Operations
How operational fragmentation an impending challenge in pizza restaurant, delivery industry
Operational fragmentation in the pizza industry can result in inconsistencies in food quality, long delays and service levels. This inconsistency can negatively impact the brand's image, causing customer dissatisfaction and a potential decrease in both loyalty and revenue.
June 21, 2023 by Edward Crowley — Managing Director, Cyntra
The pizza restaurant and delivery industry has seen substantial growth, continual evolution and increasing levels of competition over the years. This industry is defined by its innovative food offerings, a multitude of toppings and options, affordable prices and a unique blend of convenience and quality. In turn, this market segment has become a key player in the overall food service industry. Yet, as we look deeper into the industry's operations, a looming challenge surrounding operational fragmentation exists — it presents itself as a potential impediment to further growth, relevance and sustainability.
Operational fragmentation
Operational fragmentation refers to a disjointed or disconnected and inefficient system of operations within an organization, often caused by a lack of coordination and real-time communication between different operational or system components. In the context of the pizza restaurant and delivery industry, this can mean inconsistencies in food preparation, service delivery delays, supply chain management issues or emerging digital operations silos and erosion in brand messaging.
Perhaps the most visible manifestation of operational fragmentation in pizza restaurants is inconsistency in food quality, long delays and service levels. With many chains operating on a national or global scale, maintaining a uniform level of quality across all outlets becomes a monumental task. Different kitchens may use different cooking methods, varying and often changing local suppliers that might offer different qualities of ingredients, and the level of service might be different from one location to another. This inconsistency can negatively impact the brand's image, causing customer dissatisfaction and a potential decrease in both loyalty and revenue.
Another notable form of operational fragmentation lies in supply chain management. Restaurants are dependent on a wide array of suppliers for everything from raw food ingredients to liquids, condiments, paper goods and packaging materials. A disjointed supply chain can lead to inconsistencies in product availability, higher costs, daily menu adjustments and potentially compromised quality and service.
The COVID-19 pandemic further underscored this issue when disruptions in the global supply chain led to ingredient shortages, delayed deliveries, and dramatic price increases, posing significant challenges to many QSR and fast casual restaurants, and the pizza restaurant and delivery industry was not immune to these disruptions. During the pandemic, everyone was basically "taking into the wind" to change course and adjust to the new "temporary" normal. Organizations were solving operational challenges with money, short-term technology investments and even more spreadsheets. Everyone knew this was not the long-term answer, but short term it did the job in a crisis, but it also further compounded the fragmentation problem.
Technology
Digital operations, a critical component of today's restaurant industry, are not immune to fragmentation themselves. Many pizza restaurants and delivery chains have adopted technologies for order fulfillment, customer relationship management, loyalty, employee management, accounting and inventory tracking; however, these technologies often sometimes operate in silos, often leading to a fragmented view of the customer, inaccurate inventory counts, inefficiencies in order processing, kitchen discrepancies and inaccurate data, with no real-time reporting and analytics. Let's hope the day of the single back-office computer and a mountain of spreadsheets is finally over. As we all know, this creates a big disconnect and can lead to missed opportunities for personalized marketing, upsell opportunities, misplaced resources, potential customer dissatisfaction and, once again revenue, loss.
The question then arises: how can the pizza restaurant and delivery industry mitigate operational fragmentation? One answer lies in the adoption of fully integrated management systems. These backend systems facilitate communication and coordination between all the different operational components, ensuring consistency across stores and operations. Additionally, a solid understanding of the entire pizza restaurant ecosystem, and the use of real-time reporting, data analytics and visualization can help identify bottlenecks in the supply chain and other operational inefficiencies, many times offering actionable insights to optimize processes and costs and delays.
Another potential solution is the adoption of blockchain technology for supply chain management. By providing an immutable and transparent record of every transaction, blockchain technology, and its inherent methodologies can help ensure the integrity of the supply chain, leading to improved consistency, fewer disruptions, and reduced overall costs.
Finally, the integration of newer digital operations is paramount. By unifying different technologies and customer contact points — like the implementation of a mobile app, online ordering, self-service kiosks, POS, mPOS, digital menu boards and CRM, all working as a unified system with the order and inventory management, kitchen display systems, third third-party delivery and emerging drone delivery, fleet management, employee management, accounting systems and the critical data reporting and analytics — restaurants can provide a dynamic and holistic view of their operations, leading to more efficient decision-making improved customer service and better margin across the enterprise. The single-channel ordering days are officially dead, and it is now omnichannel ordering and they all must communicate in real-time.
There isn't any one company or product "silver bullet" to this growing challenge, but the restaurant industry, and specifically the pizza industry, seems to have at least, recognized the problems and are taking steps at the group management level, store level and importantly, the operations side, leveraging new technology, customer touchpoints and new data channels to eliminate the fragmentation, or at least minimize its impact on daily operations.
In conclusion, operational fragmentation in many industries poses a significant challenge in these rapidly changing times. This is especially true in the pizza restaurant and delivery industry; however, by adopting fully integrated management systems, leveraging real-time data reporting and analytics, tighter fiscal controls, embracing newer blockchain technology for supply chain management, RFID and machine vision inventory systems, kitchen quality control and integrating all digital operations, the industry can turn this challenge into an opportunity for growth relevance, and sustainability.
As we move forward in 2023 and beyond, it's crucial for the entire industry to continue acknowledging the issue and address it boldly and proactively to maintain its competitive edge in an increasingly demanding, evolving and competitive market. After all, if we look at this from 30,000 feet (about the height of Mount Everest), every organization's goal in streamlining restaurant operations should be to achieve that one "single source of truth" for their data and finally eliminate operational fragmentation.
This is a truly fundamental shift in how we operate and manage the restaurant ecosystem and the solution isn't always the new shiny product or system, but a change in operational mindset, turning chaos and fragmentation into operational excellence.
About Edward Crowley
I have been directly involved in every aspect of the interactive, self-service kiosk, digital signage, and digital wayfinding industry for well over 25 years and currently managing the North American sales and partner development for Cyntra for their Breez kiosk, Leap POS, Swyft mPOS, Astra Reporting & Analytics, Vue Kitchen Display System (KDS) and eCommerce integration and cloud solutions for the restaurant and retail industries.
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