Restaurants are fed up: A closer look at food-tech solutions in KSA

The F&B industry in the last 20 years has witnessed a revolution in digital solutions created to ease restaurant operators' lives. We've been seeing the impact of this revolution in our local markets, but what's happening now is that the market is starting to reach a saturation level in terms of new solutions, with multiple same-category ones emerging.

Like any industry, there is a limit to how many services operators can pay for, and this means that at some point, for an operator to onboard a new service, they have to drop an existing one, as they can't pay for more even if they're adding value, and this has been the case lately for restaurant operators, which is making it difficult for new companies entering the market to grow as the conversion is becoming harder by day.

Operators who have yet to automate/optimize their processes have fallen badly behind. Some of the solutions that I believe are essential for every restaurant owner, with examples of companies that are offering their services to restaurants operating in the Kingdom of Saudi Arabia, are the following:

• A cloud POS system makes monitoring and analyzing your sales more manageable and is a central hub for all other products and integrations you will use. Foodics, Lazywait, and Marn.
• If done right, online ordering tools are essential for increased profitability in the F&B industry. We're all aware of the growth of food delivery apps and how integrated they are today within the lives of our customers. Still, we're all aware of the staggering percentages killing margins, making converting your customers to your funnels essential. Zid, Salla, Blinkco.io, etc
• Food delivery apps marketing optimizers: this is a new emerging vertical that optimizes your marketing spend on food delivery appsGrowdash
• Customer loyalty platforms Koinz, bonat.
• Inventory management software Shelvz, Logestechs, and Jalebi.io
• 3rd party integrators Deliverect, Grubtech, and Feedus
• CRM platforms Lucidya

The level of efficiency and advancement in today's F&B industry was only reached with solutions that automate our everyday tasks. This has been a significant catalyst in the fast growth of many local players that emerged in the last 5-10 years and became one of the most prominent players in the industry today.

10 to 20 years ago, the market lacked solutions, and that's why we have been witnessing the rise of tech giants in the F&B industry, but at the current status of the market, this is how I would describe how the market is evolving:

?

The black line represents the level of innovation in the industry, the blue one represents the level of need by restaurants for new solutions, and the red one represents the "Subscription credit" or the level of capability of buying new services.

The industry lacked innovation, so it needed intelligent solutions to optimize the hectic operations of running a restaurant. This caused an influx of the number of solutions introduced to the industry. Now, restaurants do not need as many solutions as they needed before, and the market is reaching a saturation state. This doesn't mean we won't see any new technology emerging, but not as frequently as in the last 20 years.

While building Kitchefy, these three techniques helped us increase our conversion, and I would highly recommend food entrepreneurs to consider them in their pricing/sales strategies:

1. Having a clear value proposition for the operator with a clear understanding of the ROI the operator will have on investing in your service, the price point should be more than the money they will make or save using your service.
2. Speaking to the customer is the most important thing. It's so easy for entrepreneurs to build solutions that do not solve real problems in the industry, and there is no better way to validate that than speaking to the person buying the solution.
3. With many solutions emerging, restaurant owners always want to centralize their data points. Hence, a clear API strategy in building the product is crucial. One of the main reasons operators switch services today is if they have to add new tablets/platforms for their staff to use.

?

I'm not saying that we don't need more innovation or that food entrepreneurs shouldn't create new products. But any new product in the industry today needs to have an evident ROI and clear elaboration on how it will make the restaurant owner more money/ or save more than what they will pay to subscribe to that service. Other than that, it will be tough to build a sustainable business with clear projectors to profitability.?

?

It's an exciting time to build solutions in the industry, especially in growing markets such as Saudi Arabia, where the F&B industry is projected to reach $70 Billion in size by 2026. However, understanding the industry landscape will be fundamental in increasing the chances of success of any company emerging in this field.