Is Your Restaurant Ready for Blockchain?

March 8 2019

Remember the romaine lettuce scare in 2018? That led to a 45% drop in sales and a 60% price drop for romaine lettuce.

Food safety scares can be catastrophic. A single food-borne illness outbreak can cost a restaurant up to $2.6 million, according to researchers at the Johns Hopkins Bloomberg School of Public Health. Food safety is no small risk, with more than 48 million Americans suffering from foodborne illnesses every year.

Look for blockchain, the technology underlying cryptocurrencies like BitCoin, to play a more significant role in managing food safety — and provide additional business benefits as well.

A blockchain, also known as a distributed ledger, allows people to join a highly secure database and share information. All parties on the blockchain have access to the data, and once it’s there, it can’t be changed without a consensus of all the parties involved.

One of the first places you’ll see blockchain is at a grocery store near you. Some large chains and food producers partnered with IBM to build the Food Trust supply chain network. It’s now generally available after an 18-month pilot program with Walmart, Dole, Tyson Food, Unilever, Kroger, and other major food companies.

Tracking the supply chain behind the 45,000 items found in the average supermarket can be a daunting task. When there’s a food safety issue, a blockchain-based system can follow a digital trail all the way back to the farm or feedlot.

For comparison, it took Walmart more than six days to trace the origin of a package of sliced mangoes to a farm in South America. With the blockchain platform, it took only a few seconds.

But blockchain does more than track food safety problems. The system can track organic or other specialty foods from farm to table to ensure diners know what’s on their plates. They can certify that the beef is actually grass fed and the chickens really are range free. Suppliers won’t be able to pass off their standard product as premium and charge a higher price for it.

Eventually, food origination data will include information about the growing conditions as well as processing information like factory conditions, batch numbers, expiration dates, storage, and shipping data. Consumers will have a higher level of confidence in the safety and quality of their food. The risk of liability from foodborne illnesses could be greatly reduced with a faster response.

For a restaurant, the food safety aspects of blockchain will be behind the scenes for the most part, embedded in suppliers’ ordering and inventory systems. Major suppliers could offer blockchain information as an added service for food authentication. Of course, in case of a food safety recall, the blockchain could pinpoint every location that had received the product in question.

Blockchain will also turn up in other restaurant activities. Smart contracts will link all the parties involved from the restaurant manager to the supply house to the farmer. A smart contract can enforce the terms automatically and transparently to all parties involved.

For example, say a chef orders premium grass-fed beef from a supplier. The restaurant can generate a smart contract that includes links to their payment information, which could include an escrow account. The supplier reviews and accepts the contract, and receives partial payment. Part of the order fulfillment is the certification on the grass-fed status of the beef, for example. The supplier receives the rest of the payment on delivery.

The information about the food order is stored permanently in the blockchain, should any quality questions arise. There’s no dispute about the payment or what was delivered because all parties are using the same information.

Loyalty programs could be supercharged with blockchain record keeping. Rather than customers racking up loyalty points with individual restaurants, a blockchain-enabled program could work across companies. A customer could accumulate points from various companies and redeem them at any member of the program. It’s kind of like credit card reward programs that allow you to use miles on different airlines.

While it may be a few years until blockchain becomes an everyday part of your business, look for some of the largest players in the industry to start rolling it out soon.

Are you wondering how technology will impact you? Get in touch with Tablespoon to help you transform your business.