Why do restaurants need to be digital now?

by uchimeshi

Below is a guest post by Kashyap Deorah, founder and CEO of Hypertrack, a live location platform for retail, e-commerce and restaurants. Deorah also sold JustChalo to OpenTable.

Our favorite food apps are building restaurants offline. Should our favorite restaurants go digital? Let’s understand what that means – for consumers, for these businesses, and for the market in general.

Applications start to restaurants

I live in Berkeley and I am a fan of all things blind. The Universe has rewarded me with the best Burmese curries money can buy at the Burma Superstar in Oakland. It was a special day when they became available for home delivery via DoorDash. It looks like I have a lot more consumers on my palate because, in late 2020, DoorDash partnered with Burma Superstar to launch Burma Bites, a restaurant optimized for picking and delivery.

Like DoorDash, GrubHub has grown stronger and has partnered with restaurant owner Robert Earl to launch private label virtual restaurants, “the industry’s new secret weapon”. Call them ghost kitchens, virtual restaurants, cloud kitchens, or dark kitchens as you wish, but these are restaurants that offer dining experiences to hungry customers in their area.

Think about it – all retailers with consumer brands look at consumption patterns to gauge what is selling well. Suppliers look at the business contribution from such brands. When the patterns cross a threshold on either side, it makes sense to cut the fat in the middle and create a special label for consumers to buy their curries.

Earlier this month, Restaurant Dive and Food & Wine reported that my former employer OpenTable opened its first physical restaurant as an innovation lab. Same idea. A consumer brand looked at consumption patterns of where consumers wanted to go, realized that there was a strong preference for the type of restaurant and cuisine customers wanted to book and partnered with boutique hotel brand Life House to open a real-site restaurant called Layla.

While working at OpenTable, no doubt a generation before the company was acquired by Booking Holdings, we were obsessed with their dining experiences. As we gathered data on consumer preferences across food behaviors, we overlooked the more intimate data on each dining experience. As I acquired my company Chalo, a mobile technology firm that offers online restaurant bookings, the appeal of the point-of-sale linked mobile payment app to get that insight was not lost to any of us, including. It’s hard to dance various techs and parties together to power a great dining experience. An innovation lab makes perfect sense to check the end-to-end experience.

Technology applications aimed to connect consumers and restaurants as bilateral marketplaces. They focused on being light in presence, connecting the two sides, and getting out of the way. However, the boundary between digital and physical has now been crossed, with consumption shifting to digital turf, with each participant moving organically towards growing their business.

Restaurants need to go digital to compete

I recently interviewed Jocelyn Mangan, former Senior Vice President of OpenTable and currently Board member at ChowNow and Papa John’s Pizza, about how the pandemic is changing the consumer experience, balancing authentic experiences with technology, and the role of the customer in the value chain.

The data show that the restaurant-to-consumer channel contributes more to home delivery orders than platform-to-consumer channels. More consumer deliveries are being made by restaurants to avoid the 30% commission charged by third-party delivery companies consuming all margins. However, delivery logistics is significantly low-tech or no-tech compared to application platforms. Restaurant tech firm Olo, which went public through an IPO last month, claims an interface between 60,000 restaurants and the world on demand. While the platform focuses on digital ordering, delivery management has integrations with third-party logistics networks. Toast and ChowNow are other alternatives for commission-free online ordering.

Third-party delivery apps with consumer-oriented brands have a conflict of interest. The application company owns the customer data, not the restaurant. The app was created to maximize restaurants’ conversions, not conversions. Third-party apps are where restaurants can make deliveries over their own network without being listed in the consumer app, but the last mile delivery experience for the customer is supported by the app’s brand, not the restaurant.

Restaurants that enjoy customer loyalty and deliver their orders will need to take control of both ends of the experience – ordering and delivery. On the one hand, invest in technologies that help manage customer relationships – loyalty, communication, subscriptions, personalization, payments. On the other hand, invest in technologies that help manage delivery-centric restaurants – shipping, tracking, last mile delivery experience, distance-based payments.

A number of well-funded initiatives solve parts of this problem for the restaurant industry in the US and around the world. As a restaurant, your first step is to accept the urgency of going digital and evaluate your options accordingly. A quick Google search or search of software listing websites will show you a number of options. Equip store managers with systems to send online orders to designated drivers, equip drivers with apps to manage orders on the road, and have a curb collection and delivery experience for your customers.

Engaging the customer with your brand experience will directly boost your business, and being self-sufficient in order fulfillment will help the bottom line. Good luck!

You may also like

Leave a Comment