Updated: Dec 19, 2021
Business systems analysis is crucial to understanding the current state of a business, identifying the looming gaps, and discovering the possibilities that lie ahead when the business processes are tweaked slightly or overhauled entirely.
The growth of Peng’s fast-food store into a 10-shop chain of restaurants may be a positive one if viewed from the prism of revenue; however, the expansion brings along with it logistical, procedural, and systems challenges that require urgent attention – if the business must expand farther and grow further.
This assertion is even more crucial in the face of external challenges and competition. As Peng considers digitally transforming the business to cope with the realities, increase revenue, and remain competitive, the business must consider various factors that could affect its chances of success.
The Takeaway Food Industry in the UK: A Brief PESTLE Analysis
To better understand Peng’s business vis-à-vis the larger market where it operates, Reuvid (2014:174) recommends a PESTLE analysis be carried out to determine how the business fits into its external environment and how it can mitigate the impending challenges.
Chief of these external factors is technology. Uber Eats, Just Eat, Deliveroo, and FoodHub are a few examples of food ordering apps that have captured the attention of residents of the United Kingdom, where Peng’s high-street food business also operates.
These apps utilise advanced algorithms and geo-location technologies, among others, to aggregate thousands of food outlets and hundreds of thousands of menus which are displayed on simple-to-use interfaces.
According to Pereira (2020), these aggregators are multisided platforms providing a simple on-demand business model that takes a small percentage of each sale the customer completes, pays the delivery driver, and then remits the balance to the restaurant – a win-win affair for all parties involved.
The social and economic angles of this analysis show that the trend is only warming up; in other words, people in the UK are becoming more reliant on these tech-backed outfits. For example, Statista (2021) reports that the food delivery service in the UK is worth 11.4 billion Pounds in 2020. For context, Just Eat, the UK’s biggest online food delivery app, recorded revenue of as much as 385.6 million Pounds in 2018 (Statista, 2018).
Considering the Covid-19 pandemic and its resultant lockdown measures, the sector is forecast to grow further. Statista (2020) also reports that as many as 60% of people aged 18-34 in the UK are already increasing food delivery frequency, while 34% of people 55 and over plan to do so going forward.
It is clear, then, that the social construct regarding food, and the purchase thereof, has changed in the UK, favouring online food delivery models massively.
While there may be some legal concerns for a high-street food vendor to consider before joining one of these PaaS companies, the reward seems to be most alluring. Getting a law firm involved in the process beforehand will mostly resolve legal concerns such as data privacy, misguided elements’ phishing of customers’ information, and revenue sharing dissatisfaction.
There is an ongoing debate about the environmental impact of online food delivery services. Some argue that it reduces carbon footprint, considering that customers do not need to go to the market often or visit restaurants for daily meals.
Others, as indicated in the research outcome by Zhang and Shi (2021:6), aver that the non-biodegradable nature of takeaway food packaging is causing more harm to the environment.
Takeaway Food Business Model: A Diagrammatic Description
Peng’s current business model is affected by several of these factors briefly highlighted above, hence the need to transition to a more technology-driven model.
Figure 1 below typifies what Peng’s Chinese Takeaway business looks like currently.
Figure 1. Current Takeaway Food Business Process Model. Source: Own Creation
The purple-colour boxes are internal control processed; they show how many human interventions are required to make a single sale. Multiplying over ten restaurants, the human resources necessary to fulfil orders already look bloated.
Since every business owner is actively trying to make a profit by reducing overhead and operational costs to the barest minimum, the business process model in figure 1 shows that Peng will struggle to achieve that objective.
The diagram above indicates that it takes a manual process for the clerk to receive the phone call, accept the order, wait for the POS terminal to verify the credit/debit card details, and then confirm if the kitchen should prepare the meal or not.
Similarly, the kitchen spends time calculating the meal's cost and evaluating the customer's location to determine if the meal should be sent back to the sales clerk for onward transmission to the customer in a face-to-face method or if it should be sent through the dispatch rider instead. In this scenario, the clerk, kitchen staff, and dispatch rider are all staff members of a single restaurant.
In summary, not applying technological tools to help automate the process is costing the business time and money. Furthermore, the process is prone to errors and redundancies. Most importantly, though, this kind of business process is difficult, if not impossible, to scale.
In other words, to increase sales with this method, Peng must hire more hands to replicate the process over and over. Whereas by adding technology to the mix, Peng can scale faster, more cost-effectively, process more meals, and record better Returns on Investment (profit) in the short and long term.
Pereira, D., 2021. Uber Eats Business Model. [online] Business Model Analyst. Available at: https://businessmodelanalyst.com/uber-eats-business-model/ [Accessed 13 December 2021].
Reuvid, J., 2014, Managing Business Risk: A Practical Guide to Protecting Your Business, Kogan Page, Limited, London. Available from: ProQuest Ebook Central. [18 December 2021]. Available at: https://ebookcentral.proquest.com/lib/salford/detail.action?docID=1717605
Statista, 2021. UK takeaway delivery market value 2020 | Statista. [online] Statista. Available at: https://www.statista.com/statistics/1110682/uk-takeaway-delivery-market-value/ [Accessed 13 December 2021].
Statista, 2021. Annual revenue of Just Eat in the United Kingdom (UK) from 2013 to 2018 | Statista. [online] Statista. Available at: https://www.statista.com/statistics/579280/just-eat-revenue-united-kingdom-uk/ [Accessed 13 December 2021].
Statista, 2021. Share of people who plan to increase their use of food delivery services due to the coronavirus (COVID-19) pandemic in Great Britain in March 2020, by age | Statista. [online] Statista. Available at: https://www.statista.com/statistics/1107212/covid-19-food-delivery-frequency-in-great-britain/ [Accessed 13 December 2021].
Zhang, G. and Shi, K., 2021. Based on the carbon footprint, how much waste does takeout produce compared with the traditional way. E3S Web of Conferences, [online] 308, p.01006. Available at: http://DOI:10.1051/e3sconf/202130801006 [Accessed 13 December 2021].