I’ll Have a Large Digital Pie, Hold the Anchovies
Last Friday there was a Wall Street Journal article entitled “Apps Are Wrecking Mom-and-Pop Pizza Shops.” The primary reason why independent pizza shops are losing business is their failure to develop methods of communicating with online and mobile technology. Essentially, with purchase order factoring and invoice factoring in the mix, the chain and franchise pizza retailers have developed digital communication systems that allow a buyer using a smart phone to order a customized pizza, pay for it and 30 minutes later or so it appears at their doorstep hot and ready to eat. A Mom-and–Pop restaurant requires a phone call, the customer must travel to the pizza store, pay for the pizza and pick it up. Large chain and franchise pizza retailers such as Domino’s, Papa John’s, and Pizza Hut now attribute at least 40% of their sales to digital orders while independent Mom-and-Pop restaurants procure none.
This illustration of the economy shows a failure to adapt to technological platforms that customers now take for granted as part of their life. Customers simply don’t understand why anyone would order pizza by phone, go to the pizza store, pay for it and pick it up. They are correct. Why should they pick up a phone and speak to someone when they want a simple thing like a pizza when they do almost everything else that is important to them on-line? The Mom–and-Pop’s primary barrier is the cost of having an IT solution capable of handling online orders or a similar smart phone app. Independent pizza shops on average have reduced sales by 20% to 30% due to this failure to adapt. The bigger issue is that they are failing to maintain their current customer base as customers find it more convenient to order pizza over the internet. Additionally, an age implication may be that younger customers are just as discerning as the older ones however they expect business to be conducted in a certain way for a business to expect their participation as customers. According to a 2013 State of the Pizza Industry Report, core pizza consumers aged 25 – 34 are more likely to utilize an online ordering option than not.
One would think that the cost of creating a digital market place for a Mom-and-Pop pizza purveyor would be relatively simple and could be executed through a website. The cost to develop the website would be quickly recouped by a sustained increase in business. This is a very common problem. Technology lags, businesses lose their customer base and eventually a life’s work goes by the wayside. Just think of the New York Stock Exchange; it was once a place where hundreds of people executed a wide range of spot factoring trades by screaming orders across the room. Having a seat on the exchange was once expensive and prestigious. If you didn’t sell your seat at the right time it lost tremendous value. Now, computers trade faster and with more accuracy. Floor traders are rare these days.
While independent pizza shops are losing market share to more technologically advanced competitors, your business may also be faced with similar issues. Reference Capstone Capital Group’s blog dated January 16, 2014 regarding temporary employees and how they can help you grow your business. On that same subject they can also help you increase your digital footprint. Newly minted MBAs who are actively searching for employment are banding together in “cells” to accumulate their experience and expertise in a variety of business disciplines to assist small companies develop and implement their business plans at a fraction of their true cost.. These MBAs are keeping their skills sharp while at the same time you could be benefiting from these experienced well trained professionals who are available. There are a couple of websites to post your needs on and a group of MBAs will bid on the work. A few of the companies that provide these services are as follows: Hourly Nerd, Inc., MBA & Co., and Skillbridge, Inc.
Now there should be no excuse if you do not grow your business. You have your goals and business plan in place, Funding from Capstone Capital Group, LLC should you need it and access to some of the best talent available for whatever your needs are to support the growth of your business. Take advantage of the changes in employment and technology to keep your company growing and profitable. Create opportunities for your business instead of opportunities for your competition by staying on the cutting edge!