6 Stages of Digital Transformation in F&B— the Roadmap to Digital Maturity (and Not Being Stuck in Stage 2 like Everyone Else)

Soon every hospitality business will be 100% data-driven.

What stage of the digital transformation is your company in, and what do you need to do to unlock the benefits of the next stage?

Let’s find out.

From online orders to loyalty programs and purchasing software—restaurants are rapidly implementing new tech to improve the guest experience on the one hand and curb exploding food costs and workforce turnover on the other.

Emerging business models, like dark kitchens, have already made the switch. They know: what gets measured, gets managed. And they measure everything.

The influx of clean real-time data allows management to make on the spot, rational decisions.

The rest of the restaurant industry, however, is catching up quickly.

The hospitality industry underperforms in having live data operationally available at all times. 

Lennert De Jong
Chief Commercial Officer, citizenM hotels (source)

The thing is, new businesses can be powered with a digital strategy from day one. Everyone else has to go through a digital transformation (DT).

In 2016, Prophet’s business analysts created a maturity model that lets businesses assess where they are on their DT roadmap. Or if they even have one. Since then, global organisations have extrapolated key takeaways from this model, applying them to their various operations. 

Today, we bring this maturity model (and its six stages of digital transformation) to the F&B industry.

It will help you achieve two business-growing goals:

• pinpointing where you are with DT and
• figuring out where you want to be.

One of our recent posts painted a big-picture overview of digital transformation in the food and beverage industry.  [Haven’t read it? ← ← ← The scoop on the processes that lead to DT in F&B is in there, and it’s well worth your time].

But though valuable for understanding the concept of digital transformation (and what goes into it), this 30,000-foot overview might leave you scratching your head.

From that height, DT is unassailable. It seems utterly impossible to transform a multi-unit restaurant business, ghost kitchen network or large-scale catering company into an organisation that can make data-driven decisions at every level.

But… I promise you — it’s not.

In this post, we will be dissecting the roadmap to the 6 stages of digital transformation. 

You see, knowing the ins and outs of these stages will help you figure out where in the DT process your operation is and what you need to focus on next.

The 6 Stages of Digital Transformation in the F&B Industry

Prophet’s research identified six different phases of digital maturity. Where your F&B operation falls on this linear line depends on your digital goals and how much you’re already working towards them.

This is always a multi-pronged effort. No organisation can achieve high digital maturity [let’s say stage #5] with just one part of their business while other parts are dead stuck in stage #1. 

This doesn’t happen. 

To succeed with DT in F&B, you’re going to need buy-in from your superiors, peers, and employees. You’ll also need to take a multi-disciplinary approach that marries leadership and people, tech and processes, and data and analytics.

So let’s take a closer look at these six stages of F&B digital transformation and how you can successfully navigate each one of them.

Continue reading below the roadmap infographic.

I break down each stage into ‘people‘, ‘processes‘ & ‘analytics‘ and explain how to navigate each phase of the digital transformation in F&B.

Stage #1 Business as usual

A predictable legacy perspective guides everything you do, from menu engineering to how you scale and open new F&B locations. Think of it as a sort of ‘we’ve always done it this way’ mode of thinking and operating.

• Leadership & people:

Your job is to educate, illuminate, and shine a light on DT success stories in the F&B sector. Find case studies featuring your competitors, and show the top brass the benefits of investing in these initiatives sooner rather than later.

• Tech & processes:

Take stock of tech and processes — are you using legacy systems that are siloing your data? Is your tech bloated? How error-prone are your processes (and how much is that costing you?).

• Data & analytics:

Are your F&B decisions insights-driven? What are you not collecting that you should be?

When you look at things from the F&B perspective, if your tech is legacy ERP-based, you’re left with DRIP [data-rich, information-poor] stuff. This means that your operational ecosystem is ripe for an AI-ready restaurant management platform.

Stage #2 Present & active

Your operation is waking up to the benefits of digital transformation [and AI-supported tech and processes]. Pockets of innovation are budding in F&B — think digitalisation of stock-taking or procurement based on sales forecasts.

• Leadership & people:

Use these pockets of innovations to create case studies. Invite guest speakers to educate other execs on the benefits of digital transformation. And put together a team to map out your roadmap to digital transformation [F&B processes + tech + potential organisation-wide projects].

• Tech & processes and data & analytics:

Deploy back of house tech to solely collect data at select locations so you can identify gaps.

Pick one location, overhaul processes, track performance & monitor changes in food cost percentage, inventory variance and food wastage levels. Incidentally, you can use Apicbase to automate some of the more time-consuming tasks in your F&B operations, such as tracking inventory levels.

Stage #3 Formalised

The real change starts to happen here. One change agent [in the F&B industry, that’s usually you — a cost-conscious COO/a high-level F&B exec] starts executing. Tiny budgets come into play… but results need to follow quickly.

• Leadership & people:

Formalise your DT efforts by putting together a team. Overcome top brass objections and secure budgets for pilot programs—partner with HR, finance, and IT departments to build a multi-disciplinary team.

