In the fast-paced world of restaurant management, streamlining processes and embracing technology can make or break success. Kumar Kushang, the Co-Founder of SupplyNote, sits at the forefront of this revolution, offering digital solutions to digitize supply chains and procurement processes for restaurants. In a recent interview, he shared insights into SupplyNote’s role in reshaping the industry landscape and navigating the evolving demands of modern consumers. And talks about the company roadmap for Q2 with focus on credit for restaurants.
According to Kushang, SupplyNote’s mission is clear: to help restaurants digitize their supply chains and procurement processes. Kushang emphasized that they provide an end-to-end digital procurement stack, integrating seamlessly with various POS systems. This integration automates inventory management and streamlines ordering processes, offering efficiency and convenience to restaurant owners.
The impact of SupplyNote’s services extends beyond mere digitization. They assist both emerging and established brands in optimizing their supply chains, scaling faster, and standardizing sourcing practices. For growth-oriented brands, Supply Note becomes a strategic partner, enabling them to convert capital expenditure into operational expenditure, facilitating rapid scalability.
“We had a fantastic year last year and expect to do the same this year. We anticipate outstanding performance in the current quarter, with much greater enthusiasm in the next quarters. Our revenue has increased by 150% year on year, resulting in considerable bottom-line gains. We intend to achieve pack-level profitability in Q2 and estimate total annual revenue of roughly INR 150 to 160 crores,” he stated.
Talking about the company’s performance, Kushang anticipated a substantial portion of company’s revenue to come from commerce business, with a focus on expanding internationally, particularly in the Middle East market.“The global food rush offers exciting prospects, and we’re looking into joint ventures to capitalise on them. I believe this is going to be a huge quarter for us.”
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So far, SupplyNote has serviced over 7,000 restaurants in India. They successfully began next-day delivery last year.
“And now we’re expanding this service to other locations this year, with Bombay and Bangalore being our top concentrations. Last year there were a lot of NCR firms. We have some huge brands operating on our stack, such as Cure Foods, Biryani by Kilo, Nationals Ice Cream, Bakingo, and many large coffee companies as well. And other classics, such as Bombay Canteen and Leopold Café,” he said.
The Procurement Software Market is crucial for businesses today. It provides tools to automate and improve procurement and supply chain tasks. This market offers various software solutions to help organizations manage vendor relationships, streamline purchasing, and control costs more effectively.
According to a MarketResearch study, the market is projected to grow significantly, reaching a value of about USD 17.6 billion by 2032, up from USD 7.8 billion in 2022, with a growth rate of 8.7% annually from 2023 to 2032.
With this, Kushang credits technology for the remarkable growth of the food industry, with revenues soaring despite challenges from the COVID-19 pandemic.
“When I started this firm in 2015, the hospitality & food service industry had revenues of roughly $58 billion. Fast forward to present, and the industry has grown to around $80 billion in revenue. That’s a $20 billion increase in just six years, excluding the impact of the epidemic. Notably, digital procurement has grown faster than the sector as a whole. “Previously nonexistent, it now accounts for ~6 to 8% of total procurement expenditure,” he stated.
According to him, this shift reflects a significant transformation in how traditional businesses operate, as they recognize the importance of diversifying supply chains and minimizing reliance on traditional suppliers.
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This shift has been accelerated by factors like the rise of online food delivery platforms and the need for streamlined supply chain management. Online platforms like Zomato and Swiggy have reshaped the role of point-of-sale (POS) systems. While POS systems were previously used primarily for queue management and monitoring, they now play a crucial role in reconciling online and offline sales, analyzing customer behavior, and improving overall operational efficiency, he said.
“The restaurant industry has evolved, largely due to the influence of the next generation. So, many young entrepreneurs are on board. They see huge value in their own website, QR ordering, takeout orders and online delivery platforms, which are also used as brand building exercises. This surge is evident during the last two years. That is something I have witnessed directly,” he shared.
Kushang highlighted the government’s 45-day payment rule and the importance of credit in B2B procurement. Traditional credit models face recovery challenges, hindering digital channels’ adoption. SupplyNote addresses this by using a data-driven approach for credit assessment and partnering with financial institutions to offer accessible credit to restaurant owners.
