Tech vs. People

Sep 27, 2022 | Corporate Insights, No Bull Economics

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Par Tech recently reported that when covid hit in 2020, 13% of its restaurant client base (operators in large brand systems) closed & half re-opened 6 weeks later. This compares with its restaurant tech competitors that sell to smaller mom & pop restaurants which saw a 50% closure rate as of week 6.

This is testimony to the power of large restaurant brands and the benefit of scale as it relates to financing, marketing, management depth, tech infrastructure, and supply chain. These results are notable as Par Tech points out that even the large restaurant brands have not progressed in tech as much as would be expected. While there were a few large retailers that didn’t have e-commerce stores by 2020, McDonald’s customers couldn’t place digital orders until 2021.      

Certainly, the large brands initially benefitted from share gains at the expense of those mom & pops that didn’t make it. But what is notable in the chart below is how the independents quickly recovered & continued their long-term share gain trend at the expense of the big chains in 2021. 

The reality is that the restaurant business is still a people business and small operators can compete and win by providing best-in-class customer service, ingenuity, and home-grown market strategies that only local owners can provide. The restaurant industry is plenty big enough for both the large brands and mom & pop restauranteurs, and it is a snare for business owners big or small to think that tech has eclipsed people skills – never going to happen…

Industry Market Share Graph

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