Central Kitchen Network — Podcast Interview (Episode 1–4)

As restaurants reopen, we discuss the changes big shifts that will affect the food service industry going forward.

Podcast Episodes —

Episode 1/Episode 2/Episode 3/Episode 4

Hi Ji Ching, thanks for being here with us. Can you tell us a little bit about your history with food service?

Yeah, I’ve been in various roles, started food innovations, and then going into countries to launch them — did a couple of stints in different locations like Indonesia and Myanmar which really expanded my taste buds, but for the last 3 years getting into the technology space by heading the digital strategy and very recently, also growth platforms and partnerships. I have always worked in food though, not only because food is delicious, visceral and personal, but because there is something amazing about the entrepreneurial spirit, resilience and sense of purpose in the food business that attracts me. These are your OG hustlers you know, before your Jeff bezos, Zuckerbergs or Jack Mas.

Fantastic, and I must say we definitely see such hustle to the fullest in the recent crisis where many now are evolving and pivoting their business. In fact, you wrote an article about the ‘5 powerful shifts for the F&B industry in the new normal’. Can you tell us a bit more about your basis for writing it?

Sure. My current role as head of digital and growth platforms allow me to interact with a lot of non-traditional F&B players on a frequent basis — whether it’s food delivery platforms, ecommerce players, logistics, POS solutions, virtual kitchen players — the list goes on. Definitely restaurateurs have the best understanding of today’s business and operations, but being privy to all these conversations in new spaces gave me the leg-up to see a little bit further into the future. And the response has been great — we got feedback from chefs, owners hat these insights became thought-starters that they are now using to redesign their business models. Some technology players have reached out see if we can road-test some of these concepts, which we are very excited about.

No one has all the answers, but as a critical part of the F&B community we feel a responsibility to continue to help to build these conversations.

You talked about the industry going from a more competitive mode to moving ahead collaboratively as an integrated ecosystem. Can you elaborate a bit more about what this means for F&B?

I think what this crisis has shown is the power of collaborative innovation. These 6 months for the restaurant industry has been something like what you would describe in the tech world, as a very long series of sprints. When you are hit by a black swan event like Covid-19 need to do things fast, you cannot afford to build competencies from scratch. Instead you look for partners who already have those competencies that you lack and with goals that are aligned to yours so you can work together.

I think the shining examples of such collaborative hustle — is from the bubble tea companies. Remember the long queues at bubble tea shops when it was announced that standalone tea shops needed to close?

Just a few days later, many bubble tea shops started partnerships with F&B brands to sell-through delivery. Liho even sold a DIY bubble tea kits in a Shopee exclusive. These guys not only shifted their distribution channels, but even evolved their core product in a matter of days. I think this is a speed that not many companies, even tech can match!

Collaboration will also be even more important in the new normal for F&B as trend cycles get shorter, we are really in the age of big bang moments rather than flatter adoption bell-curves. And collaborations on menus or new distribution formats will help F&B deliver expectations on this shorter time-scale.

I remember that. You compared the future of food trends as something more similar to the business of hype in fashion. Fashion and food seem to be materially, quite different types of goods! Can you elaborate more?

Fashion was invented when clothing went beyond covering the human body, into a social means of deriving pleasure, and communicating identity. Similarly, food today is not just about sustenance, but is also a way that we indulge our impulses.

This is something that has been going on for a while, but what Covid-19 does is to really put this on steroids. Pre-covid on average 10% of restaurant revenue came from delivery, during lockdowns this went to pretty much 100%. Post Covid — we expect this to be closer to 30% as more people gravitate towards having food delivered to them.

Why does this matter? Let’s say it’s 5pm and you are thinking about your next meal. If you were going to a restaurant, you would probably think about the type of food you wanted to eat, where you needed to be after dinner, check google for reviews and select a restaurant, maybe even made a reservation the day (or week) before. If you were getting it delivered however, your thought process would be short circuited to whatever looked appetising after a few scrolls. Food delivery customers are much more impulse-driven than dine-in.

This means that, there is increased pressure for F&B to refresh their menus more frequently, and to promote these new offerings to their customers. In fact, food is a lot more difficult than fashion to offer novelty because its components are perishable. The problem statement of a shorter trend cycle, intensified by a short shelf-life for food, creates many interesting opportunities upward of the value chain.

Can you share what some of these opportunities may be?

