sharing would yield greater trust and partnership, ArrowStream set out to build the first collaborative network for supply chain trading partners-with our primary focus on the foodservice industry.

During the last 10 years, we have put forth great effort to make a dent in this ambitious undertaking. Because of our remarkable team of supply chain and logistics experts who are passionate about their work and customers who trusted us with the systems and data at the heart of their businesses, ArrowStream’s 10-year history boasts numerous milestones and achievements for which I am grateful. Here are 10 of ArrowStream’s accomplishments from the last 10 years that I am celebrating this month:

1. Extraordinary customers who share savings and foster strong relationships through trust and collaboration with other business partners.
2. A compound annual growth rate (CAGR) of 39% in the last three years (2007-2009).
3. Crain’s Chicago Business named ArrowStream Chicago’s fourth fastest growing company of 2009.
4. Inc. Magazine ranked ArrowStream # 867 on the Inc. 5000 list of fastest-growing private companies.
5. $41 million in rebates are generated across the ArrowStream Network.
6. The ArrowStream Network represents almost 10 percent of the foodservice industry today.
7. The ArrowStream Network provides visibility into more than $15 billion of product.
8. The ArrowStream Network today includes 4,000+ restaurant chains, distributors and manufacturers and reaches over 19,000 restaurants nationwide.
9. ArrowStream customers represent nearly 25% of the top 50 brands listed in the Nation’s Restaurant New’s 2009 Top 200 chains by sales and includes some of the nation’s most successful, innovative and expansive foodservice businesses, including Wendy’s, Panda Express, P.F. Chang’s, and Popeye’s.
10. A team of talented people who have dedicated themselves to fulfilling our vision: building the world’s most efficient supply chains.

I am proud of the work ArrowStream does, the hardworking team we have built and our customers and partners whose success and achievements fuel ArrowStream with ambition to accomplish more. While there are hundreds of feats to celebrate from the past decade, I think this list of 10 is an excellent representation of how ArrowStream’s daily focus-to provide customers with superior supply chain operations, higher profits and a much stronger competitive position-yields industry-changing results. And we have only just begun to scratch the surface.