Who Nailed and Failed Digitalisation in the Food Service Industry?
Updated: Nov 26, 2020
Digital transformation, more than ever, is redefining how business is conducted for the foodservice industry. Businesses that can keep up with shifts in the industry create wonders, while restaurants that fail to embrace the new trends struggle greatly.
In our previous blog post about the restaurant industry, we covered the four key trends of digital transformation and put forward that customers in the contemporary context are in search of differentiation, innovation, and customisation. We believe that these expectations are among the main drivers of success for the foodservice industry. Therefore, in this instalment, we are going to talk about some of the success stories and failed examples in the industry that should be taken into consideration.
Here are a few examples of restaurants that thrived with the help of digital transformation:
Quick-service restaurants have always been more adept at embracing digital transformation. Nevertheless, some of them surpassed the others. Chains such as Domino’s currently have a pretty positive outlook thanks to its robust digital infrastructure. Domino’s not only mastered the art of food delivery, but also managed to make use of first-party data from online orders.
With the help of the brand’s loyalty program, the pizza giant is now able to target its audience more efficiently. In doing so, the company is better able to understand the emerging needs of its customers and make changes in their services and add elements of customisation. Hailed for its digitalisation efforts, Domino’s was also able to expand its sales by 3.7% and add 5,000 new jobs across the UK, especially by virtue of its advanced digitalised services during the Covid-19 pandemic.
Considering that quick-service restaurants were easier to adapt to the digital environment, here is a successful example of a casual restaurant: Inamo is one of the leading restaurants when it comes to digitalisation. The founders Noel Hunwick and Danny Potter came up with a system of interactive dining tables, using a unique projector system. As follows, customers are able to choose from a selection of virtual tablecloths, display their own photos, play games and even view a kitchen webcam.
Not only they offered their customers virtual assistants, but they also provided customisation options through their menus. Thanks to these developments, the restaurant was able to expand to three branches in the UK and has been looking for investors to grow more after raising its sales by 15% in 2019.
🥗 Vita Mojo
As another successful example, Vita Mojo was established back in 2015 as the first totally digital and cashless QSR restaurant in the UK. The restaurant is currently taking innovation and customisation to the next level by collaborating with DNAfit: DNAfit analyses the customers’ genetic make-up, highlights their possible genetic intolerances and specific dietary needs and helps the restaurant to come up with personalised meal options. This way, customers also have specific information regarding calories and the exact quantities of ingredients in each meal, using in-store tablets and online services for delivery. In addition to their restaurant, Vita Mojo’s team developed the Vita Mojo Operating System (VMOS) which assists the digital evolution of popular restaurants such as Yo! Sushi.
Now if we talk about less fortunate cases, it has been a rough couple of years for many casual dining restaurants in the UK. We have seen formerly successful restaurants such as Jamie’s Italian, Strada, and Byron going into administration by filing for insolvency. The underlying reason behind this downfall can be attributed to the impact of Brexit, increased competition, higher business rates, and rents.
However, one striking feature of these restaurants is that they also lost their touch with changing customer expectations and couldn’t keep up with ongoing trends. Here, Strada’s case is worthy of our attention. In an interview explaining their closure in Birmingham, ICC Strada’s General Manager Natalja Bulgakova told that they lacked a presence in TripAdvisor. As she acknowledges their shortcomings on the digital side, it is safe to say that keeping abreast of the current trends matter greatly.
🥪 Pret A Manger
UK sandwich chain Pret A Manger has been a favorite grab-and-go place for commuters, office workers, and those in a hurry during a decade of unrivaled success. As it offered fast and convenient service, it was able to expand tremendously and make profits. Although the chain has always catered to the needs of its customers in-store, they started to flounder with the outbreak of Covid-19. Being unable to adapt to the current trends of the digital business model, the lockdowns exacted a toll on the company. In August, Pret A Manger cut 3,000 jobs, or more than a third of its workforce, in the UK.
One major reason for this cut was that the company was lagging behind and this didn’t go unnoticed: Pano Christou, chief executive of the chain admitted that “Pret’s been run over the last 30 years with gut feel and intuition, and we haven’t done that badly, but I think the richness of data today gives you an opportunity to learn much more about your customers.” The company became aware of its shortcomings only during the pandemic. As the chain struggles, it will do anything to survive: It announced a customer loyalty program after store closures and launched its first dark kitchen to prepare its food strictly for delivery just recently. However, only time will tell whether these efforts were too late to come.
Keeping these examples in mind, here are our suggestions for businesses:
✔ Create 21st century-worth guest experiences indoors. ✔ Incorporate third-party delivery services and software companies into your business; be prepared as a truly hybrid experience for your customers in and outside of the dining space. ✔ Find the right mechanisms and reach your customers wherever and whenever they are through advertising and other online means. ✔ Better analyze your existing customer base, keep a close eye on data and statistics and develop insights to make better decisions.
In our third instalment of the restaurant sector analysis, we will discuss examples of transformative digitalisation technologies and start-ups that the foodservice industry should definitely consider collaborating with. Subscribe to our newsletter or follow us on LinkedIn or Twitter if you’d like to be notified. By Navivest Research and Analysis Team