Outside Insights | November 2016

Is the Restaurant Industry at Odds with Innovation?

When it comes to technology in your restaurant, it pays to understand and embrace what customers want.
Digital is disrupting the fast food landscape as we know it. Thinkstock

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Digital is no longer the purview of the elite and forward thinking: it is the core of successful organization’s strategy. In the business-to-consumer sector, the ever-increasing expectations of customers—as well as the pace of change—have led to a gap between supply and demand. But some companies are leading the way and getting ahead of the game.

Take McDonald’s: in August, the fast food giant opened its brand new “McDonald’s of the Future” concept store in Missouri, along with U.K. branches such as those in Welwyn Garden City, Hatfield, and Kettering quickly following suit. The new stores offer self-service kiosks, new technology in the kitchens (meaning everything is freshly made to order, and tablets for customers to use at the tables (as you may want to check your emails or play a game or two while you eat your burger).

At the heart of this transformation is understanding and then acting on what the customers want, and an understanding of customer experiences that span both online and offline channels. Paul Pomroy, the CEO of McDonald’s U.K., says, “We’ve listened to customer feedback and know we need to modernize further in order to remain relevant … Our converted restaurants will deliver a fast and easy experience, aided by digital and traditional ordering points ensuring we continue to be enjoyed by our customers.”

Changes and Trends in the Fast Food Industry

Overall, the foodservice industry is fairly resistant to the advances of technology. Part of this may have to do with the homely, traditional association of eating and mealtimes, and, of course, the fact that the product is perishable. But more pressingly, the industry itself is at odds with innovation: it’s slow, highly regulated, and very capital-intensive. 

What the industry’s more forward-thinking players are doing is implementing digital change that has less to do with actual food and more to do with process, whether that’s customer experience or internal. 

By and large, at the moment, it’s about mobile and automated ordering. Not only does this provide valuable customer data with every interaction, but also it improves efficiency (removing the step of the counter/waiting staff taking the order and relaying it to the kitchen) and saves money (as fewer staff are needed).

As of yet, it seems that ordering via kiosk hasn’t enjoyed the same success, although we will see whether McDonald’s can prove us wrong on that one.

Innovation in the fast food industry is slow moving, but it’s happening. Jack Cowin, executive chairman at restaurant franchiser Competitive Foods Australia, explains this as move from “why” to “why not,” saying that for Domino’s Pizza in Australia, a new delivery tracker—showing when your order is in the oven, in the car, and what street it’s on—is leading to quicker delivery times.

There’s also the recently coined “fast-casual,” which is most popular in the U.S. and offers diners fast food of a higher caliber with better quality ingredients. This sort of hybrid approach is proving popular with consumers who not only want to know the calorie content of their food, but also its provenance—the why of where it comes from? For example, is it sustainably sourced? Online channels, as well as traditional advertising and in-store displays, are ideal to convey this sort of information.

Why Digital Transformation Matters

McDonald's has been experimenting with digitization since 2005, starting with online ordering. Working with a digital transformation partner to meet the challenge of remaining relevant to today's consumers, it amalgamated the customer experience of ordering food by creating an omni-channel experience: order online, pay with e-wallet, and collect the food the same day using a QR code. From this process, McDonald's can tailor campaigns and offers based on data collected during the ordering process, such as by location, age or eating habits.

Recognizing that customers want hyper-connected, always-on, personalized interactions, it built a customized platform, including an e-wallet, which merged the brand site with its e-commerce sites and applications, hailing the start of its digital transformation.

Cornerstones of Transformation and Never Standing Still

Digital disruption is ubiquitous—get on board or get thrown off the track. Three areas are absolutely imperative for making lasting, successful changes to any organization or industry: technology (systems), operations (practices), and culture.

Organizations must understand that transformation is a continual process and that the underpinning foundations of a business—the operations, technology, and culture—need to be continually renewed in order to deliver the new Customer Experience Vision. This isn’t change for change’s sake: this is focused, transformational change aimed squarely at delivering customer satisfaction, and ultimately, generational loyalty.

“Customer experience is the last source of sustainable differentiation,” says Tiffani Bova, the global, customer growth, and innovation evangelist, salesforce. Digital transformation is really about customer experience—using technology to immerse your customers in something they can't help but advocate.

As noted by Steve Case, co-founder and former CEO and chairman of AOL and investor in food tech firms Sweetgreen, OrderUp, and Revolution Foods, “Because of the ubiquitousness of the Internet, every company needs to be a tech company.”

Peter Veash founded The BIO Agency in 2006, bringing together pure-play digital experts to create digital change. It’s quickly grown to become a major player and is now one of the U.K.’s most successful innovative digital agencies.

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