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March 2018 Digital Issue

Opening the

Opening the Digital Do The Digital Door has opened wide and foodservice operators would do well to enter it STORY BY ANDREW COPPOLINO CHALLENGES AND OPPORTUNITIES echnology is becoming an entrenched disruptor for all industries, including food and beverage, with numbers both impressive and growing. In Canada, smartphone ownership is approaching 60 per cent, while nearly 90 per cent of Canadian households are connected to the Internet. Add to that the fact nearly two-thirds of all digital-media usage comes from mobile apps, according to and you have a seismic shift in the way consumers shop — and eat. The so-called “Digital Door” has opened wide and foodservice operators would do well to enter. DEFINING THE DIGITAL DOOR The term “Digital Door” — coined by Toronto-based NPD Group — refers to any digital access to a restaurant or foodservice operation of any kind that is an actual order activity. “That could be an app on your phone, ordering through a website, access through a kiosk at a QSR restaurant. It’s any digital device used for ordering food,” says Robert Carter, NPD Group’s executive director, Foodservice, in Canada The Digital Door isn’t only welcoming to millennials, Carter points out; it’s right across the demographics. While not all operators are currently engaged with the technology — and some are wary, calculating that it doesn’t work with their style of menu or market demographic — they admit to being intrigued by the possibilities, even though they staunchly maintain the actual restaurant experience is the critical one. The challenges posed by any sort of technology platform — such as mobile-ordering apps, Twitter, Instagram or third-party delivery — range from lack of understanding, to lack of time and infrastructure, to staff resources for engagement. That, however, represents a risk, according to Carter. “It’s going to put them at a competitive disadvantage.” You can’t ignore the numbers. OpenTable, the California-based restaurant-reservation system, is huge. Since it was introduced 20 years ago, the system has seated more than a billion customers across the globe. In just the third quarter of 2017, 52 per cent of the seated diners in Canada originated on a mobile device, according to company figures. While he has declined to use third-party delivery companies, Brian Plouffe, owner of Waterloo’s independent upscale-casual restaurant King Street Trio, lauds OpenTable’s utility and how it’s boosted business. “I have a love affair with OpenTable,” says Plouffe. “From 24-hour reservations with confirmations, to organizing busy days such as Valentine’s Day, to the credibility of reviews and them being very active in promoting their services.” GO WHERE CUSTOMERS ARE Handled properly, Carter says a digital-door strategy can boost sales, with customers ordering more food — resulting in check averages more than 50 per cent higher than the traditional in-house experience. So, rather than look at the issue as a problematic one for operators, Carter suggests embracing the opportunities. Remember, he says, the door opens onto $1.6 billion in spending at restaurants and is growing by more than 15 per cent annually. The door allows passage in both directions, feeding the need for convenience for consumers — especially the lucrative millennial market. “It allows operators to go where the customers are and provide an access mode customers want to use,” says Carter. “That makes it an effective way for operators to connect.” Massive aggregators such as Just Eat, Foodora, Uber Eats and Skip the Dishes are some of the important digital drivers: they create the digital infrastructure and restaurants pay a fee to join. “It’s up to food operations to decide if they want to pay Just Eat to get access to a digital-ordering and delivery strategy,” Carter says. In the QSR realm, many franchise concepts have allowed individual franchisees to partner with the services, he says. “My suggestion would be to focus on a system-wide strategy, as franchise models are built on consistency and familiarity across a brand.” At the other end of the dining scale, finedining restaurants may not fit in, according to Phil Wylie, vice-president of People and Operations at Oliver & Bonacini Hospitality. 30 FOODSERVICE AND HOSPITALITY MARCH 2018 FOODSERVICEANDHOSPITALITY.COM

or iSTOCK.COM/WAVEBREAKMEDIA “The overall trend of technology and social media is huge for us in terms of giving customers a glimpse of how their meals are prepared and what the food chain looks like. We have experimented with Uber Eats for some of our more casual concepts, but the financial model behind it didn’t really work,” he says. Pizza delivery is a long-standing model and Domino’s, which has been in the pizzadelivery business for decades and offers multiple access points for ordering and engaging customers, is continuing with its model. “We’re keeping an eye on it, but it’s tough to determine exactly what the impact is. We just haven’t been able to put our arms around it yet,” says Jeff Kacmarek, vice-president of Marketing and New Product Development. Kacmarek says cost is a factor — along with the belief that Domino’s has the best delivery service in the industry, even as it builds its sit-down and carry-out business. FOLLOWING THE RIGHT PATH For Plouffe, a sales boost is easily measureable on big days such as Valentine’s Day and New Year’s Eve. “We can secure a credit card and have no cancels or no-shows. For non-lunch venues like ours, guests are assured they have a reservation,” he says. Otherwise, Carter says the pause for thought should come from recognizing traditional traffic to restaurants is currently glacial — growing at only about two per cent year-over-year — and consolidation is taking place. “The chains are getting bigger in terms of the number of brands, and that’s putting pressure on independents. Without a partnership with one of the aggregators, they’re going to suffer,” he says. Where independent closures have slowed, he continues, it’s where there is delivery revenue. With 60 per cent of the population owning a mobile device, it only makes sense to open the Digital Door to a market growing by leaps and bounds, Carter says. Mobile devices have infiltrated the industry, becoming a key “path-topurchase for consumers,” he adds, citing online retail numbers from the Christmas period, which place it at a record high. “Technology is here to stay, but the foodservice industry seems to be one of the last areas moving to this type of platform,” he emphasizes. “And yet, consumers are expecting that you will have some sort of digital strategy.” FH FOODSERVICEANDHOSPITALITY.COM MARCH 2018 FOODSERVICE AND HOSPITALITY 31