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It’s the buzzword of 2020 and 2021: Hybridisation. Everyone who is anyone in hospitality is shouting it from the rooftops and especially the QSR industry is already rapidly implementing new business- and restaurant models around the term. But what is it and, more importantly, why should you care? In this article: What the Hybrid?
To kick it off: what exactly is hybridisation and why is it suddenly so big? Hybridisation is the simultaneous entry of foodservice players in multiple market channels they don’t usually operate in, and the extension of their range of service models to allow seamless integration with the virtual customer journey. It is the natural next step of a well-known trend within the wider foodservice industry, namely blurring. This is combined further with the technologisation and digitalisation that have become prevalent throughout the world.
Foodservice players have been focusing more and more on increasing their share of stomach instead of their share of market in the traditional market place. This means that they are no longer staying in their own well-defined channel and instead are actively targeting consumers within different channels. Caterers are becoming operators, supermarkets are becoming caterers and restaurants are feeding people at home as well as providing their products and meal kits in the supermarket. Branching out to be able to tap into different revenue streams that may or may not lie outside of your traditional market segment is one of the defining traits of a hybridised brand. In short, this means going from a monolithic approach where brand, product and location are one, to a modular approach were you look in every channel for the ideal mix.
First of all, and most logically, digitalisation and technologisation play the role of enabler for the hybridisation of the brand. For restaurants, (digital) technology not only allows their customers to order online easily. It also allows for integration of almost every aspect of their business within centralised systems, cutting down on operational costs as well as eliminating human error. This means that your restaurants are able to handle a much more diverse stream of ordering, allowing you to up the ante on delivery, meal kits, curb side or drive thru channels.
Secondly, technology specifically also allows for another very important aspect of hybridisation: removing the dependency on location. You want to optimise your revenue within a certain region but the ROI isn’t optimal? Try investing in strategically placed Ghost Kitchens to drive revenue through delivery. Alternatively, for an even lower investment, partner up with an already existing Ghost Kitchen operator to integrate your brand into their operation. This way of working gives you an incredible amount of freedom when strategising about entering new markets or regions, allowing for almost instant full-cover availability with the right mix of partnerships and own investments. Additionally, the method allows new physical location opportunities to open up with the benefit of having the upward sales potential through delivery and other sales driving activities. For a great example of this way of working, check out Mr. Beast Burgers in the US, a brand that opened 300+ locations on its launch day and sold over a million burgers within the first 2 months of operation!
Lastly, hybridisation is boosted by digitalisation, because it allows for a previously unparalleled degree of interaction with your guest. Digitising consumers are in search of brands that resonate with their personal values and interests. Brand loyalty is no longer just achieved through good food, especially for younger generations its just as important to connect to a certain lifestyle – which allows for even more hybridisation opportunities such as merchandising or cooperation with non-foodservice brands. A good example of broadening the meaning of a brand can be found in KFC, who recently introduced the KFConsole to connect to their gaming focused audience. Being visible and recognisable both on- and offline is another key aspect of a successfully hybridised restaurant.
Despite all of these positives, you still have to be careful in your approach to hybridisation. Investing in technology might be profitable in the long run, but can still require a hefty investment up front. Being available anywhere, anytime sounds great on paper but still requires brand recognition and activation for it to pay itself off. Going for only a virtual brand sounds great but will require severe investments in branding and marketing activation. Additionally, being available from many (dark) locations is amazing but only as long as you can guarantee quality in every single one of those locations or your brand might take a big reputation hit. In short, you must have tight control over your finances, operations and marketing and set clear goals for your brand to be able to leverage the power of the hybridised model. Building your story, increasing brand value and awareness and as a result loyalty will be key to stand out in those different channels. Luckily, Conceptional’s Performance & Growth services are geared to do exactly that, proofing you and your brand for the exciting hybridised future of F&B.
To summarise, hybridisation means branching out from your core business to tap into a multitude of revenue streams, most often with the help of technology. This can be further enhanced by reframing the restaurant to a service instead of a single location. Though not every aspect we stated in this paper should be prevalent in every concept, strategically selecting aspects to integrate into your brand opens up a new world of opportunities. And this leads us to our ‘WHY?’.
Why would you hybridise? Hybridisation reduces your dependency on a single revenue stream, increases overall revenue (especially when strategically selecting channels that complement each other in terms of workload over the day), increases visibility of your brand, enables you to better connect with your guests and allows you to boost your overall performance and growth. The restaurant industry is changing, and to half-quote Charles Darwin: “It is not the strongest brands that survive, nor the most intelligent, but those who are the most responsive to change.”