Restaurants in the complex dining industry, such as Darban, face critical strategic issues. Some of the problems faced by Darden are internal and, therefore, within the control of the restaurant’s management team. At the same time, Darden faces external factors that the restaurant’s managers have no control over. For any organization, it is essential to analyze both internal and external issues to come up with a proper strategy to counter these strategic issues. Thus, it is a worthwhile course to examine Darban’s strategic issues, both internal and external, and propose solutions to such problems while justifying the proposed solutions.
Strategic Issue: Supply chain volatility
At the point of delivery of the goods, the Darden restaurant faces chain operations risks in the supply of goods. Supply chain volatility is an external strategic challenge that Darden Restaurants cannot control. A restaurant business has to go through the cumbersome task of getting ingredients, equipment, and other necessities through a complex web of suppliers, and Darden is no exception (Qvintus, 2021). The restaurant faces supply chain volatility issues, which can disrupt the flow of goods, resulting in operational inefficiencies, increased costs, and possibly service disruptions. In the worst-case scenario, the restaurant can leave business due to a lack of delivery access. One of the most significant challenges with supply chain volatility is ingredient availability and pricing uncertainty. Weather and geopolitical events that could change global supply and essential ingredient costs expose Darden to potential risks due to the market’s unpredictability (Migdadi, 2023). For example, poor weather, such as droughts or floods, can affect crop yields, leading to scarcity and price increases for agricultural commodities. At the same time, geopolitical strife or trade spats would have the power to disrupt international supply chains, causing disturbance and destruction in accessing imported ingredients.
Supply chain volatility can cause disruptions in inventory and procurement, which may be critical to Darden Restaurants. In a restaurant like Darden, a proper inventory is essential for meeting customer demand without waste and extra storage costs, which may affect the overall cost of the product. Sudden changes in supply chains cause either inventory shortages due to limited supply or excesses due to oversupply; both result in operational inefficiencies and financial losses. In a volatile supply chain, procurement decision-making is impaired due to market unpredictability. Making an informed decision is difficult because supply chain volatility makes the market juggle fluctuating prices and availability. Therefore, businesses, particularly Darden, will face challenges while upholding quality and consistency within the food supply.
During periods of market volatility, the price of commodities tends to increase—the disruption of the supply chain forces Darden to spend much more to get the ingredients and supplies. The quality and safety of ingredients and the integrity of the product in the supply chain could be at risk, making customers feel unsafe or satisfied with the food (Qvintus, 2021). For example, suppose the logistics process goes wrong due to delayed transportation or a hitch in storage. In that case, the quality and integrity of a perishable good might be compromised, leading to food spoilage or contamination. According to Barros et al.’s (2021) research findings, to ensure food safety in a volatile supply chain, a restaurant like Darden will need to invest more to implement sound quality control measures and manage suppliers; if not, the restaurant may risk serving its customers substandard and unsafe food.
Finally, supply chain volatility may put Darden at a competitive disadvantage compared to competitors with less risky or more diversified supply chains. Restaurants that can better manage risk and potential supply chain disruptions would have more advantages regarding consistent product availability, cost competitiveness, and reliable service. On the other hand, supply chain challenges may limit Darden’s ability to innovate, move into new menu categories, or respond to consumers’ changing tastes and preferences (Gaudenzi et al., 2021). This limited innovation may eventually lead to them losing their market share to competitors with more resilient supply chain strategies. Satisfying customers and building loyalty in a fiercely competitive sector are essential for long-term business success. Any off-task part of the supply chain may directly impact Darden’s ability to meet customer expectations and maintain its position in the marketplace.
