Covid-19 forced many of the technologically-averse into using online tools to ensure supply and labor kept pace with demand. As we begin to see intermittent daylight from the dark days of the pandemic, there are five reasons stakeholders in the foodservice industry must focus efforts on digital initiatives from both the demand side (consumer) and supply side (distributor).
Online Foodservice Ordering Will Only Increase
Both Gen Z and Millennials are so used to ordering from restaurants online, many concepts are looking at a mix of delivery-only plus bricks-and-mortar locations. As aggregators work out business models that make money for operators (which seems to be the case), consumers have shown they are willing to pay for the convenience of delivery – regardless of the premium. Annual subscriptions from Doordash and Uber Eats pay off in the long run for consumers.
Cloud Kitchens Are Connected Digitally
Kroger, Wendy’s and Burger King are among the concepts that have expanded their reach to the digital world. While these businesses have strong roots in bricks-and-mortar businesses, they realize they need to tap into the digital consumer for growth.
DIY Technology is Here
Software programs from SaaS, SAP and JustFood are a few of the options that allow manufacturers to take control of the entire food production process, from the moment materials enter a facility to the finished product being delivered.
In just the past few years, several major food companies have taken the leap to “hedge” against reliance on broadline or third-party systems by offering an end-to-end solution.
Broadline Distributors Face Mounting Pressure
Broadline distributors have long faced the issue of tapping into trends long after their expiration date. Consider that distributors began as logistical companies only. However, with Covid-19, manufacturers and third-parties – namely Amazon – have found opportunities going direct-to-customer to not just bypass the logjams of supply but to leverage relationships with customers.
As Amazon makes its way into foodservice distribution, traditional foodservice distribution as we know is evolving digitally.
GPOs Are Accelerating the Pace of Digital E-Commerce
Group Purchasing Organizations account for nearly 15-20 percent of total foodservice purchasing in the United States. Companies like Entegra, Avendra and Dining Alliance are among the leaders that are not just giving operators buying power, but giving them powerful tools for online commerce, and giving manufacturers more of a direct line to these influential trading partners.
The Bottom Line
The pace of digital ordering and e-commerce will continue to grow and manufacturers that are armed with information and who remain technologically flexible will be in a better position to succeed.
To learn more about FSIP’s Managing the Digital Foodservice Economy study, click here.
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