According to Mckinsey, the food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. In the United Kingdom, the market has more than doubled during the COVID-19 pandemic, following healthy historical growth of 8 percent.
In this modern age, the power of internet and technology has been able to enhance old ways of working and reduce redundancies through digital transformation. Mobile technology is reshaping the restaurant and food delivery industry. Peng is in direct need of innovative digitization to manage and meet enhanced customers’ expectations as the company seeks to upgrade its traditional way of doing business.
The digital transformation goal of Peng seeks to improve traditional processes by meeting customer demands, enhancing focus on core-competencies and improving the overall efficiency of the business model. Using a SWOT (Strength, Weakness, Opportunities and Threats) Analysis, the digital transformation goal of Peng is thus reviewed;
STRENGTHS
STRONG DELIVERY SYSTEM:
Through the use of digital technology, Peng could partner with large and well-structured food delivery third parties in the UK like Deliveroo to reach out to potential and existing customers normally beyond their reach within specific target markets such as Northumberland, Devon and Durham. HIGH VISIBILITY With a population of Over 67 million people, there were 65 million mobile internet users in the UK in 2020 according to statista.com. Digital technology would offer sufficient leverage for Mr. Pengs to have a large outreach and market visibility.
HIGH VISIBILITY:
With a population of Over 67 million people, there were 65 million mobile internet users in the UK in 2020 according to statista.com. Digital technology would offer sufficient leverage for Peng to have a large outreach and market visibility.
WEAKNESS
INCREASED FOOD COST:
As of October 2021, the consumer price index score for food and non-alcoholic beverages in the United Kingdom was 104.7 indicating that food prices have risen by more than four percent when compared with 2015. Food inflation in the UK hit an 18-year all time high according to yahoo finance. However, the margins for food cost increases due to costs accrued from logistics and payment processing fees before it finally gets to the customer. The customer bears the brunt of this added costs.
OPPORTUNITIES
ACCESS TO NEW MARKETS:
Peng access to untapped market is unlimited in the UK through the use of digital technology and innovation. Peng could also scale its target market beyond regions of England such as Northumberland, Devon and Durham to other markets they couldn’t have reached within its 10 years of existence and also solidify its presence in current strong market hold in England.
The opportunity unlocked by accessing new markets would enable Peng scale with speed, employ new workers, gain new customers and enjoy increased profitability in revenue and gross profit.
THREATS
COMPETITION:
The food delivery business in the UK is fiercely competitive. The online food delivery business is comprised of many competitors with over 25 food delivery apps in the UK, according to redbytes. In a competitive environment such as food business it has become very difficult for online businesses to differentiate their products and offer really competitive prices.
In a fast moving world of technology, the current business model of Peng is too slow and lacks the structure to Blitz scale.
Firstly, the use of face-to-face or phone orders weakens the efficiency of the business and reduces the potential of the business to scale fast despite doing 10 years in the food business space.
Secondly, despite accelerated sales and labour volume, Peng is facing challenges of meeting customer expectations due to lack of digital technologies in its business model.
Finally, embedding digital technologies such as deliveroo or JustEats would enable Peng have a wider reach beyond 2 miles and meet food orders less than 12 pounds. This move would enable Peng compete for markets they couldn’t capture due to traditional business practices.
REFERENCES
Clark D, ‘’Consumer Price Index (CPI) for food and non-alcoholic beverages in the United Kingdom from January 1988 to October 2021’’, Statista, November 17, 2021.
Gursumet Kau, ‘’Just Eat Online: The ‘Online’ Takeaway Business Model Explained’’ Jungle Works, December 16, 2021.
Kabir Ahuja, Vishwa Chandra, Victoria Lord and Curtis Peens, ‘’Ordering In: The Rapid evolution of food delivery’’, Mckinsey, September 22, 2021. https://www.mckinsey.com/industries/technology-media-and-telecommunications/ourinsights/ordering-in-the-rapid-evolution-of-food-delivery
‘’SWOT Analysis of Food Delivery Business’’, Marketing Tutor, December 2021 https://www.marketingtutor.net/swot-analysis-of-food-delivery-service-business/
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