If you are a brand or OEM,how can you help them with trendy, yet versatile and simple ingredients to help them turn out new dishes monntly? If you are an enterprise solution, how can you help them with order analysis, inventory management to better predict trends and reduce reduce waste? If you are a consumer facing platform, how can you help F&B with time-limited visibility solutions for their new offerings? The list goes on.

Does that mean that all food will become fads? In your article you also talked about food as a service, or a Spotify for meals, where restaurants will deliver personalised food on a subscription basis to homes.

There are times in life we live to eat, and times where we eat to live, and I believe we are standing at a fork in the road for foodservice where different models will start to evolve to meet those needs more intimately and there will be more polarisation between those who offer food service (experiential, restaurant eating) and food as a service (subscription based and functional eating).

The former is everything we know, love and romanticise about restaurants. It’s hyperlocal, experiential, experimental. It’s the Nomas, the nostalgic hawker stall you grew up eating, you go there to love food, appreciate the craft, and build unforgettable memories. Food as connection and experience is something irreplaceable, and that is likely to continue.

The latter is where it’s ripe for disruption. Food service is quite the laggard in that regard, today most industries are talking about industry 4.0, but if you think of kitchens as a factory for food, in this region it still looks more like 2.0, where there is division and specialisation of tasks, but productivity driven automation remains limited, much less cloud connectivity.

This will change, however, as Covid-19 economic impact will trigger a search for safe, contactless and efficient food models.

On one end restaurants who have the customer base will rush to scale, either through their own central kitchens, or tapping into 3P central kitchen solutions to increase production efficiency. On the other end, CPUs can either help these restaurants scale as OEM partners or themselves move to develop D2C models with RTE solutions or hot meals. Mass personalization will be key — and the winners will be the ones who successfully scale production, while staying connected to customer needs.

Eventually we will be able to move on to the 4.0 — data-driven food service — where food can be created and distributed efficiently around an individualised playlist of specific preferences and dietary requirements — a spotify for meals.

Does such mass commercialisation of food mean the end of Michelin restaurants?

No — we always need special and indulgent meal occasions , but it does mean that these experiences do become more precious, and F&Bs need to up their game in applying design thinking principles into their restaurant experience — whether it’s delivery or dine-in!

A three Michelin starred restaurant in Chicago, Alinea recently broke the mold by going from 300 dollar dishes, to comfort food 50 dollar to-gos. The demand went through the roof and so far, customers have eagerly taken to the challenge of trying to plate their own dinners in full Alinea style. They’ve also been showing off birthdays and anniversaries celebrated at home with the high-end carryout.

What this shows is there is still room for premium experiences even in to-go or meal kit space, but it’s not a copy-paste of your existing menu and operations.

Pre-covid a lot of restaurants where delivery is an afterthought. That’s fine when delivery is only 5–10% of your revenues and previously restaurants saw it more as an additional source of sales using spare capacity — basically it was a bonus. What Covid has shown is that delivery can be more, and when delivery is 30–40% of your total revenue, the way you play the game is very different, that’s why during this period you see a lot of restaurants now moving from third party delivery as the sole channel, into also investing into their own platforms with the help of restaurant solutions like Oddle and Ninja OS . This is an attempt to wean themselves of overdependency on 3P platforms and also increase share of revenue.

I believe this is the transition stage. Fast forward it is likely that we see less hybrid models, and more focused restaurant models that either go for dine-in OR delivery, OR even retailing. These will design their menus, costing, labour and supplier choices around very different financials.

Thanks for sharing your insights with us today Ji Ching, any parting words?

So… Zouk Singapore recently announced that Zouk will be transformed into an eatery, livestreaming venue and a location for monthly bazaars. A week before it launched an online shop selling merchandise, bottled cocktails and food from its RedTail kitchen. A month before they also teamed up with STB to host virtual parties. These new revenue streams are aimed not just as a coping measure, but also as a means to speed up Zouk’s transformation from nightclub operator to a lifestyle group.

This is really a good time for F&B to do some soul searching. Why do your customers love you? What is the food experience that you want to deliver for your diners?

Traditionally, restaurant businesses are tied to well, their restaurants. But the days where F&Bs are simply food production sites bound by the four walls of their kitchen, are officially over. F&Bs today need to see themselves as an evolving F&B brand that guarantees a specific food philosophy or experience. Once you have that as a north star, you can branch out to different concepts around that same brand promise, but make operational choices that are more designed for channel.

For some, this decoupling will be like cutting the umbilical cord and they will fail, for others who can pivot effectively, and quickly this will be a moment of unshackling, an opportunity to build something greater.

Thank you for sharing Ji Ching!