Updated: Dec 19, 2021
Horizon scanning is a valuable means of understanding an industry, sector, or market in a bid to identify the drivers of change, as well as the potential barriers, effects, and prospects (Cuhls, 2019).
For example, the fast-food sector has grown exponentially in the UK such that it has become a significant contributor that fills the unemployment gap. According to an IBIS World's 2021 research (2021), the industry is populated by as many as 54,000 businesses, employs about 399,000 people and boasts a market size of £19 billion.
The report also estimates that the industry will enjoy marginal growth at a compound rate of about 1.3% through 2022 (ibid).
From pizzas to burgers, migrant-influenced traditional cuisines, and all kinds of other meals, residents of the UK are becoming more attuned to ordering food via mobile apps like Deliveroo, Just Eat, Uber Eats, and the likes. According to (Goffe et al., 2020), more than a fifth of UK residents ordered a takeaway meal weekly in 2017.
With the Covid-19 lockdown measures and similar movement restrictions in place such that people cannot physically go to their favourite restaurants, that number would have risen substantially.
For small business owners like Peng, transforming their entire business systems to accommodate technological innovation is no longer a matter of choice but that of survival.
With ten outlets, and the desire to expand further, this takeaway business must make a choice between developing its technology solutions in-house, joining a third-party platform, or relying on a hybrid system such that they can slowly build the capacity and technology required to be self-sustaining in the long term while, in the short term, continue offering their meals through a third-party platform.
Options for Digital Transformation in the UK Takeaway Food Industry
Platform-to-home food delivery services, like Just Eats, have the potential to bring Peng’s business to more customers in a very short time. Once the paperwork is completed and the contract signed, Peng’s ten takeaway shops can be hooked to Just Eat’s app and opened to the public immediately.
This method promises economies of scale in the sense that Peng may not need to hire new hands. Yet, their restaurants can enjoy the benefits of quickly scaling the business exponentially.
Also, Peng needs not to worry about the maintenance and updating of the software on which the system runs. Similarly, Just Eat will take care of cyberattacks, server downtime, and algorithmic glitches, while Peng focuses on providing quality meals.
This model provides the perfect opportunity to reach even more customers in the takeaway restaurants' locations without the need for further investments in digital or traditional marketing campaigns, considering that customers only need to search on the app to find their preferred meals.
In summary, Peng’s business will be able to scale faster and more efficiently, thus boosting revenue while cutting down on expenses that would have been spent hiring more people to run the business.
Some Caution, Though
The downside to using such platform-to-home food delivery systems are significant too. For example, it will be difficult to wean the business off the platform once it gains traction.
Even after building an in-house app or similar technology-driven food delivery systems, removing the business from Just Eat, for instance, means losing customers and revenue. In other words, Peng may be compelled to continue paying the stipulated commission on each successful sale as charged by the platform. The business is thus vendor-locked!
Similarly, if Peng relies solely on the app to get customers, the business may run into losses if the platform suffers extended server downtime or related software malfunction.
Also, using this system means Peng has little or no control over the data supplied. With privacy issues being a significant concern for app users according to Ribeiro (2019:15), not having complete control of customers’ data may result in unexpected and costly lawsuits down the road.
While the benefits are instant and very alluring, the challenges of platform-to-home food delivery systems are worth some consideration too.
Are There Other Viable Options?
On the other hand, the Virtual Counter System is unsustainable because it requires multiple human touchpoints to function properly. This model will mean hiring more people (like salesclerks, dispatch riders, and so on).
The method will also slow down the food order-to-plate process, thus further depleting the profit the business accrues from sales. Overall, the customer experience will turn out to be very poor.
Like the second option of building a digital presence, this third option also means spending significant revenue on marketing and advertisement. Being a small business, it may be very difficult to outspend bigger restaurant chains, like McDonald's, in the digital (and traditional) marketing space.
Having considered the pros and cons, the first option – join a third-party platform – is the most viable digital transformation strategy of the three. This option requires minimal investment, is quicker to deploy, will bring in more sales, and is poised to make the restaurant brand more popular.
Cuhls, K., 2019. Horizon Scanning in Foresight – Why Horizon Scanning is only a part of the game. FUTURES & FORESIGHT SCIENCE, [online] 2(1). Available at: https://onlinelibrary.wiley.com/doi/full/10.1002/ffo2.23 [Accessed 15 December 2021].
Goffe, L., Uwamahoro, N., Dixon, C., Blain, A., Danielsen, J., Kirk, D. and Adamson, A., 2020. Supporting a Healthier Takeaway Meal Choice: Creating a Universal Health Rating for Online Takeaway Fast-Food Outlets. International Journal of Environmental Research and Public Health, [online] 17(24), p.9260. Available at: https://www.mdpi.com/1660-4601/17/24/9260/htm [Accessed 16 December 2021].
Ibisworld.com. 2021. IBISWorld - Industry Market Research, Reports, and Statistics. [online] Available at: https://www.ibisworld.com/united-kingdom/market-research-reports/takeaway-fast-food-restaurants-industry/ [Accessed 15 December 2021].
Ribeiro, C., 2019. Technology at the table: an overview of food delivery apps. [online] Hdl.handle.net. Available at: http://hdl.handle.net/10400.14/26991 [Accessed 16 December 2021].