Aditi Dutt Chaudhuri, James Gische, Felipe Caro
The restaurant industry is one of the few industries in which technology adoption has been slow. Many restaurants still rely on conventional ways of ordering supplies and ingredients over the phone and using simple manual entry methods with pen and paper. Although this method has worked over the years, it is error-prone and time-consuming to track order histories. A typical restaurant manager spends around four hours per week ordering from different suppliers of fresh produce, meats, frozen goods, and other items. Coordinating orders from so many different suppliers and maintaining separate order histories for each can be quite cumbersome. In addition, if there are any changes or miscommunication between the restaurant manager and the supplier, it can lead to shortage or waste, resulting in financial losses that low-margin suppliers and restaurants cannot afford.
To address these problems, ChefsOrder, an LA-based startup, provides a simple solution in the form of an online platform. With a single digital platform, restaurant managers and chefs can manage all of their suppliers in one place, simplifying coordination. This platform also acts as a marketplace for restaurants, enabling them to select suppliers offering the lowest price. According to the company’s founders, customers using ChefsOrder have been able to streamline their ordering process, resulting in significant time saving.
ChefsOrder creates value in the restaurant supply chain via aggregation and infomediation. By aggregating suppliers and restaurants into a single platform, ChefsOrder saves time for restaurants because they do not have to communicate with each of their suppliers separately. ChefsOrder also provides restaurants and suppliers with information, such as order histories, which creates further value. In addition, ChefsOrder helps restaurants reduce risks in supply continuity. A restaurant can use ChefsOrder to find a replacement for a supplier that has been disrupted or that faces a shortage of supply, minimizing the impact of the disruption and reducing the time to recovery.
There are several opportunities for a platform like ChefsOrder to expand by providing additional value in the restaurant supply chain. First, ChefsOrder can offer the same kind of aggregation value for suppliers as it currently does for restaurants. Features for suppliers to track their restaurant customers would allow suppliers to track orders, optimize delivery schedules, and communicate with their customers efficiently. ChefsOrder can also provide more information to both parties to enhance the value of the platform. Such information could include restaurants’ ratings and reviews of suppliers and demand forecasts by product for suppliers. Finally, ChefsOrder can help restaurants and suppliers optimize their supply contracts by suggesting and facilitating buyback or revenue/profit-sharing contracts in the right circumstances. All of these enhancements would allow ChefsOrder to increase the overall supply chain surplus, benefiting both parties on the platform.
ChefsOrder will face important risks and challenges moving forward. The most critical threat will most likely be from increased competition. This could come from existing players in the restaurant supply chain; e.g. larger suppliers developing their technology for interacting with restaurants. The company also faces competitors focused specifically on the restaurant industry, such as SimpleOrder, and larger procurement software vendors who operate across industries, such as SAP Ariba. As with all double-sided platforms, ChefsOrder’s success will depend on scaling up network effects to fend off competitors.