How Digital Transformation Is Impacting Eating Out

Eating out has become part of the modern-day culture, and whether it’s fast food or fine dining, the customer experience matters.

It’s not enough to have efficient service while enjoying a meal because technology has prompted customers to expect much more.

So what role can digital transformation play in the restaurant and fast-food industry to improve the customer experience?

Earlier this year McDonald’s made headlines when it announced the launch of its mobile ordering app.

This is just one part of its digital transformation strategy aimed at improving the customer experience and gaining back market share from its competitors.

While no doubt it won’t be long before other burger franchises follow suit, the fact that McDonald’s got there first is significant. Their shares are currently one of the hottest commodities on the stock market.

Already forecasts reflect a share price climb to $180 from $124, representing an increase of almost 27%. Certainly from a launch perspective, this digital transformation appears to be one of the smartest moves McDonald’s has made in decades.

According to CEO Steve Easterbrook, the strategy behind the move is not just about improving operational efficiency, but rather it’s aimed at achieving better customer engagement. The mobile app ordering is just part of this. In time they hope to introduce geofencing, which will alert franchises of a customer’s imminent arrival, ensuring that the food is served fresh as well as fast. Customisation is also a part of the digital strategy, enabling customers to choose what they want as sides or beverages. Rather than order taking, human resources can be moved to front-of-house customer service roles such as table concierges. The benefit to customers is that they can place and pay for their order in one easy transaction. They can then collect the order at the drive-through or counter. Introduced in May, McDonald’s plans to roll out the app to more than 14,000 franchises by the end of 2017, including those located in Germany, France, the UK and Canada.

Building blocks of digital transformation

This example of digital transformation is one that many businesses can learn from, particularly because of the way McDonald’s went about implementing it. They knew that a large part of their success would be dependent on being able to develop and integrate the app with their legacy systems across multiple locations with speed and accuracy. That they managed to achieve this ahead of their competitors is impressive.

Already other successful apps such as UberEATS are providing restaurants with a way to connect with customers without having to develop their own apps. And they aren’t just innovators disrupting the eating-out industry. These new models of operation are proving to be far more efficient than old technology, improving not only the customer experience but also helping to reduce food waste and optimise resources and the supply chain. The underlying principle is to match consumer demand to supply in real time and facilitate communications between all trading partners. Cloud-based technology is using analytics to forecast consumer demand and in this way optimise operational costs. Four ways in which this has been achieved in the food industry are as follows:

• Stock is sold out and the cost of inventory is reduced
• Volume of inventory required is reduced
• Shelf life is increased and wastage is reduced by almost 75%
• Profitability of new product releases reduced to 3 months or less

But more importantly, this type of digital transformation is driving improvements in both customer service and value. New technology is helping businesses become more agile when responding to consumer demand. It’s providing analytics that tell businesses more about their customers and what they want, and mobile apps are putting more consumer conveniences and choices in the hands of the customer. This in turn is driving better customer engagement.

The good news is that cloud-based platforms are becoming more affordable, which is making digital transformation accessible to small and medium-sized businesses. Plus, apps are being developed that easily integrate with back office and CRM systems. In many cases it’s digital innovation that is helping new businesses capture market share and break new ground, giving them an advantage over other players that may be more established.

The bottom line is that digital transformation is no longer a “nice to have” option if or when the budget allows. For businesses that want to remain competitive in the industry, and relevant to customers, digital transformation is becoming an essential investment. It is the key to boosting bottom-line profits and ensuring a business remains relevant to its customers. It’s providing convenience, choice and customisation. It’s what customers want and it’s meeting them where they are at.