The Importance of Supply Chain Transparency for Restaurants

Restaurant-goers today don’t just want to know what’s on the menu, but what’s in each menu item, where it came from and how it got to their plates. Their need to know may spring from environmental concerns, dietary preferences, social conscience or support for local farmers and artisans. Diners may not know it by name, but what they’re asking for is supply chain transparency. And they’re not alone: Regulators, investors and restaurants’ own risk managers are among other groups pressing for supply chain transparency.

What Is Supply Chain Transparency for Restaurants?

Supply chain transparency gives restaurants the means to answer questions from customers and other stakeholders about the sources of their food, its contents and how it is handled on its way to the plate. Restaurant supply chains used to run in the background, largely invisible to customers. But now, restaurants are increasingly addressing diners’ concerns by communicating more openly about their supply chains. They must do this to get ahead of an increasing variety of questions: Are their menu items organic? Gluten-free? Free trade? Carbon-neutral? Humanely raised? Locally farmed? Checked for contaminants?

Nevertheless, achieving transparency poses steep challenges for many restaurant operations because the needed supply chain management advancements remain works in progress.

Key Takeaways

• Restaurants face growing customer scrutiny about the environmental and ethical practices in their supply chains.
• Supply chain transparency is the practice of disclosing verifiable information about the origins of, processes employed and ethical practices behind the products being used by an organization.
• The digital transformation underway in many restaurants lays the foundation for supply chain transparency.

Supply Chain Transparency for Restaurants Explained

Restaurants of all sizes are taking on supply chain transparency. Big restaurant chains and vendors, for example, are embracing environmental and social causes in a big way. Examples include McDonald’s touting its switch to cage-free eggs in support of animal welfare; Chipotle publicizing the installation of wireless sensors to monitor its “Food With Integrity” standards; and food distribution giant Sysco, which launched its “One planet. One table.” initiative to support environmental sustainability.

Likewise, independent and smaller restaurant groups are touting their supply chain ethics. Consider this pronouncement on the website of T’s Restaurant in Rhode Island: “We are committed to mindful food sourcing with a New England-centered thought process, an eye on sustainability, and partnerships with family-owned farms and businesses.” Then there’s Seattle-based Mt. Joy, whose new chicken sandwich concept centers on regenerative farming, an approach that goes beyond reducing environmental impact to improving environmental resilience.

To credibly deliver on promises like these, restaurants need to lift the curtain on their supply chains.

The State of Supply Chains in the Restaurant Industry

Restaurant supply chain transparency remains out of reach for many smaller restaurants today. Overall, restaurants’ technology uptake lags other industries. Illustrating the point, only 13% of restaurant managers surveyed say they are operating on the leading edge of technology, according to the National Restaurant Association (NRA). In 2024, though, over half said they planned to invest more in back-of-house technologies related to supply chain transparency, NRA says.

For restaurants to go beyond marketing messages to achieve real supply chain transparency, they need to demonstrate stronger execution than typically exists today of several supply chain management functions, including:

• Supplier relationship management (SRM): SRM entails a systematic process for evaluating suppliers, monitoring their performance and interacting with them in real time, often using digital tools, such as vendor management software that features supplier scorecards and information-sharing portals. SRM can support supply chain visibility, collaborative problem-solving and joint innovation as well as providing cost, quality and delivery benefits.
• Supply chain visibility: This function tracks the food and non-food items ordered from suppliers and available in storage. Visibility is achieved using tools such as transportation management and inventory management software. These draw data from various types of sensors and other sources to monitor supply chain details including refrigeration, emissions and waste.
• Supply chain traceability: Traceability, which relies on supply chain visibility, zooms in on specific products or batches to track the origins of their ingredients, their processing steps, certifications and other essential details. Tools involved include barcodes, QR codes, digital passports and radio frequency identification (RFID) tags, along with software that can tap into source information contained in a database.

