On the one hand, restaurants have gone far more digital since the start of the pandemic. Mobile ordering has gone from the purview of early adopters to the mainstream, and digital technologies are being built into restaurants online and in the physical world. However, for all the on-table QR codes and artificial intelligence (AI)-enabled drive-thrus, the B2B side of the industry has remained largely stuck in the past.
“The problem on the buyer side is that procurement is offline,” Jordan Huck, chief executive officer of restaurant supply chain technology company Notch, told PYMNTS in a recent interview. “The problem on the distributor side is, their order desk is offline — they receive orders via email, text, phone, fax machines, carrier pigeons. Their order desks are completely offline, and so they have to have two, three people a week who just manually enter orders into their systems.”
Notch, formerly known as ChefHero, recently launched its all-in-one supply chain solution, which offers restaurants and distributors a one-stop integrated digital ecosystem for each step of the process.
Bringing Technology Back
Specifically, Notch is bringing technology to the back of house. “Technology has exploded on the front of the house right and that’s well documented,” Huck noted.
He cited Toast’s point of sale (POS) technology as one example of leading consumer-facing restaurant technology, and the proliferation of advanced inventory management systems and third-party delivery apps as examples of the ways in which restaurants’ front of house has benefitted from the digital shift.
“That’s great, but the largest part of the income statement is back of the house,” he said, adding that 35 to 40 percent of a restaurant’s costs go toward paying for ingredients, which remains an offline process. For restaurant groups, this lack of digital integration makes it harder to keep track of what products are currently available with a given distributor in addition to adding unnecessary labor.
“We really believe that there’s a tailwind, from a supply chain perspective, for the back of the house,” he said.
Huck notes that Notch’s product allows distributors to invite buyers to order from them, to be discovered by buyers, and to process payments digitally. “If you can build an audience in B2B, you can be in FinTech,” he said.
On the restaurant side, he said, the product creates “full digital connectivity from the moment a diner walks into a restaurant,” integrating digital ordering tools, point of sale software, and inventory management systems, and providing access to information about suppliers’ stock.
A Supply Chain Solution For A Supply Chain Problem
“We’re a company that was forged in the pandemic,” said Huck, explaining that Notch observed the need to digitally integrate every step of the process for both buyers and distributors after the company took a major hit — an 80 percent revenue decrease — in April 2020. “So, it was the pandemic that gave us the clarity to understand the problem that needs to be solved.”
He added that the unique toll the COVID-19 pandemic has taken on the restaurant supply chain has caused not just a need bult also a demand. He explained that much like the restaurants with which they work, distributors are also facing “huge talent shortages right now,” making the inefficiencies of pen-and-paper systems a more pressing issue than before.
Huck explained, “That just means that our product really needs to be consumer grade, even though it’s B2B, it’s really got to be so easy for both our distributors and our restaurants to use.”
He added that there is also “increasing demand” across industries for “tech tailor made for that vertical.” As a counterpoint, he cited QuickBooks Desktop (adding that the software, as an accounting system, is “different, obviously, than what we do”) as an example of a horizontal product that uses a one-size-fits-all model across verticals. Notch’s solution, in contrast, appeals to the widespread need for increasing verticalization.
The Intelligent Future Of Restaurant Supply
In the next several years, Huck predicts that we will see more businesses “using data to drive efficiencies in their business.”
As more restaurant technology becomes integrated, and data can be transmitted across systems, he believes that these systems will be more able to make “intelligent recommendations” around how external events — say, a holiday — will affect the availability of any given product. Businesses will be “using the technology stack in restaurant operations to feed predictive decisions in your supply chain.”
For Notch’s immediate future, the goal is expansion. Currently, the company operates in its home city of Toronto, as well as in Chicago and several cities in Texas. In the next year or so, the company is looking to expand to California, New York, Boston, Florida and other parts of the East Coast.
“The technology stack on the restaurant and the distributor side is highly fragmented, and we’re attempting to and will be the first company that that will provide full visibility,” said Huck. “Think Google for ingredients — full visibility into the supply chain that will be available in a given market.”