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Ryan Broomfield

Written by: Ryan Broomfield and Robyn Duffy

Ryan Broomfield

Partner

How is tech helping to shape the future of the food and drink sector?

  • August 2019
  • 7 minutes

In the past five years a radical transformation has taken place in the food and drink sector. Businesses can no longer rely on simply producing stand out products; their goods must also reflect the consumers lifestyle or provide an experience. 

The digital economy has been a major player in driving this change, with new innovations helping fuel the 'I want it all, and I want it now' culture. But what can tomorrow’s consumer expect? 

In this blog we touch on some of the latest trends and opportunities in the food and drink sector and how innovations in tech are creating efficiencies and new challenger brands within the market.  

On demand lifestyle – I want it all and I want it now 

Today’s consumer is looking for speed and flexibility. With modern lifestyles incorporating a busy day job, the 'side-hustle', and an experience-led social life to boot, the food and drink sector must strive to keep up or be left behind. 

Dark kitchens are already the norm in densely populated areas like Manchester and London, allowing eateries to service our insatiable appetite for app-based food delivery without overstretching existing sites. New entrants to the market like Twisted London, which originally launched as an online social media platform (now with over 20-million followers worldwide), have based their entire business model around delivery-only operations and use dark kitchens to keep their cost base low. 

In the mainstream, Deliveroo have created Deliveroo Editions - helping established high street eateries expand into delivery by providing dark kitchens in industrial parks and other low-cost locations. Most importantly in this model, Deliveroo pays the bills which means no rent, no rates and no utilities for operators. Restaurants pay their way by giving Deliveroo a commission on each order – nifty! But where might we see the delivery market go next?  

On demand lifestyle 2.0

Drones. Most recently seen disrupting flights, soon to be seen disrupting the takeaway market. It’s no surprise that delivery is the food sector’s fastest growing channel and its extensive use of technology means it is also the most innovative. 

Predicted to be delivering takeaway food to our doorsteps by no later than 2024, drones are powered by electricity making them potentially more sustainable than other forms of transport - another factor in their favour for the environmentally friendly consumer. Moving forwards, as consumers continue to embrace hyper-localisation and become increasingly decentralised, this progressive move forwards in delivery looks set to go from novelty to everyday quickly.  

On the go – what next? 

Lunchtime trade is a huge opportunity zone in the UK with research agencies MCA and HIM announcing the food-to-go market to be worth £2.1bn in 2019. As it stands, the market is capitalised largely by several flagship chains, including Pret, Starbucks, Leon and Eat (soon to be Veggie Pret). This untapped potential is ripe for differentiation with many new brands appearing in the sector. Tech will be at the forefront of these innovations and we’re set to see some surprising challengers including vending, personalised tech-led meals and app delivery lunchtime-only models.  

Personalisation is the latest trend to go live on London’s lunch time eatery scene. Part tech-firm, part fast-casual dining chain Vita Mojo are at the forefront of this trend with their hyper-personalised health food concept. The model offers complete choice to customers over a range of healthy ingredients via an in-store app using pre-loaded tablets near the point of sale or via their delivery website. Customers are given a list of bases, proteins, sides and sauces and can pick as few or as many as they like. Sliding buttons allow for an increase or decrease in the amount of each element in a dish. As they move the sliders, users are shown exactly how many grams of fat, protein and carbohydrates they will end up with, along with the number of fruit and veg portions and overall calories. Allergens are also clearly outlined - a growing concern for consumers and operators alike. 

Looking forward to future competitors in the market, one of the most surprising up-and-comers in this space is the vending machine. The vending machine industry in the UK is often considered archaic – that’s if it’s considered at all. But that’s set to change as brands like Mother reinvent the industry through tech-led machines that help busy customers eat better. Mother’s machines are touchscreen, provide nutritional information and provide cashless payments alongside a convenient way to access nutritionally balanced snacks, drinks and food on the go. 

As we see more competition from new players like Mother and Vita Mojo on the high street, expect to see heavy hitters come out in force as they strive to stay relevant by integrating food tech into their business models.  

Where does the future of food tech lie?  

Research and Markets predicts that the global food tech industry is expected to exceed $250 billion by 2022. Clearly this is a space ripe with opportunity, yet in the UK, food tech businesses are still fighting to make themselves heard and therefore relevant in the mainstream market place. Across the pond, US conglomerates have already adopted tech into their business models. In 2015, McDonald's invested in technology to provide self-service kiosks keeping their business efficient and relevant to the fast food market. Likewise, Starbucks, another US heavy hitter recently reported increased revenues of $2.65 billion, attributing most of the increase to their app-based rewards programme which now accounts for 40 per cent of their sales in US stores. 

Clearly these examples of early adoption by big name brands illustrate how tech can be integrated into businesses both seamlessly and with exceptional results. This month we saw what we anticipate being one of many acquisitions in the UK as app based corporate catering company City Pantry was bought by FTSE 100 firm Just Eat. Backing this trend YFood’s latest London Food Tech Week showcased a wealth of talent with businesses ready to provide tech-based solutions to busy consumer’s in the food and drink space. As the market continues to evolve and competition remains fierce, we expect to see a range of innovations come to market in the next few years. Our predictions for the next big trends include dynamic pricing (check out Wasteless) and machine learning innovations used to cut down food waste and protect restaurant margins (Shelf Engine).  

If this is something you would like to discuss further, please contact Ryan Broomfield.

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