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1 Apr 2021

Econ Digest

Technology in restaurant business: The helper that goes beyond business fundamentals


        The application of technologies in restaurant businesses: only paying attention to business fundamentals is not enough to cope with the rapidly changing business environment.
New technologies will play an increasingly important role in various business operations in the future. This is especially true after the outbreak of COVID-19, as businesses have had to make adjustments to survive. The application of new technologies is one of the tools to help companies operate under the new normal. The catering industry can be taken as an example. Last year, online food ordering and delivery platforms played an important role in the revenue generation of many businesses. It is estimated that no less than 66 million online orders and deliveries of meals were made in Thailand in 2020. In 2021, new technologies are being increasingly applied to various catering industries in different dimensions.

  • Large-scale operators establish a business ecosystem and connect with third-party platforms: Due to the diversification of the catering business of large-scale operators and the complex industrial chain, some operators realize the importance of building a business ecosystem in order to be able to fully connect with various technology and business trends. If the operator has its own multi-brand delivery platform, it can centralize the ordering of affiliated brands in the same application. In addition, it can also analyze consumer data to support the formulation of business strategy plans, while trying to connect its ecosystem more effectively with third-party platforms.
  • Small and medium-sized catering operators and the use of third-party platforms: due to the limitation of investment in technology systems, the use of third-party platforms as revenue-generating channels for operators plays an important role, for instance, mobile platforms/applications (such as meal ordering applications), payment for goods and service charges, and the use of various types of social media to attract a large number of target customers in a short period of time. It is expected that the trend of using mobile platforms/applications will become more and more popular, because online platform developers can develop new technologies to expand application functions to meet the needs of catering operators and consumers.

      In addition, small and medium-sized full-service restaurants may choose to use cloud-based restaurant management solutions, so that operators can use the system at a relatively low initial investment. This technology can help operators more effectively manage prime costs, which account for 55-65% of total revenue, such as reducing pre-consumer waste or opportunity costs caused by management errors. In addition, this type of system also includes ready-made software that can help operators easily collect data and conduct preliminary analysis.
Going forward, the survival of catering business operators will not only depend on the basic factors of catering business operations, but also on the application of new technologies to innovate services, such as virtual brands or selling food without relying on brands. Operators should focus on online channels and take advantage of limited funds and efficient use of kitchen space and raw materials, because they can produce and sell multiple types of food in the same kitchen and reduce investment risks.
         All in all, KResearch believes that the use of technology and the introduction of digital tools will become one of the new standards in the catering industry, which is expected to bring more convenience to consumers but higher consumer expectations, and changing standards will also increase the cost of operations.
       Therefore, in addition to necessary technologies such as mobile platforms/applications, small and medium-sized operators should choose new technologies that are in line with business needs and cost-effectiveness, such as using restaurant management solutions to improve management efficiency. At the same time, large-scale operators with a large amount of resources should establish their own business ecosystems and use advanced technologies to analyze them, so as to improve their competitiveness in an era of rapidly changing consumer behavior.

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Econ Digest