In the KU Insights newsletter we break down industry trends and give an insider view of what’s happening in the world of KU. Here’s a look at the takeaways shared in our March 2019 Insights Newsletter featuring commentary by the KU leadership.
1. WSJ warns of marketplaces taking over consumers’ brand loyalty.
What’s Been Said: A la Amazon and the retail industry, the article regards the growing popularity of food-delivery apps and their channel’s share of online orders as a threat to individual restaurant loyalty. E.g. consumers going from “I’m feeling like a Big Mac,” to “I’m feeling like whatever burger gets here fastest/cheapest.”
What We Think: “The marketplaces are here to stay. You can either sell through them or not. If you don’t, you have to have the horsepower to attract the delivery customer on your own or you will lose the sale. Turn the marketplaces into marketing channels for your restaurant.” – Jim Collins, Chief Executive Officer
2. Hundreds of retail stores announced to be closing in 2019.
What’s Been Said: On the same day, JCPenney, Victoria’s Secret, Tesla, and GAP announced the closure of hundreds of retail locations, bringing the number of total chain retail closures planned for 2019 past 4,500.
What We Think: “Closing retail locations represents the greatest shift in the geography of America since the creation of the interstate highway system, conceived under President Eisenhower in 1956 and completed over the next 35 years. Loop freeways around city centers continued to be built until the Great Recession in 2008. These freeways solidified cars as the major mode of American transportation and led to the buildout of suburbia and retail centers every five miles or so where major brands could repeat their formula with great success. Restaurants who want to continue to grow their reach need to assess where consumers are today and how they can reach them. Whether this is urban locations, virtual restaurants for off-premise consumption, or captive locations such as universities, airports or mixed-use developments will depend on each brand’s ability to create a formula that works in each environment.
For existing restaurants, the story is unclear. As malls and power centers are reconceived into mixed-use, walkable living areas, movies watched in theater decline, and retailers close locations due to the consumer shift to online purchasing, restaurants in these locations lose a big sales driver: shoppers. The restaurants that are more dependent on shopping and entertainment colocation strategies are likely to become part of the redevelopment of the entire area. The restaurants that have the one prized thing in this era of convenience – close proximity to homes – they have the opportunity to innovate their menus and embrace off-premise channels to succeed.” – Meredith Sandland, Chief Operating Officer
3. Autonomous food deliveries (and robots) are put to the test.
What’s Been Said: A look into the feasibility of autonomous delivery, and the timeframe(s) for practical launch. In short, it’s a visionary but tricky business.
What We Think: “We are seeing effective applications of automation and robotics in the pizza category which has a rich history in the restaurant delivery space. Pizza as a product and the packaging conforms to basic geometric shapes, which is still a difficult task to automate, yet provides the desired consistency to develop automation in the food delivery space. The restaurant industry will endure similar product and service automation challenges as the food manufacturing and parcel delivery services have gone through. I will continue to monitor the progress made with pizza automation as other cuisines will capitalize on the lessons learned from pizza.
Do you need an autonomous delivery fleet as part of your food delivery strategy today? I think we still have a tremendous amount of improvements that can be made to the existing delivery network without adding the complications that come along with robots. Advanced algorithms that optimize the human capital and vehicle capacity which is driven by product freshness can be created today. It would require that all participants in the food delivery value chain to normalize transactional data exchange between partners for optimization and improve critical system communication within.” – Jessi Moss, Executive Vice President, Information Technology
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.