Casual dining chain TGI Friday’s switched a number of suppliers from overseas providers to UK ones in the wake of the Brexit vote, its procurement and supply chain director has said.
Speaking to SM, Alyson Scott said the crash of the pound after the UK voted to leave the EU added a £6m extra cost to the business, which buys in sterling, euros and dollars. After the referendum, sterling fell to its lowest value since 1985.
“I had my boss, the CFO, asking me what I was going to do to mitigate that £6m,” she said. “We had to think outside the box.”
The chain has reduced portion sizes and re-engineered some items, such as substituting full fat sour cream and mayonnaise for low fat options, to cut costs.
“In the past we wouldn’t have moved for less than £100,000, but that changed [after the referendum]: we went after every penny,” said Scott. “The exchange rate impact meant we had to completely change the strategy of what we were buying.”
TGI Friday’s has moved a number of contracts back to the UK since June 2016. Moving a steak contract from Uruguay to the UK saved £800,000 (although this contract has since returned to the Uruguayian supplier). It also moved its potato skins contract to a UK supplier.
However the company is unable to change some products. Jack Daniels glaze, for example, is made in the US and “is a necessity”.
The chain has removed provenance descriptors from its menus so if the origin of products changes post-Brexit, it will not have to print new ones. “Having flexibility is very important to us,” said Scott.
Although exchange rates have improved, Scott said she was “hedging her bets” and looking for suppliers in sterling, euros and dollars.
Scott said that some suppliers in Ireland were looking at buying manufacturing capability in England. “We are working with some great suppliers there who don’t want to lose our business,” she added.
Packaging has also been a focus, with the chain looking to reduce the amount it uses in the supply chain. “We’ve been making every case size 15kg and making sure they are completely full,” said Scott. “It all helps longer term.”
Supply chain initiatives had so far managed to reduce the £6m extra cost to £1.4m, she said.
But the potential risk to transporting fruit and vegetables is “really worrying”, added Scott. “If it gets caught at customs, with such a short shelf life, it doesn’t bear thinking about,” she said.
She added that the chain was taking a partnering approach to working with suppliers, although she had found some suppliers were cautious about signing long-term contracts.
Despite the challenges presented by Brexit, Scott said it had raised the profile of supply chain in the business. “I was head of department and I would say I’ve been promoted to director as part of seeing how critical supply chain is to the business.”