‘Scanning the horizon’: Peng’s Digital Transformation options.

Hey guys! In my last blog we conducted a SWOT analysis of our favorite Chinese takeout, Peng’s and figured that the business needs a digital transformation.

Digital transformation is the integration of digital technology into all areas of a business, changing how the business operates and delivers value to customers. It’s a cultural change that requires organizations to keep challenging the status quo, innovate, and get comfortable with failure.

Let’s see what options Peng has come up with to meet his digital transformation goal:

Join a 3rd party food delivery platform: In contrast to the quick service restaurant sector which struggled in 2020 due to the Covid lockdown, the food delivery sector has grown rapidly due to the changing consumer habits caused by the pandemic. Customers in the UK who used to order takeout maybe once a week have now made it part of their routine. And it’s also funny that the usual assumptions about customer segments, demographics and adoption have been turned on its head. The older generation who are typically considered late technology adopters have had to adapt to this change pretty quickly cos let’s face it.. they don’t really have much of a choice.

Currently there are 3 big players in the UK food delivery sector- Deliveroo, UberEATS and JustEats. Just Eats is currently leading the market, reporting an increase in its restaurant partners by 40% in one year and accounting for one-third of all orders placed. UberEATS reported a 150% jump in deliveries made in the UK and now covers 75% of the population, up from 50% at the beginning of this year while also doubling its restaurant partners to 17,000 in the last four months. In the first six months of the year, Deliveroo has doubled its customers to about 149million and reported a 110% order increase across the UK this year compared with the first half of last year.

Obviously, food delivery platforms have been experiencing massive growth and all the signs point to even higher numbers in the future. While this typically translates to more visibility and sales for its restaurant partners, these brands complain that the 3rd party platforms have taken them farther away from their customers. To address this complaint however, Deliveroo has launched a Signature service which is meant to give brands some contact with customers. This access allows restaurants to reward loyal customers. It’s still a pretty minor step in improving the connection between restaurants and their customers, though. There’s also the bit about agent fees that can get as high as 30%!

2. Build up a digital presence (e.g. website or mobile app) to take orders and promote the shop to the new markets. Speaking of hyper-personalization, one great way for a restaurant to remain connected to customers and tailor their services to be more inclusive is to build its own web or mobile app that allows them to take orders and payments. It also opens up more options for some people living with disabilities to place orders.

Thanks again (?) to COVID, most restaurants and coffee shops have adapted their business model to include takeaway and delivery services. What this means is that these businesses have undergone some form of digital transformation. A major complaint restaurants have about 3rd party delivery platforms is that they don’t have access to their customers’ data. Additionally, even though there are some running costs, the business gets to keep 100% of its profit as Peng wouldn’t have to pay agent fees to 3rd party platforms (which I’m sure he’s keen to avoid)

Considering he doesn’t have prior expertise in this area, some challenges Peng may face with this option will include how to acquire, convert, retain customers and possibly upselling and cross-selling other products or services.

3. Implement a ‘Virtual Counter’ system to reduce human resources required in each shop. Have you ever called the bank or another business and you were greeted with an automated voice telling you to “Press 1” to achieve a certain goal? Pressing 1 takes you to a resource that’s specific to your query. It just helps the business manage calls and segment operations much easier & faster than having to ask each customer what kind of query they have.

The virtual counter system is a similar service used by some restaurants as an “all-in-one” system to streamline operations.

SquareUp counter service for restaurants https://squareup.com/gb/en/point-of-sale/restaurants/counter-service

Peng is considering setting up one of these virtual counters that will contain the shop’s menu. The way he imagines it, when customers call in to place an order, the system takes the order and automatically sends it to a POS computer in the kitchen where the order is made. The food is then delivered and customers pay directly to the dispatcher.

While this is a great idea, the Virtual Counter system can do so much more than what Peng imagines. Companies like McDonalds and KFC have introduced Customer Self Service Kiosks that have pretty much replaced walking up to cashiers to place your order.

Which of these three options do you think would suit Peng’s the best? I’d love to hear your thoughts in the comment section!