- February 6, 2017
- Posted by: Jill R.
- Category: Digital Disruption
Many people would consider a lack of pizza as an omen to the apocalypse. However it’s not the lack of pizza that is creating a stir, it’s what’s causing the shift in the pizza industry that has people talking. The argument is this: “Technology is killing off independent pizzerias in the United States at the rate of roughly 2,549 locations per year (in 2015 alone),” according to Aaron D. Allen, Global Restaurant Consultant at Aaron Allen & Associates. Although there is some truth in Allen’s article, “How Tech is Killing Off Independent Pizzerias,” I’d like to look at this in a slightly different way. Technology alone is not the root cause of this change. The integration of technology into our business and social relationships has enabled the change and the independent pizzerias have either not been able or willing to adapt to the change.
Let’s set the foundation for this argument. Do you remember Blockbuster? Several case studies about the demise of Blockbuster suggest that the Internet and new digital distribution options lead to the closure of the $6.5B annual mega video store chain. The Internet didn’t kill Blockbuster; the company did it to itself. “Blockbuster didn’t have a technology problem — digital distribution was minimal, albeit talked about incessantly — but rather a customer problem. It gave them no reason to visit stores in lieu of a latest, greatest hit,” Jonathan Salem Baskin reveals. The reality is, Blockbuster refused to change; they were comfortable, complacent and not in touch with how their customers were evolving.
Fast forward, and returning to pizza, we see a similar trend, not only in those companies that have embraced technology but in how we have culturally shifted in the way we use technology. The simple fact is this: as of January 2014, 90% of American adults own a cell phone (PewResearch, 2015), approximately 51% of media time is on a mobile device (KPCB, 2015) and for Millennials, 89% off all internet activity is through a smartphone (Entrepreneur, 2015). As a connected society, we expect technology to be readily accessible and designed to meet our needs. As a business, you must have a mobile first strategy. You must be digitally connected to your customer.
In the last 2-3 years, we have seen a massive shift for chain pizza brands. Domino’s, Pizza Hut and Papa John’s have seen huge increases in sales through online and mobile orders. Domino’s price per share has grown more than 3,000 percent since 2008, with digital and online ordering growing 300%. I previously wrote that all companies must be a technology company. Domino’s CEO agrees, ‘We don’t see ourselves as a pizza company. We’re a technology company that sells pizza.’ This is the heart of digital transformation.
Digital transformation is the accelerating transformation of business activities, processes, and competencies to fully leverage the changes and opportunities around technology and its impact on society. Today people are looking for convenience, simplicity and accessibility. The world of “30-min or it’s free” has reached a new level, with count-down clocks allowing customers to track every step of their pizza ordering process. Technology hasn’t killed independent pizzerias; a society of instant gratification, and deliverability has. More options, no hassles and on-demand ordering is what people crave. New food ordering platforms like DoorDash, UberEats, GrubHub, Eat24 and more cater directly to this desire, and I’m confident all would be happy to assist a local pizzeria with online ordering and delivery options.
Unfortunately, as we saw with Blockbuster, technology isn’t messing everything up. Small businesses have grown comfortable with what they are doing and either don’t want to evolve or unfortunately, are unable or don’t know how to evolve. These trends will continue, either in food delivery, pizza sales, video rentals or any small business. If you are not invested in technology, you will not survive. Technology isn’t killing off pizzerias. The tools are available to everyone. Those companies that embrace them will not only survive, they will grow.
Do you have a small business, startup or growing business looking to accelerate your digital strategy? I would love to talk with you.