How to Change Your Business Model in the Food Industry
In our insight series on the food service industry, we have been examining trends and the startups that are building the future of the industry. In our final insight piece, we wanted to imagine a day in the life of a typical restaurant customer where the business model has been bolstered by these technologies:
Our heroine Jane left her office at 6 pm- exhausted and feeling ravenous. (We know ‘office’ feels so 2019, but we believe it’ll be back for at least 2-3 days per week for most service industry workers so stick with us!)
She needs to find a place to eat immediately but she also wants to try somewhere new and spoil herself after a hard day.
Out of habit, she logs into her go-to application to find one of the closest and highly recommended restaurants in the neighbourhood and heads there as she ponders over the menu and places her order on-the-go.
Because she made her reservation and completed her order and payment already, she doesn’t need to worry about not finding a place to sit nor waiting in any queues.
As she sits down in the booth that she reserved, the waitress greets her with her meal and shares the Wi-Fi password.
She also reminds her of their latest technology: Jane can customise the music in her booth as she wishes. She selects a few upbeat songs and enjoys the meal which she customised herself when ordering.
She completes the customer satisfaction survey that pops up at the end of her meal on the table and leaves.
Little does she know that the next day, she will receive a notification saying that she has a discount on her favourite dessert to be redeemed either online or the next time she visits the restaurant- the restaurant knows it is her birthday!
This story only portrays the tip of the iceberg.
From the moment Jane sets her feet inside, various technological tools come into play to maximise her satisfaction from this visit. Her food was actually prepared by kitchen robotics, and as she connected to the Wi-Fi, her data such as her favourite menu items or purchasing habits became available to the restaurant for further customer behaviour analysis. Furthermore, Jane probably has no idea how the business managers made up their minds about which meals to keep and which ones to exclude from service. Nor is she aware of the digital tools that are employed in the back of the kitchen to optimise back-of-kitchen operations.
This is not Sci-Fi, all of it is possible today.
This particular scenario doesn’t necessarily take place in the distant future. It is in fact already here. The food service industry has been long changing, and with the impetus of the Covid-19 pandemic, the ongoing trends of building a data driven business strategy and its influence on business model transformation will be hard to avoid.
As we have discussed in our previous blog posts, at the heart of the future lies innovation, customisation and differentiation. Companies with a digital mindset and the right business growth strategies will be the ones to thrive. More and more, the foodservice industry will employ innovative tools to minimise human contribution, time and effort. Restaurants of the future will increasingly look into dynamic solutions for daily problems. Customer data and insight will have the utmost importance in designing the future of this sector and meeting the customer where and when they are in a ubiquitous fashion. Additionally, ghost kitchens will proliferate to address the demands of customers.
We can hear you saying ‘I am overwhelmed, I don’t know where to begin with!’. It is our job to make it achievable and measurable for companies. We design the right combination of upgrades for your most pressing business needs.
1. New Revenue Generation
If your most urgent concern is new revenue generation, a great place to start is learning how to convert your new customers into paying clients. On average, 70% of website visitors are ‘new’ but they only represent 20% of ‘revenue’. An example business model upgrade would allow you to:
Profile new customers with the existing data they already have via for example search engines and analytics
Offer the right products and services with the right proposition including discounts to aid the conversion at the right place (offline & online)
2. Recurring Revenue Improvements
If you’re concerned about increasing your recurring revenue, it’s time to go beyond ‘retargeting’ solutions based on cookies. An example business model upgrade would allow you to:
Use an ‘operating system’ to manage your entire business that allows you to customise your offerings
Tap into all alternative distribution channels to provide delivery and create new experiences such as recipe boxes, but most importantly gather and analyse the data about the customers’ behaviour 24/7
3. Cost Reduction, Efficiency Gains and Sustainability
If you’re worried about cost reduction, efficiency gains and sustainability, it is time to approach these from a data driven perspective. An example business model upgrade would allow you to:
Implement robotics in the kitchen
Turn waste management into new revenue
Efficiently manage back of kitchen operations and inventory management at the same time with the sales data provided by an operating system
To adapt and reinvent themselves, businesses need to expand their vision and upgrade their business model canvas. Here, our recommendation for traditional businesses is to always keep an open mind and be adaptable. The scenario we presented in the opening part encapsulated only a few start-ups. Just imagine what could happen if you collaborate with many more.
It is therefore absolutely crucial to pick partners that can address the deficiencies of the sector and up your game with the appropriate digital business strategy. It is important to remember that this is an ongoing and everlasting journey. While you transform yourself, you will also become part of the future.
If you’re a food business owner, we’d love to hear what your specific challenges are so we can design the right business model upgrade as your own business strategy consultant.
By Navivest Research and Analysis Team