Product Managers Prepare To Turn Restaurants On Their Head

Product managers think that they know how to make food delivery more profitable
Product managers think that they know how to make food delivery more profitable
Image Credit: Assemblies Unlimited, Inc

Restaurant product managers have a difficult job these days. It has always been a challenge to get people to come to your restaurant and spend money. However, with the arrival of food delivery services that will now take a restaurant’s food to anyone’s home, things have become even more complicated and it may be time for them to change their product development definition. The challenge and expense of running a restaurant while at the same time trying to make money from supporting a take-out operation has become a very challenging thing for any product manager to do. That’s why some product managers have come up with a radical new way to solve their problems.

Say Goodbye To The Restaurant

When you run a restaurant, where does the money go? It turns out that a lot of your money is going to go to pay for your restaurant’s location. The nicer the location, the more customers you are going to be able to attract; however, the nicer the location, the more your monthly rent is going to be. All of this can start to reflect poorly on your product manager resume. Product managers realize that this is a real problem and they think that they may have come up with a solution to it. What they want to do is to make use of the latest e-commerce technology to liberate restaurants from pricy retail space. They can do this because food delivery is picking up everywhere.

The product managers’ plan is to open shared kitchens in industrial buildings. To make this plan happen, the product managers are going to have to find ways to get the restaurant to quit their existing storefronts, move to the new spaces, and become entirely home delivery driven. Right now this is a radical idea. However, people who watch the restaurant industry believe that this new approach could leave its mark on the industry.

This is bad news for the people who run shopping centers and malls. Restaurants have been one of the few bright spots for them when it comes to renting out spaces. The product managers plan is to turn industrial facilities into shared kitchens when can then be sublet to multiple restaurants who are trying to prepare food for home delivery. The delivery of food from restaurants to people’s homes is something that has been around for a while. This part of the business has started to account for a larger and larger part of a restaurant’s business as the ordering apps have become more popular. However, the problem has been that delivery has been unprofitable until now. The problem is that profit margins are thin to begin with and then when fees are paid to the delivery apps, what little profit that there was is now gone.

A Brave New World Arrives

The new way of doing business that the product managers are looking at has the ability to change everything. The new approach can solve a restaurant’s delivery problems because the industrial space that they occupy is generally cheaper than the street-facing retail location that restaurants currently occupy. Other reasons that this new approach can pay off for a restaurant is because the new locations offer flexible lease terms and don’t require a lot of upfront investments. These new spaces are optimized to support delivery.

Getting started in one of these new spaces is easy for a product manager to do. They can lease the kitchen along with its utilities and any required major equipment. Just to make things even easier, they can get delivery services to pick up their food and they can use apps that will allow their customers to place orders. Taken together, this all allows the required work to be managed.

An interesting side effect of the arrival of these stand along food preparation facilities is that they have generated a need for additional cold-storage facilities to hold all of their ingredients. Cold-storage facilities used to be too expensive based on their per square food space. However, as Amazon has been buying up more and more warehouse space, prices for warehouse have been rising and now cold-storage facilities don’t look so expensive. There is an estimate that the demand for cold-storage facilities will require the creation of an additional 70-100 million square feet of storage over the coming years.

What All Of This Means For You

Being a product manager for a restaurant can be demanding and difficult. The challenges include paying for expensive retail space and trying to make money from the new food delivery business that has just shown up. Some product managers are taking a look at their product manager job description and considering a radical approach where they walk away from the traditional restaurant and become a delivery only business.

The new idea just might work if product managers can find ways to use the latest in ecommerce technology to allow their restaurant to give up its pricy retail space. The plan is to open a kitchen in an industrial space and give up the retail location. This would allow the restaurant to become a delivery only business. Currently the delivery business is not a profitable part of the restaurant business because of the costs associated with it. The industrial space that the new business would occupy would cut costs and could make delivery a profitable part of the business. Getting started with this new approach is easy because everything can be leased. The new approach is causing more cold-storage space to have to be created.

Restaurant product managers need to take bold steps in order to help their restaurant remain profitable. The food delivery business has started to become a big deal and so product managers need to find a way to make the most of it. Creating a stand-along delivery only business sure seems like a good way to maximize the value of home delivery. Product managers are going to have to take the time and run the numbers to see if this radical new approach might be what they need in order to make their restaurant a success!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that a product manager could have a retail location and a stand-along delivery location at the same time?

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What We’ll Be Talking About Next Time

I’m pretty sure that by now we all know who Amazon is. They are the very large company that started out as a book seller and over time has morphed into a company that sells just about everything and seems to do just about everything. The Amazon product managers seem to have an almost golden touch when it comes to their product development definition – everything that they lay their hands on seems to be very successful. They have started offering the world’s most successful cloud service, they bought Whole Foods, and they have just launched one-day deliveries. However, it turns out that not everything that they do is successful. A good example of this is their restaurant delivery business.