Fast food giant smartens up takeaway channel

Jardine Restaurant Group's KFC plans to implement a new store format - food lockers in two Hong Kong stores as a trial, says group chief executive Andrew Wong.

Customers only have to order in the app or website. Then, the app with GPS, will tell them the distance and time of the nearest self-pickup point. Customers could collect the order from the locker after entering a four-digit passcode generated by the app. No counter and front-line staff are needed. But the time schedule has not yet been decided.

This is only one of the changes for the restaurant operator, implementing digital transformation in Asia since two and a half years ago. The group operates Pizza Hut and KFC in Hong Kong, Macau, Taiwan, Vietnam, and Myanmar.

The food locker has been implemented in a railway station in Taiwan adopting a click and collect strategy. Also in Taiwan, there is a Portuguese egg tart vending machine.

In Vietnam, Pizza Hut has tapped into artificial intelligence technology, integrated with a smart camera system to analyze visual actions. This helps ensure the food quality in the making process, and can comply with various hygiene and preventive measures.

As a result, Jardine Restaurant Group was able to adapt to the new normal faster than peers when the coronavirus pandemic spread last year.

After adopting the out-of-store strategy, the delivery and takeaway business accounted for over 80 percent of the business and more than 40 percent of overall sales came from digital orders in 2020. The Hong Kong delivery and takeaway business even performed better compared with the pre-pandemic level.

"While all our peers were muscling for the delivery market, we were strengthening our takeaway channel," says Wong.

There is delivery demand but the number of riders is limited, he says. Customers have to wait for one to two hours, deterring them from choosing delivery.

KFC offers takeaway promotions, like buy one get one free to change consumer behavior. After that, the takeaway business grew faster than the delivery business last year.

The group has its own riders and delivery staff while most of its peers outsource the delivery services.

To shorten the time of delivery, KFC, which is located in residential areas, has introduced "walk boys." Pizza Hut has also offered fixed-point delivery to the residential area during peak season.

The accuracy of the estimated delivery time in the app has been improved as the adopted algorithm could generate automatic delivery time for a customer. In the past, the estimated delivery time was guessed by the store manager.

Delivery time is to be further shortened as riders could deliver food from different stores in the same area rather than the fixed store. The delivery management system has an auto-dispatch function that intelligently organizes and schedules orders.

It is believed that there will not be large-scale dine-in restaurants in future, Wong says.

"Cutting dine-in stores and adding more takeaway stores is a long-term conformity," he says. However, the group will still keep some dine-in stores for a different customer experience.