Why Restaurants Should Focus on Supply Chain Transparency

Seven out of 10 diners say they’d be likely to order food that is more sustainably grown, according to NRA. Regulators and investors are on the same page, according to a food industry study by Deloitte and New York University. That study states: “Firms that underinvest in sustainability may encounter higher regulatory costs or have trouble accessing capital at a competitive rate from lenders who are trying to meet their own sustainability targets.”

Despite supply chain challenges, even smaller restaurants are finding ways to satisfy at least some of these demands.

One hot trend has seen many restaurants seeking out more local sources and branding themselves as “farm-to-table” establishments. In these arrangements, supply chain transparency can be easier to achieve because the supply chain is shorter and simpler. Restaurateurs who obtain ingredients from local farms, for example, can have in-person relationships with their suppliers, sharing information directly and collaborating with them to solve problems on both sides. Furthermore, such short supply chains often involve little processing, packaging or transport. Notably, eight out of 10 diners in the NRA survey also said they’d tend to order locally sourced food.

Large food suppliers and distributors can also help accelerate the greening of independent restaurants in ways large and small. Kraft Heinz, for instance, has promised to purchase 100% sustainably sourced tomatoes for its widely used ketchup by 2025. And in the example of Sysco discussed earlier, thousands of items that restaurants can buy from the company are backed by leading sustainability certifications, among other assurances.

Meanwhile, as big chain restaurants have been tackling more complex supply chain transparency challenges with digital technologies, newer technology models are expected to trickle down in the industry to smaller establishments. For instance, the Chipotle effort mentioned above is said to be pioneering the use of RFID to track ingredients from suppliers to restaurants as part of the company’s campaign to improve overall food safety and responsible sourcing.

Benefits of Supply Chain Transparency for Restaurants

Most consumers expressed willingness to pay a premium of over 10% for environmentally sustainable meals in restaurants, according to consultancy Simon-Kucher. But environmental and social messaging falls flat without supply chain transparency — especially at a time when companies of all kinds routinely face claims of misleading consumers through “greenwashing.” People want tangible proof. Beyond benefits to the brand, operating a supply chain transparently can also deliver improvements in risk management, operational efficiency and other areas described below.

• Enhanced customer trust and loyalty: In a 2024 survey by PwC, nearly nine out of 10 consumers reported firsthand experience with the disruptive impact of climate change, underscoring their personal investment in issues like sustainability. This translates into everyday choices — including where to dine out. For example, more than half of consumers said it’s important for the restaurants they frequent to make sustainable choices, according to a survey by the Datassential market research company.
• Increased competitive advantage: Restaurants compete on everything from quality to cost to service and now, increasingly, sustainability. At the elite level, restaurants worldwide have long competed for Michelin Stars, and since 2020 they’ve competed for Michelin Green Stars. This apt metaphor for the greening of the restaurant industry is reflected in establishments large and small, as sustainability has become a competitive selling point for attracting customers, partners and, importantly, loyal staff in a high-turnover industry. On the flip side, advocacy groups have been known to ding the brands of big restaurant chains falling short in areas such as animal welfare, as the Humane League does in publishing its annual “Cage-Free Eggsposé.”
• Improved risk management: The building blocks of supply chain transparency, such as supplier relationship management, supply chain visibility and traceability, inherently reduce operational, as well as reputational, risk. Not only can managers identify and promptly address product recalls, unethical supplier practices or environmental concerns, but their heightened vigilance can help minimize supply chain disruptions due to vendor or transport delays.
• Operational efficiencies: A more sustainable supply chain should also deliver operational efficiencies because it reduces waste and energy use. Savings could add up, since many restaurants lose hundreds of dollars a week or more on food spoilage alone.
• Compliance and ethical standards: The compliance burden on a restaurant supply chain varies by the size of the establishment, ranging from state- and municipal-level health and safety codes to federal rules, such as the Securities and Exchange Commission’s new requirements for climate-related disclosures by public companies. The burden on nearly all restaurants is growing, though, given the Food and Drug Administration’s 2026 deadline for new food safety and traceability records that are applicable to those selling food and beverages totaling more than $250,000 annually.
• Consumer insights and innovation: As restaurants open themselves up to scrutiny of their sourcing, they can do so gradually. For instance, they can introduce limited-time offers of locally sourced, sustainably grown items to gauge sales levels and customer feedback. This allows for consumer testing of new options before they are permanently added to the menu.
• Attracting new markets: Most surveys about the popularity of sustainability and other ethics supported by supply chain transparency show the attraction growing with each new generation of diners. For example, in the NRA survey, 62% of baby boomers favor sustainable restaurant choices compared with 67% of Gen Xers, 77% of millennials and 79% of Generation Z adults.