“It’s not an issue to charge for a line of credit. The recuperation process is the issue, and it presents a significant obstacle. And that calls for a lot of relationship-building and ongoing presence. Distributor networks have acted in this manner over the years,” he said.
Traditional distributors have established personal connections and local presence, enabling efficient credit recovery through designated individuals. In contrast, digital channels often lack these relationships and local insights, leading to reliance on unsecured credit and discounts to compete, resulting in unsustainable business models, he elaborated.
Kushang further explained that this approach has resulted in numerous companies operating in the red, with some even going out of business or being acquired. For instance, Zomato relies on its online ordering channel to recover capital, which can sour relationships with restaurants by tying up their revenue capital. These challenges highlight the need for innovative solutions to address credit issues in the B2B procurement space.
“In contrast, there are a few players, including us, who are actively exploring additional solutions to tackle this challenge. At SupplyNote, we’re leveraging our SaaS system to implement interventions at various levels,” he said.
By gaining complete visibility into clients’ wallets through POS systems and understanding their inventory and purchase patterns, SupplyNote can develop credit scoring mechanisms. These mechanisms enable traditional NBFCs and banks to provide loans with confidence, leveraging their existing infrastructure for recovery.
“Through initiatives like MSME escalations and ongoing innovation, we’re building a robust recovery stack that benefits both businesses and financial institutions, ultimately creating a sustainable ecosystem for credit in B2B procurement,” he said.
Further talking about the challenges faced by the restaurant industry in adopting new practices, Kushang feels that the stakeholders, with their unique cash flow dynamics, have not shown significant enthusiasm for these initiatives. They tend to avoid excessive paperwork and prefer to defer such processes, posing a challenge across the board.
“This is our third attempt at tackling this challenge. However, we now approach it with greater confidence, thanks to our increased understanding of our customers, facilitated by our integrated software stack. We acknowledge that determining whom to lend to based solely on data can be challenging. While banks rely heavily on KYC and understand the entrepreneur, we’ve refined our approach by focusing on the last few transactions to determine creditworthiness,” he informs.
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SupplyNote’s process is streamlined, requiring only a few clicks and minimal documentation, as they already possess the necessary KYC information and transaction patterns. By doubling down on this approach and emphasizing factors like credit limit, tenure, and recovery timelines, the company aims to mitigate risks and reduce friction for both parties involved.
“We are optimistic that these efforts will lead to fewer defaults and a smoother lending process overall,” he said.
Analyzing the resurgence of offline dining experiences and their impact on the food market, Kushang emphasized the significance of offline presence in building brand trust and enhancing the overall consumer experience. He highlighted SupplyNote’s adaptability to both offline and online models, emphasizing the company’s commitment to facilitating procurement regardless of the sales channel.
“Firstly, the increased mix of offline revenue stabilizes the current revenue pie, which I believe is beneficial for most restaurant brands as it adds a tangible aspect to the brand’s equation. This tangible presence enhances trust among consumers, which is vital for online orders. Therefore, I strongly believe that the offline presence contributes significantly to the overall brand trust,” he said.
Kushang noted that irrespective of the business model, whether offline, online, or a blend of both, their value proposition lies in supply chain management.
“No matter how they operate, we support companies with forecasting, procurement, culinary operations, and decision-making. Being able to maintain our values means that a stronger brand is better for us. Still, things might not be looking good for companies who rely just on internet data and don’t have full wallet visibility. Revenue streams and customer comprehension may provide challenges for them.”
“Most businesses focus on revenue sources and base their models on specific channels. From a technological standpoint, I believe it’s advantageous. Scalability might pose challenges without the right technological solutions, but comprehensive intervention is essential. I agree with the importance of a 360-degree approach,” he elaborated.
Overall, Supply Note’s innovative approach to digitizing restaurant supply chains underscores the transformative potential of technology in the food industry. With their comprehensive suite of services, they are poised to drive efficiency, profitability, and growth for restaurants across the globe.
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