A proposed solution to a similar challenge: Supply chain diversification
Diversifying the supply chain is one way to address the strategic problem of supply chain volatility. Diversified supply chains provide alternative suppliers and distribution channels through increasing suppliers and distribution paths so that the reliance on a singular source of supply chain volatility is minimized. There are many reasons why applying a diversified supply chain strategy will help restaurants such as Darden face challenges due to supply chain volatility and, overall, enhance resilience and competitiveness in the market. Risk mitigation is one of the primary reasons for supply chain diversification. Because ingredient sourcing is diversified across regions of a country, any disruption—whether due to natural calamities, political tensions, or supplier failure—would not easily throw the restaurant off balance. The diversification of the suppliers ensures that even if one runs into a problem, others can line up alternative sources to fill the orders, thus ensuring that operations at Darden do not stop. This approach to risk management is proactive, increasing the restaurant’s preparedness level for unanticipated challenges and reducing the impacts of supply chain interruptions on service quality and customer satisfaction.
Supply chain diversification also offers flexibility and agility in dealing with evolving market conditions and changing consumer preferences. A diversified supplier base may enable the restaurant to access various products, ingredients, and pricing models. This increased access, in turn, facilitates the ability to turn on a dime concerning changes in demand, pricing, or availability. Thus, if a particular supplier increases costs or risks losing its ingredients, restaurants could easily switch to another supplier that can still offer cost competitiveness, price concessions, or other concessions without compromising the quality or menu offering. This variety’s availability leads to procurement decisions that can be maximized, always ensuring sourcing cost-effectiveness with both consistency and supply reliability (Gaudenzi et al., 2021).
With a diversified supply chain, Darbin will promote innovation among its staff and product uniqueness by providing access to unique or speciality ingredients from various regions or suppliers. This will allow the staff at Darden to be creative and develop the best cuisine in the market. Companies like Darden can take advantage of the many options they have to experiment with new menu opportunities, create new trends based on the ingredients they have access to and the trends that the culinary industry faces, and make themselves stand out from others. The restaurant can also collaborate with several suppliers to leverage their knowledge and innovation in products from different markets to improve quality and diversify restaurant menus.
Besides risk mitigation and flexibility, supply chain diversification adds to sustainability and corporate social responsibility initiatives. Using local or sustainable suppliers from different regions reduces transportation carbon footprints, boosts regional economies, and fosters ethical sourcing. Thus, diversification in sourcing also helps restaurants align with consumer preferences around environmentally friendly and socially responsible businesses; this will build a good brand reputation and enhance customer loyalty. As a result, a diversified supply chain strategy is the best solution for addressing supply chain volatility because it offers many advantages for restaurants like Darden in terms of risk reduction, increased flexibility, innovation, and sustainability. As a result of diversifying its supply chain, the restaurant will be able to cope with the volatility of the supply network of suppliers and distribution channels, maintain an operable perspective, and seize opportunities to grow and differentiate itself in a dynamic and highly competitive context. The benefits of supply chain diversification and investment in supply chain management capabilities provide a proper position for Darden to create long-term resilience through strategic planning and collaboration with suppliers.
In conclusion, the restaurant industry has critical strategic issues and challenges, both internal and external. Darden, a significant player in the restaurant industry, has also faced its share of internal and external problems and challenges. Supply chain volatility is the restaurant’s main internal challenge. Supply chain volatility limits the restaurant’s access to necessary ingredients and supplies, thus limiting its competitive edge. However, Darden can diversify its supply chain to mitigate the impact caused by supply chain volatility. A diversified supply chain gives Darden a competitive edge and ensures the restaurant has a constant supply of cost-effective and safe products.
References
Barros, M. V., Salvador, R., Prado, G. F., de Francisco, A. C., & Piekarski, C. M. (2021). The circular economy is a driver of sustainable businesses. Cleaner Environmental Systems, 2, 100006.
Gaudenzi, B., Zsidisin, G. A., & Pellegrino, R. (2021). Measuring the financial effects of mitigating commodity price volatility in supply chains. Supply Chain Management: An International Journal, 26(1), 17–31.
Migdadi, Y. K. A. A. (2023). Identifying Best Practices in Hotel Green Supply Chain Management Strategy: A Global Study, Journal of Quality Assurance in Hospitality and Tourism, 24(4), 504-544.
Qvintus, P. (2021). Managing Supply Chain Volatility Caused by Major Disruptions: Creating a Disruption Preparedness Scorecard (Master’s thesis).
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