9 Steps for Restaurants to Increase Supply Chain Transparency

Supply chain transparency isn’t achieved overnight — it’s not like flipping a switch. Phasing in transparency over time requires a concerted effort. Here is a good approach that can bring most organizations at or close to their supply chain transparency goals in nine steps.

1. Conduct a Supply Chain Audit

Conducting a supply chain audit establishes a baseline for transparency. The audit should assess overall supply chain visibility, identify any strengths worth highlighting in brand messaging and uncover weaknesses that need to be addressed.

A dedicated audit team with clear goals and a project plan should review the restaurant’s and its suppliers’ operations for support of sustainability and social ethics. The audit should include an assessment of the organization’s criteria for supplier selection and its contract provisions; a review of suppliers’ policies, certifications and practices; a mapping of visibility gaps and other risks; and an analysis of routine monitoring procedures. An action plan and budget should emerge from the supply chain audit.

2. Choose Transparent Suppliers

A reputable restaurant must have reputable food suppliers. During a rigorous supplier selection process, restaurant management should ask potential vendors for proof of quality assurance and testing programs, their regulatory compliance track record, certifications they hold for sustainability and social responsibility and what certifications they require from their own suppliers. Among other questions: What are a supplier’s systems for traceability and for recall, in case of a problem? What is its communication culture? Does the vendor publish a sustainability report on its website?

Another attribute for a restaurant to consider in its vendor selection process is a supplier’s commitment to diversity, equity and inclusion. Setting up a supplier diversity program can help institutionalize such criteria, which can also be communicated to receptive customers.

3. Implement Traceability Technologies

Food supply chain traceability is set to spike in importance under a federal food safety rule going into effect in 2026. It will require nearly all restaurants to develop traceability plans so they can, on demand, report where a product came from and the date and location where they took receipt, among other information.

Traceability is also a key factor in transparently reporting on sustainability and social responsibility, as it allows restaurants to verify the origin, production methods and other details about their food supplies. Traceability technologies are growing in number and dropping in price, including cloud-based tracking using Internet of Things sensors.

Coming onto the market, for example, are so-called “ambient sensors” the size of a postage stamp. These can be affixed to anything that needs to be traced, and they can communicate wirelessly with off-the-shelf routers in a storeroom or with 5G cellular networks during transport. This new technique can provide information about location, temperature, carbon footprint and more, and is expected to soon overtake current visibility solutions that rely on RFID and QR codes. And with the recent surge of artificial intelligence, data collected from sensors like these can be continually analyzed to identify when something might be going awry in the supply chain.

4. Regularly Audit and Monitor the Supply Chain

Supply chain transparency requires continuous monitoring and improvement. Suppliers’ performance should be tracked according to an agreed-on set of metrics. Supply chain management systems facilitate monitoring, with dashboards, supplier scorecards and portals that enable vendors to upload information such as product specifications, sustainability policy documents, certifications and reports.

Site visits, both up front and at other key moments in the relationship, can contribute to understanding a supplier’s operations and standards for safe, sustainable products. These visits can also provide an opportunity to ask about the suppliers’ own vendors and their sustainability practices, which may not be fully captured by supplier portal data.

