Torchy’s Tacos Works to Ensure the Timely Delivery of High-Quality Ingredients to its Restaurants
Torchy’s Tacos is developing a redistribution program to maintain quality, reduce costs, improve inventory planning and increase efficiency.
By the end of 2020, Torchy’s Tacos will have opened 20 new restaurants and entered four new states, bringing it to 91 locations in nine states. The company has tripled in size over the past five years, but that rapid growth means little if it doesn’t have fresh, high-quality ingredients every day to serve every customer “damn good tacos.”
“From a distribution perspective, if we can have the deliveries show up on time, complete, the right quality and meet all the KPIs we track, the store partner has a fighting chance to be successful,” Senior Director of Supply Chain Ed Malloy says. “Everything we do is to support the stores. We live and die by ‘damn good tacos.’”
In Torchy’s Tacos’ never-ending mission to enter new markets, the Austin, Texas-based company focuses on staying nimble. To achieve this, Malloy’s team is overseeing the addition of four distribution centers and developing a redistribution program this year to maintain quality, reduce costs, improve inventory planning and increase efficiency.
“I’m really excited about what we are trying to do because it’s a flexible model that provides us the opportunity to maintain growth and support the business development team in whatever market they want to go next,” he adds. “We are all corporate-owned stores, so if next year we decide we are going to Indianapolis, which we are nowhere near now, I can get there.”
Each year, the company needs to be supplied with more than 125,000 cases of avocadoes, 1.5 million pounds of jumbo white onions, 12 million fresh cage-free eggs and 42 million portion cups of sauce. It also uses 40 different types of fresh fruits and vegetables. And those numbers only continue to grow.
Torchy’s Tacos sources its ingredients through PRO*ACT, North America’s leading distributor of fresh food sourced from premier national, regional and local farmers. In first-quarter 2020, the company added four distribution centers in 60 days to expand its produce network.
The company’s three distribution centers in three major markets to allow the produce distribution company to deliver five days per week to stores. It also expanded its produce-only distribution center in Texas to become a full line center where it will increase distribution to five days per week.
“Ninety-five percent or more of the stores in Texas are going to get five deliveries a week,” Malloy emphasizes. “This is a major plus for us and stores that are older and tighter on space. Because our volume is good they are able to help us.”
Torchy’s Tacos partnered with PRO*ACT because the produce companies within the distributor’s network are the experts at managing the short shelf-life of perishable items. “They are good at managing temperatures across the whole produce spectrum,” Malloy notes. “They assist the stores in managing the quality of the products we serve, which is the raw materials and ingredients that go into the ‘damn good tacos’ we offer.”
Using Redistribution to Grow
To further support its growth and improve inventory planning, Torchy’s Tacos implemented a redistribution program, starting with 25 to 30 percent of the items used in stores. The redistribution center consolidates frozen, refrigerated and dry products that will ship these items to all the distribution centers.
“The redistribution center will improve turns, control costs and, from a supply chain standpoint, help us gather information from storage usage to what the distributor needs on-hand,” Malloy explains. “If we manage this information properly, our goal is to go back to our suppliers and give them much more detailed information from a demand planning standpoint.”
Torchy’s Tacos has established close relationships with key suppliers based on the quality of products they offer. The company aligns itself with suppliers that do a good job providing the right product at a fair price. “As long as they don’t fail in quality, service and price, we are content,” Malloy says. “We don’t shop our business because you cause more problems the more you jump around. Shopping around for a penny savings here or there is not worth the disruption to the system.”
The relationship, Malloy emphasizes, is not mutually exclusive. For example, one of Torchy’s Tacos’ suppliers packaged an item in a particular size of case that worked for all of its stores except the smaller locations. “We went back to the company and asked if there was a way to come up with another size product,” Malloy remembers. “They did do it and we were pleased they did it, but what they found was there was a market for that size case to other customers. By listening to our needs, they found a greater opportunity in that area.”
Limiting the number of suppliers from which Malloy’s team sources through the redistribution program will make it easier for Torchy’s Tacos to expand. “Next year, as we go into other markets, I’ll go through the same process over and over again,” Malloy says. “I don’t have to follow the same path for everything. As I continue to add more volume into markets and I can buy product at the right quantity to make the best purchasing option, I can pursue that at the same time.”
Torchy’s Tacos will continue to focus on ensuring quality throughout the supply chain so its restaurants are set up for success. “Are we doing everything we can from our side to make the operations team successful?” Malloy asks. “If we do not do our job, then the operations team is put in a position where they can’t do theirs. We don’t want them to worry about quality. We want them to take for granted that when they place an order the truck shows up on-time with the products they want and the quality they expect to remain successful.”