• Tech & processes:

Start replacing legacy tech [modified ERPs and point solutions] with platform-based solutions that can connect your BoH various operations.

Deploy tech solutions that can talk to one another — in the case of Apicbase, it means connecting to your HR systems to create shifts and rotas that cut down on labour costs, or to your POS system to make planning and forecasting easier and data-driven.

Overhaul processes with an eye on the new technology you’re using now. Automate what you can, roll out new, digitally forward processes and decide what needs to go. (Think of Apicbase as your Rosetta Stone — you input recipes, which are then automatically translated into bills of materials according to the desired quantities. The BOMs are, in turn, translated into accurate purchase orders).

• Data & analytics:

Identify gaps in measurements and work on closing them (recipes, stock, sales). Tech should now have automated complex manual calculations like actual food costs or bills of materials. Create a bespoke analytics dashboard in collaboration with IT and other departments. 

Stage #4 Strategic

To drive your organisation further down this F&B digital transformation roadmap, you need to form strategic partnerships. It means collaborating with other executives (a buy-in from your CTO, CFO, and CPO will make your life easier). Whole teams are working on DT projects, and the budgets are substantial. 

• Leadership & people:

The organisation as a whole should now be focusing on eliminating DT bottlenecks. Push for bigger budgets and bolder projects. Leverage success stories from your experiments to secure leadership buy-in.

• Tech & processes:

In F&B, back-of-house operations are now managed by a central platform. For example, Apicbase can drive your entire BoH operation (either through built-in modules or integrations), which means legacy and point systems need to go out the door.

Roll out new processes and tech to all locations. If you’re testing something, adopt the ‘fail-fast’ mentality [Your processes should be scale-ready as soon as possible].

• Data & analytics:

Everything from POS and HR to vendor relations and the weather should flow into your BoH management platform and feed your insights and suggestions machine.

Data and analytics experts should report directly to C-level executives. It ensures critical business information doesn’t get tangled up on the grapevine.

Stage #5 Converged

At this point, the chief digital transformation officer has a seat at the execs table. That’s because digital tech is the backbone of everything your organisation is doing. New roles are introduced, and the operation as a whole is turning to information-rich data to guide its decisions.

• Leadership & people:

Change agents and early DT sponsors are now leaders of the operational strategy. The goal is to find synergies between pilot programs, connect the digital dots, and ease the rollout of your digital strategy.

New hires should all be digitally literate and support the new infrastructure [think AI and machine learning experts, innovators, and futurists].

• Tech & processes:

All tech in use now is cloud-based — the line between technology and processes is blurred because most actions don’t require execution and monitoring, just approval.

For example, Apicbase detects par levels of ingredients needed for pasta Bolognese ➡ the system creates a bill of materials ➡ instantly calculates quantities ➡ chooses the best vendor based on packaging options and lead times ➡ automatically creates a PO that’s ready for approval.

• Data & analytics:

Start testing a process that uses data points from disparate sources [think internal — vendors, recipes, and external — current events, weather] to make better business predictions.

Layer AI and machine learning on top of your tech/data to assist your BoH tech in automating more complex actions (automatic vendor selection, judgement calls on which vendor to choose). 

Use increasingly accurate data and insights to experiment and create new business models. For example, creating automated or semi-automated F&B kiosks outside your main locations (or introducing delivery, branching into cloud kitchens, and similar).

Stage #6 Innovative & adaptive

Constant innovation is a way of life for your F&B organisation. You’re monitoring trends; you’re running pilot programs [smart digital menus, robotised waiters, fully automated kitchens], and you’re rolling out those that are successful at scale. This innovative mindset allows you to diversify your business models and create new streams of revenue faster than ever before.

At stage six of your F&B digital transformation, it’s not just your F&B that’s reinvented — your entire organisation is a living, breathing, digitally-transformed organism.

At this point, DT is embedded into the DNA of your culture. New and old employees possess significant digital prowess. And your tech, processes, people, leadership, and analytics all serve the same goal — to support innovation. To experiment and iterate. And to adopt what works and cut out what doesn’t.

Not a single F&B operator is here just yet… but we at Apicbase are working hard to get you there.

Your F&B Digital Transformation is Around the Corner… But It Has to Start Somewhere

And it should start today.

You now know the endgame of your F&B digital transformation includes your entire operation.

It is a sobering thought… and a bit overwhelming, too. Especially when you consider how different parts of your global operations don’t go in lockstep through this process. Your customer support can very well be a step ahead of your HR. And your marketing can be miles ahead of everything else.

But it’s the crux of your business — your F&B operations and BoH in particular — that you want to focus on. It is what’s going to move the needle for you if you’re 

• a restaurant chain, 
• a large hotel brand, or 
• an enterprise caterer.

All it takes is turning your focus to that often-neglected place — your back of house operations. Turn it into your North Star. A DT success story.

The rest of your operations will follow suit.

So let’s move away from theorising… and put our money where our mouth is.

If you’re looking for a blueprint for digital transformation in F&B — a guide that will let you know what actions to take, one after another, to take your BoH from ‘meh’ to ‘yeah’ — check out our actionable guide below.