In-house, meanwhile, proper inventory management can help reduce food waste as part of environmentally sustainable practices.

5. Foster Open Communication With Suppliers

Supplier relationship management is a two-way street. To foster open communication with suppliers, restaurant staff members need to place orders accurately and on a regular schedule, to facilitate vendors’ planning and fulfillment. Honoring their terms of payment can also smooth the relationship, as can discussing any potential payment delays in advance.

In turn, suppliers should be encouraged to regularly upload sustainability details and other data to the restaurant’s supplier portal, with technical and training support given as needed. The portal can act as a tool for a more efficient and effective relationship that is based on structured communication, as opposed to fragmented emails, texts and phone messages. While they establish a solid base for collaboration, supplier portals should be supplemented by periodic in-person discussions.

6. Educate Staff and Stakeholders

Supply chain transparency should be a team effort, based on commitments to sustainability and other social goals that are baked into a restaurant’s culture. From the restaurant owners to the managerial, administrative, kitchen and wait staff, everyone should be well versed in the restaurant’s culture of sustainability and their role in upholding it. Policy-setting, training and clear messaging all contribute to this culture. New hires should learn these priorities and related practices from the outset, and refresher courses on do’s and don’ts should take place at least once a year.

One big return on this investment in time could be increased loyalty on the part of staff on a restaurant’s payroll. The restaurant industry is plagued by high turnover rates, but HR studies have shown that employees motivated by a higher purpose tend to be more committed.

7. Communicate Transparently With Customers

Supply chain transparency must be actively communicated to customers to have an impact. Create a communication strategy that supports the restaurant’s top priorities in sustainability or animal welfare or fair trade. Train wait staff on sustainability messaging, but also reach beyond the dining room to attract new customers with social media and other marketing.

The Datassential survey showed that the top two ways consumers would like to learn about restaurants’ sustainability practices are through notes on menus and signage. Yet only a small percentage of restaurants are highlighting sustainability on their menus, Datassential says.

8. Obtain Certifications and Join Transparency Initiatives

Many states require food safety certification of local restaurants, and some municipalities have composting and packaging regulations that restaurants must follow. At a more technical level, restaurant staff can become certified with Chartered Sustainable Supply Chain Professional credentials from the International Supply Chain Education Alliance, for example, or they can attain similar accreditations from other professional associations and universities. Nonprofit groups also certify food suppliers, and restaurant managers can seek out those issuing such labels as USDA Organic, Certified Humane and Fairtrade.

Participating in initiatives, such as NRA’s Sustainability Expert Exchange and Supply Chain Expert Exchange, offers opportunities to share challenges and solutions in areas such as food sourcing, animal welfare or compostable food packaging.

9. Regular Reporting and Improvement

Supply chain transparency is not a one-and-done exercise. Even for the largest food suppliers and national chains, it’s more about progress toward sustainability and societal benefits over time. To return to an example above, McDonald’s proudly proclaimed its feat of achieving its goal of using 100% cage-free eggs two years early, in 2024, after first announcing its intention in 2015.

Regularly tracking and reporting improvements in metrics might involve calculating a restaurant’s carbon footprint by standard formulas, monitoring the percentage of ingredients sourced from fair trade suppliers, keeping a running count of health and safety inspections passed, adding up investments in sustainability and even self-publishing supply chain transparency activities, such as collaborations with suppliers toward specific goals.

Challenges in Achieving Supply Chain Transparency

While customers profess preferences for sustainably produced food and are willing to pay a premium for it in restaurants, challenges can hinder the supply chain transparency needed to support these environmental and social goals. Potential roadblocks include:

