Wake up!
The way I see it the food world has been lethargic for years because Tech thought Food was boring. New applications of technology are starting to revolutionize a lot of sleeping industries. Shipping, real estate, where disintermediation is finally happening at the realtor level, industrial procurement, construction procurement, etc all have tech companies building value and change and someone finally turned around and looked at restaurants and realized the biggest tech companies serving them were old world or otherwise unknown names.
The challenge has been figuring out how to utilize tech to change the space. POS vendors like Square, Revel, Clover and others have replicated many of the elements of traditional POS online. But they way they’ve done it is basically to copy all of the features of traditional POS and replicate them in AWS. So the only benefit to restaurants is a cost benefit of cheaper equipment. Don’t get me wrong, this can be a big savings, but is that really a “tech revolution?” I don’t think so.
Sweetgreen’s valuation of over $1BB came from being one of very few restaurants, and really the only one approaching scale, to start to use new tech and new thinking to inform the way they do business. They have 90 stores, which makes them a medium-small chain. But they have over 1MM users of their app. That makes their per-store average over 11,000 people, that’s nearly unheard of in any form of retail (compare to Starbucks with only 815 users per store). They also burn a lot of gray matter on, and are very serious about, their “real food” ethos and they’ve done a spectacular job of translating that through their digital brand. That resonates with their consumers who value authenticity and action over hyperbole. Tech permeates the company and you see great examples in programs like Outpost – which makes delivery free by concentrating orders on a delivery location – and their blockchain approach to sourcing and the connection to safety created by the specificity that enables.
And it’s not like the biggest brands are asleep at the wheel. QSR giants like McDonalds and Chick-fil-A are quickly catching up to Starbucks in feature-benefit and corresponding use of mobile apps to simplify consumer ordering. Personalization features allowing consistent customization, etc are right around the corner. The McDonalds app even lets you pick up in the drive through. All of these apps utilize technologies like geo-fencing to determine everything from menu and feature availability to in-store fire time. All use app-only promos to drive adoption and this will both decrease labor costs and increase average order size, as most consumers actually order more when they order through an app.
Where big data joins the party.
What consumers may not know is that the larger, more established restaurant chains use data driven approaches to everything from adding new menu items to locating stores. Whether this information translates to the best possible decisions is sometimes questionable, but at least they have access to the data. Most small and medium chains don’t have access to these systems and data sources due to financial constraints. That’s a problem KU will help its partner restaurants solve.
When asked, I see big changes coming in the food industry and I think the changes will impact everything about how we use and think of restaurants. Those operators who see, understand and espouse the change will thrive. Those that don’t will die. But that’s how progress actually works. The death of an old brand is a bummer. I hate seeing Sears going away because I grew up knowing Christmas was approaching because the catalog arrived on our doorstep. The fact is, though, that I haven’t bought anything from Sears in years. Nostalgia doesn’t keep businesses alive, commerce does. New commerce is smart, enabled, relevant, and easy. All of those traits are fine with me.
I can’t wait to see what happens.
– J
header photo by Helena Lopes via Pexels