By Kitchen United COO Meredith Sandland
Malcom Gladwell popularized the academic concept of adoption curves. In an adoption curve, the percent of the overall population that engages in a particular behavior (e.g., purchase, style trend, diet, etc.) starts very small, rapidly accelerates, then slows down as the last few folks come in. This pattern can be seen over and over again in innovation from technology to fashion.
In Gladwell’s view, the main question this model raises is who among consumers is causing the move through the adoption curve? How do these people cause the curve to move from one stage to the next? He talks about the Mavens, Connectors, and Salesmen – folks in society who play roles in Early Adoption, Early Majority, and Late Majority uptake of an idea.
The two most mysterious aspects of this graph are the ones that are not defined: the axes. What is the definition of the “target market” that is going to be 100% penetrated? How long does this process take? Why would some trends be adopted by a large target market (say, the entire US population) and others by a small one (say, brunette females between the ages of 35-44)? Why would some trends catch on immediately and others over many years?
For those must-have items, technology adoption curves are becoming steeper and more ubiquitous with each succeeding introduction. Other durable consumer goods are never adopted beyond a specific niche (e.g., back-up power generators, food processors, snowmobiles).
Certainly the right Maven, Connector, or Salesman is required to drive widespread adoption. But that is not all that is at play. Businesses selling these items are active participants in the likelihood that any given trend is widely adopted. There are five stages that businesses must manage through in order to maximize adoption:
- Innovation – individuals or corporations create new products out of new ideas, ingredients, fabrics, technologies, etc. This stage usually results in a very small minority of people adopting the innovation in a beta test or because they are passionate enough about the type of idea to have sought it out. An example here is an amazing new tripod being offered via kickstarter. Only the faithful few who really love photography and nerd out onf tripod innovation are going to care enough to find this product before it goes mainstream. Many great new products never make it beyond this stage due to lack of resources to invest in the next stage.
- Availability – businesses make these products widely available either through multiple national retail outlets, media platforms that many have embraced, or building the required infrastructure. This stage usually results in the Early Adopters trying the new product. An example here is Uber. When Uber first made itself available on the iphone, then the android, it became at least theoretically possible for anyone to use the app. When products get stuck at this stage, it is typically because the inventor thinks innovation ends once the product is invented.
- Benefits – great companies continually innovate. As they add benefits to the initial product, the product starts to make sense to more and more people. This is where the Early Majority comes in. Early Adopters see the awesome new things they can do with the invention, and they start telling everyone. The Early Majority hears about these awesome new things and jumps on the bandwagon. An example here is the internet. When all the internet was good for was slowly going through academic research in greenscreen format, there wasn’t much of a reason to subscribe. But when it became fast enough to message distant friends rapidly, read the news, and buy things based on photo graphical user interfaces, the Early Majority was there. Inventions get stuck at this stage usually due to lack of competition to spur continual innovation and cost reduction.
- Cost Reduction – The Late Majority might want to jump on the bandwagon, but they are making choices in their budgets. And until a product comes down in price, they just can’t engage. The reason must-have technologies have become so ubiquitous so quickly is because they get to the cost-reduction stage quickly and costs come down massively. A good example here is the smartphone. The iPhone may have changed the game, but there’s a reason why the Android platform has nearly the same market penetration: it’s cheaper. And the competition between these two platforms and the several OEMs that make the phones is great for consumers – this competition brings down the price of all options and forces companies to offer more basic models at accessible entry-level price points.
- Need – the Laggards aren’t going to get in on a trend until they have to. When bell-bottom jeans are nowhere to be found, they will embrace the bootcut. When they literally have no other options but to participate in an innovation, they will do so. Companies spur this activity by retiring old models, trimming product offering, and ending support of old technologies.
How does this apply to food? What we eat and how we eat it are trends adopted by groups in society or society at large. As an example, the clementine has existed since the 19th century, but the version Americans are now used to seeing in the grocery store were planted in the US in 1996. First available in specialty stores in California in the early 2000s (innovation phase), they became widely available across the nation in 2011 (availability phase). During the 2010s, Cuties have been pushed as an “easy” way to get your children to eat something healthy. They are “sweet, easy to peel, juicy and fresh” and have their own ads (benefits phase). Now, in 2019, there are two major brands (Cuties and Halos) as well as non-branded alternatives such as the ones available at Trader Joe’s (cost reduction phase). At this point, all but the Laggards have not switched from regular oranges to the little mandarins!
Delivery will go through a very similar cycle. In the US today, non-pizza, non-Chinese digital delivery is <10% of total restaurant spend. In more developed countries, that number is between 30-70%. What will companies do to drive penetration 5x its current?
The first step was innovation: DoorDash, GrubHub, Uber Eats, Postmates, and more created a way to order and fulfill from restaurants. I can remember the first time I heard about someone using one of these platforms – it seemed as crazy as Amazon Prime did when that was launched. How could it possibly make sense to pay $79/year for 2-day delivery instead of just planning ahead and going to the store? Same with restaurant delivery – how could the delivery fees make sense vs. just going and picking up takeout? Or going out to eat? Or cooking? Fast forward just a few years, and I’ve become a user. Why?
The second step: availability. In the last few years, thousands of restaurant brands have gone online – either enabling direct ordering on their own websites or signing up with one or several of the major platforms. As the food choices consumers want become available, consumers are more likely to use the platforms. In some parts of the country, there aren’t a lot of choices, and in those places, delivery is less penetrated.
At the end of 2019, we are entering the benefits phase. The major platforms and large restaurant brands are spending millions of dollars on advertising delivery to convince consumers this new thing is useful. The most obvious benefit is convenience, but delivery is convenient to a select few right now. In densely populated neighborhoods, choices are many and delivery times are short = very convenient. But in some neighborhoods, delivery times can be long, resulting in fewer choices, poorer quality, and very inconvenient wait times. Uber is attacking the choices issue by working on “Virtual Restaurants” – different brands and menus offered out of the same kitchens that are already on their platform. Kitchen United brings choices to neighborhoods through additional kitchen capacity from with to operate Virtual Restaurants. The benefits phase will go on for some time as restaurants and platforms both innovate to improve the consumer experience. Custom-designing a delivery experience and not just packaging up in-restaurant food will lead to more adoption: restaurants that focus on this are already seeing 25-40% off-premise volume mix. Improvements to the digital platforms themselves will also drive additional adoption. Remember Amazon in 2000? Think of it now. No wonder over half of American households have a prime membership.
Soon we will come to the cost reduction phase. In the future, delivery will be less expensive than eating in a restaurant. With lower costs for real estate, buildout, labor, delivery and even food, restaurants that embrace digital delivery will start to compete with each other to capture this highly profitable business. Delivery may even be less expensive than cooking for oneself when one takes into account the time it takes to plan, shop, cook and clean as well as the extensive food waste that happens in homes that don’t cook every meal in-house.
Think delivery as 30-70% of total restaurant spend in the US sounds crazy still? We’re on our way.
Meredith Sandland is the Chief Operating Officer of Kitchen United. KU offers restaurant brands a turnkey way to expand into new markets and reach the off-premise diner. Subscribe to the KU Insights newsletter where we break down industry trends and give an insider view of what’s happening in the world of KU.