• High costs: Restaurant managers surveyed by Nation’s Restaurant News cited the high costs of hardware and cloud services fees among their top barriers to implementing new technology.
• Complexity of supply chains: Depending on their size and type, restaurants may have dozens to hundreds of ingredients to source. Changing customer demand, seasonality, the perishability of food and exposure to recurring disruptions in the global food supply chain all compound the supply chain challenges inherent in orchestrating procurement and delivery. So does limited visibility into supply chains — especially the inability to see into a particular vendor’s own supply chain, where secondary risk may lie.
• Supplier resistance: If a particular supplier does not already incorporate environmental and social goals into its own branding and corporate culture, a buyer is not likely to make headway in requesting the detailed information and documentation needed for supply chain transparency. Supplier selection processes should include some requirements, such as sustainable and ethical practices, from the start, to avoid problems later in the vendor relationship.
• Lack of standardization: The labeling of environmentally and ethically sourced supplies can pose another challenge. Terms such as “carbon negative” or “humanely raised” are often unregulated and applied voluntarily. Hundreds of nonprofits issue labels and certifications. In a single area, fair trade, several organizations issue them, but the methods and criteria behind the competing logos can be confusing. In the U.S. market, the Federal Trade Commission’s Green Guides are among efforts to rationalize labeling.

How Restaurant Technology Promotes Supply Chain Transparency

Many restaurants have been digitally transforming their business processes, from using mobile tablets to take orders in the front of the house to automating accounting and financial statement production and monitoring inventory in the back of the house. More advanced establishments have taken up digital tools for supplier relationship management, visibility and traceability, three pillars of supply chain transparency.

Integrating these tools can take supply chain transparency to the next level, with cloud-based enterprise resource planning (ERP) systems acting as a central store for data while application programming interfaces connect the different point solutions. In this way, integration can help automate delivery of accurate, real-time metrics and audit trails for greater transparency.

Increase Supply Chain Visibility With Supply Chain Management Software

NetSuite’s modern and lightweight restaurant software for restaurants, franchisors and hospitality groups provides essential support for supply chain visibility and transparency. Its cloud-based ERP system includes supply chain management, inventory and accounting software that can help restaurants integrate from the front of the house to the back, while enhancing supply chain collaboration with vendors to achieve more sustainable and ethical sourcing.

Supply chain transparency enables restaurants to openly embrace ethical sourcing and sustainable practices as part of their business culture and customer branding. Digital tools for better supplier relationship management, supply chain visibility and traceability can provide tangible proof to share when marketing to diners who have heightened concerns about how the establishments they frequent support the causes they care about.

Supply Chain Transparency for Restaurants FAQs

What is transparency in the food supply chain?

Supply chain transparency lifts the curtain on how a food business sources, transports and otherwise handles the raw ingredients and other components that go into its products and services. Transparency entails: (1) strong supply chain management for better supplier relationships, visibility across the entire network and traceability of individual products; and (2) open communication with customers about the process and progress toward sustainable and ethical sourcing in the network.

What is an example of supply chain transparency?

The use of cage-free eggs has become a point of competition among national restaurant chains, following pressure from consumers concerned about animal welfare. McDonald’s, for example, issued a press release in 2024 telling the world that it had completed a supply chain transformation to use only cage-free eggs. Cargill, the chain’s egg supplier, publicized its role in the collaboration, including the creation of global standards and compliance monitoring based on research from the Coalition for Sustainable Egg Supply. The Humane League, in turn, applauded the achievement of McDonald’s and other chains toward this goal, while chastising big brands that have so far fallen short.

What company types have transparent supply chains?

Most consumer-facing businesses are under pressure from customers to show their commitment to ethical sourcing and sustainable practices. Some have defined their brand around such commitments more strongly than others. For example, “Certified B Corporations” pass rigorous testing that certifies their practices, accountability and transparency on factors ranging from their treatment of employees to their supply chain practices. Other companies may apply for product-level Fair Trade certifications, USDA Organic labels and other third-party validation.

What is the Transparency in Supply Chains Act?

Under the California Transparency in Supply Chains Act, large retailers and manufacturers doing business in the state must publish annual reports that detail the risks of human trafficking and slavery in their supply chain and how these risks are being addressed. The law applies to businesses with over $100 million in global annual revenue.