The Covid pandemic hit the US restaurant industry really hard. In New York City close to 100 restaurants closed permanently. Some of the restaurants that survived the initial onslaught, converted to take out, using delivery apps and taking advantage of the free outdoor dining options that the City of New York offered as a relief measure.
When the Delta variant struck the city in July of 2021, the height of the summer season was significantly affected. Some who survived the first wave could not survive yet another round of restrictions for an industry that has a high failing rate on a good day.
The Omicron variant hit the city at the height of the holiday season. The takeout, delivery apps and restricted outdoor dining could not rescue the beleaguered restaurateurs.
This pattern has been repeated in Chicago and Los Angeles. It is evident that the industry and frankly consumer have a market need for a solution.
Market Opportunities during periods of economic growth are economic conditions that attracts entrepreneurs, who create products, services and jobs to meet the demands of a bull market.
However, entrepreneurs by their nature are problem solvers. When many run from a bear market, they run after the bear. The identification of a market need is usually the inspiration for trying to solve a problem. The truth is no one really knows when the pandemic will pass. The restaurants that survive will need a more durable solution than traditional takeout. Complicating the varied restrictions on dining is the fact that there is an extreme labor shortage in this sector. The availability of kitchen help and packaging employees for the delivery services is hard to manage. As for the delivery apps, it is hard for the restaurant’s to justify this solution as durable, because the fees are high and the competition on the apps with competing business make for an expensive hit or miss scenario on any given night.
The restaurateur still has to staff the kitchen help and delivery prep for each shift in case an order comes through. Once the meals leave the restaurant, the owner loses control of its brand. If the soup arrives cold because the delivery was “third on the list”, the brand could suffer from a poor review.
If you are an entrepreneur looking for some ideas to address this market need, let MGSN run through a CONCEPT GENERATION session. Concept Generation, also referred to Ideation exercises is a stage that most people have dabbled with at one time or another. It is a key stage in building solutions for limitations in the market place. However it is a stage in product and service line development which requires a disciplined exercise. Dedicated market research, to document the need, and an analysis of current solutions that are in the proof of concept stage, prototype stage or new product entry stage, is needed to provide a viability analysis of the idea.
Assuming you get past the viability analysis, which is by no means the end of the viability question, research on how the idea will be transformed into a business model that could support the viability of the idea in a product or service line.
The research should address the cost to produce, deliver and service the product/ service lines. After a projection of these burdens is established in this stage, the price modeling exercise should commence. Can the market support the cost of production, delivery, service and a profit margin?
In the case of the battered restaurant industry, can an Ideation session devise a solution that not only addresses the market stress points of Covid but provides a viable path to sales that will outlive the pandemic? A model that will provide a means to project steady cost for of labor, food supply, packaging cost, as well as a delivery cost. Can the owners can make a living with this model.
The answer may lie across the Pacific in Japan. Many business travelers who take the overnight flight for LAX to Tokyo, are able to get that hot breakfast and coffee when the plane lands in Haneda at 5:30am, thanks to an array of vending machines.
Japan’s vending machines offer a wide arrays of food and beverages, as well as consumer goods. The have a steady source of customers attracted to brand loyalties, as well as the pure convenience options for the consumers, The Japanese manufactures and produce machines with panels that will advertise in a streaming format, broadcast format and well as restaurant’s branded façade and interior.
The vending machine provides complete control over inventory and labor. The delivery cost are removed. This model provides a solution to the cost ratio but there is a question is the ability to drive loyal customer to the machines.
In the Concept Generation Stage, the entrepreneur will need to conduct additional market research to identify manufactures, the support service and maintenance cost. The entrepreneur should identify service vendors. Part of the fees the entrepreneur may earn in that this offering could be in day 2 service charges. There will be a need to offer this potential long term solution to the strapped owners with a market entry sweetener. The entrepreneur should look to take the digital marketing campaign, to sell the vendor model to the consumer, as an initial free service. The market resistance to this idea is significant. There is no vending machine culture that could support this offering in the US. As the entrepreneur you will be the market disrupter. You should develop this potential profit line item on your sweat equity to ensure the endurance of the model.
You have a lot to work with as far as social media campaigns, free desserts, sodas, etc., as a vending offering and loyalty discounts for the return of the dining experience.
If this idea, burnished with a disciplined Concept Generation stage, has survived the viability analysis, onto the real hard work, the Proof of Concept Stage.