For restaurant owners and chefs in the Middle East, getting the best price on high-quality ingredients is a time-consuming, manually intensive process which requires engaging with multiple suppliers, each of which have their own invoicing and payment system which adds further complexity to the ordering process.
This doesn’t help buyers who want to be able to order the same product on a rolling basis and require the flexibility to adjust orders so as to optimize their procurement process and avoid wasted ingredients.
To solve this problem and build trust with restaurants, Dani El-Zein, co-founder of Dubai-based supply chain management software startup Supy, said his company is building a “managed marketplace” to streamline the end-to-end ordering process between restaurants and suppliers.
“We want to bring data and visibility to the restaurants so that they can then be empowered to take smarter decisions on how they’re going to work with suppliers,” he told PYMNTS in an interview, adding that it will improve the standard payment process, which is both complex and low-tech.
He further said that on average, a restaurant will receive 300 to 500 invoices a month from their suppliers — and managing that many purchase orders can be confusing and difficult for restaurants to keep track of.
Often, restaurants “will just pay what’s been told [even if] you don’t receive what you order,” he added.
To make matters worse, payment transactions between suppliers and restaurants are done through the “old-school method” of cash, bank checks and bank transfers, creating further difficulties for both parties. Moreover, without a way to verify what has or hasn’t been received and paid for, there are limited mechanisms for resolving disagreements.
Here too, El-Zein said Supy is solving the problem by creating a settlement system to streamline transactions through a supplier portal, enabling wholesalers to issue digital invoices which restaurants can then pay online.
Groups Versus Independent Restaurants
The digital transformation of restaurant supply chains has advantages for buyers and suppliers. It allows both to keep on top of their books, ensures there is a clear and readable record of who has ordered what from whom, and enables businesses to leverage a data-based approach.
For restaurants, collecting data allows them to optimize their purchasing, ensure they are paying the best price and avoid over- or under-ordering. On the supplier side, Supy has the potential to “empower suppliers with statistical data on certain restaurants that can allow them to make smarter decisions,” El-Zein said, ultimately reducing losses from defaulted payments.
When asked about market differences between the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA), where the company also operates, he explained that the hospitality sector is much more “group driven” in the KSA, where the UAE is home to more independent, individual restaurants.
In the group-oriented model more commonly found in the KSA, the “communication with suppliers is a bit more centralized and when they’re centralized, you have another layer of communication that happens between the branches,” he noted.
Bolster Data Analytics Capacity
When it comes to the shape of the restaurant industry across the Middle East and North Africa (MENA), El-Zein pointed to two noteworthy trends.
Firstly, he has observed “delivery becoming much more aggressive” in the last two years because of the pandemic, while the fine dining trend, particularly in MENA markets, has been gaining traction in recent years.
On the supplier side, he noted that wholesalers who were initially skeptical of digital transformation are increasingly welcoming solutions like Supy’s and are now more curious and interested in how they can digitize their businesses.
Going forward, El-Zein said Supy is looking to bolster its data analytics capacity to build predictive models for supply forecasting.
“We’re building a data science team to empower restaurants to give suppliers forecasts,” he said, added that the same technology will also help suppliers predict demand and better manage their procurement.
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