From Appetizers to Apps: The Rise of Tech in Food

Tech-led business models are here to stay for the restaurant industry. During the pandemic, the need to eat and our desire to dine out was a constant, but in most cases, local level restrictions prevented us from dining in-person entirely. Restaurants that weren’t already digitally orientated had to adapt quickly. Ordering food from our mobile phone has now become an integral part of our life, making it as important to the restaurants’ financial models as tasty dishes.

Having great food, while obviously important, still won’t be enough to guarantee success even after the pandemic passes. Ordering food on our mobile devices is likely here to stay, and ensuring customers have a great tech experience will be critical for players in the food industry to thrive. Restaurants will need to constantly evolve the user experience post-pandemic to ensure they are offering the right services in a way that is as frictionless as possible for their customers. But remember, the tech is just a means to a (hopefully delicious) end. Most people don’t want technology for the sake of technology. They want solutions that make their lives easier, and tastier. Download our detailed paper for research, insights, and tips.

Tech-led business models are here to stay for the restaurant industry. During the pandemic, the need to eat and our desire to dine out was a constant, but in most cases, local level restrictions prevented us from dining in-person entirely. Restaurants that weren’t already digitally orientated had to adapt quickly. Ordering food from our mobile phone has now become an integral part of our life, making it as important to the restaurants’ financial models as tasty dishes.

The need to react with agility is critical. However, the solution is not one-size-fits-all; what works for one company may not work for another. Brands need to shape their apps around the unique needs of their consumer base, but they also need to consider the business model itself.

Ipsos data shows that 40% of Americans are ordering food using a third-party delivery app, such as Uber Eats, DoorDash and GrubHub. Of those using these apps, nearly 4 out of 10 claim they are using them more now than they did last year. Consumers are turning to these apps for a wide variety of reasons, but the top reason is one of comradery — to support restaurants they have ordered from before (32%). Some people are even using them to try out new places (25%) and others are using them purely out of necessity, with 21% saying this is the only way they can get food delivered to their area.

Based on Ipsos’ 35+ years of experience evaluating tech-led innovation, we know the first step is having a clear single-minded goal; having multiple goals will not lead to success. And there are many business models that can be leveraged to reach that goal. For the restaurant industry, they range from being a platform that partners with restaurants and drivers (Platform to Consumer Model) to a fully integrated model where everything is kept in-house (Full-Stack Model). Confirming which model is financially and operationally feasible is the first step:

• Platform to Consumer Model: Uses third-party apps, such as Uber Eats and DoorDash, which list the available restaurants that are geographically close to your location. You place an order through a website or a mobile app, and shortly thereafter, your food arrives at your doorstep.
• Full-Stack Model: Everything is done in-house. This includes not only building the app or hiring drivers, but also cooking the food. With this model, the food is often prepared in ghost or cloud kitchens. You can’t dine in these locations; the primary purpose is to prepare food that is delivered to your doorstep. Kludio, for example, is a digital food court in Dhaka.

Once the business model is determined, ensuring your digital innovation connects with consumers on a cognitive and emotional level becomes critical to success.

• A cognitive connection stems from the ability of your innovation to fulfill a need or a desire; in other words, the utility of the innovation. In most cases, users logically assess this before they actually experience the innovation. For example, Uber Eats is a convenient way to get your food delivered.
• Emotional resonance is important as well. Every interaction we have with a service evokes an emotional response. However, these are not immediately intuitive because the emotions associated with services are not big ones. They are much more subtle. Using Uber Eats as an example, grabbing your favorite meal from your favorite restaurant gives you a sense of normalcy.

As restaurants went digital during the pandemic, they made concentrated efforts to reassure us that it was still safe to eat out, leaning into low-touch curbside pickup and partnering with third-party partners to offer contactless delivery (Uber Eats, GrubHub and DoorDash). Outside of these obvious reassurances, they also employed push notifications to either maintain awareness or to push offers to drive user conversion (Seamless). Some even offered deals (DoorDash), linked to reward programs (Jersey Mikes), offered pick-up through the drive-thru (McDonald’s) and even began making food recommendations based on your previous orders (Starbucks). These added features create differentiation.

Having great food, while obviously important, still won’t be enough to guarantee success even after the pandemic passes. Ordering food on our mobile devices is likely here to stay, and ensuring customers have a great tech experience will be critical for players in the food industry to thrive. Restaurants will need to constantly evolve the user experience post-pandemic to ensure they are offering the right services in a way that is as frictionless as possible for their customers. But remember, the tech is just a means to a (hopefully delicious) end. Most people don’t want technology for the sake of technology. They want solutions that make their lives easier, and tastier.