When it comes to innovation, go to the source. And when it comes the task of feeding people, that means to go to the people who provide the beverages.
In other words, PepsiCo Inc. has joined the ranks of companies and brands setting up innovation labs. According to a statement, the beverage behemoth has “announced the launch of PepsiCo Foodservice Digital Lab, a first-of-its-kind suite of capabilities built to connect foodservice operators with the companies, services, insights, and solutions best suited for their specific digital and online needs.”
Innovation labs and technology and business incubators are nothing new, of course, but the rise of eCommerce, omnichannel retail, digital payments and other such efforts has provided fresh fuel and motivation to that trend. In the case of PepsiCo, the company said it plans to make use of “proprietary and syndicated research into restaurant and food ordering interactions” to “teach operators how to identify and deploy technology solutions that benefit their business.”
The PepsiCo innovation effort comes at a time of significant technology development in the world of restaurants, including quick service restaurants (QSRs). As PYMNTS research has extensively documented, the future of retail technology is in large part playing out in the food service and food delivery industry.
That research has found a technology gap between consumers and QSR operators — one of the main challenges faced within the broader food service world. For instance, 65 percent of QSR managers believe using apps to place orders delivers a positive customer experience. Not only that, but 92 percent of customers have a positive view of using an app to place a QSR order.
As for the PepsiCo innovation initiative, the company says it wants to give foodservice operators “more information about how they can best use [technology] to their advantage,” according to the statement. “In fact, a recent survey of foodservice operators found that nearly half felt unsure about the longevity of emerging technology and whether it's here to stay. Still, nearly two-thirds say they plan to upgrade their foodservice tech in some ways in 2019, but many expressed frustration about the time and energy needed to research and onboard the best solutions for their business.”
The idea behind the Digital Lab is to also strengthen ties between the brand and PepsiCo customers.
“The digital age has disrupted everything — including the way people order, eat and experience food and beverages,” said Scott Finlow, chief marketing officer of PepsiCo Foodservice. “PepsiCo is helping our customers stay ahead of the curve in regard to understanding the latest technology and consumer trends impacting the foodservice industry. With the customer-focused Digital Lab, we created a one-stop service for operators to access the resources and knowledge needed to drive a better consumer experience and impactful business results in the digital era.”
That said, just as not all technology projects pan out, nor do all attempts at running a dedicated retail tech hub or innovation lab. That truth is reportedly playing out with Neiman Marcus, a venerable retail chain that is trying to build “retail experiences” around luxury and brick-and-mortar stores. In fact, the retailer recently appointed two executives to lead its customer and store strategies as part of the effort to build a luxury platform. Part of the goal is to create creating personalized experiences for customers within retailer's the soon-to-be-overhauled 43 stores.
Still, the QSR field — where PepsiCo is operating — continues to make digital and mobile gains, as was shown in Q1 2019 earnings reports. Mobile, indeed, is the big area of innovation right now.
For the first quarter of 2019, for instance, Shake Shack’s bets on mobile appeared to bring further benefits. The QSR’s revamped mobile app, as well as the addition of chicken offerings to the menu and warm weather in key areas, helped boost customer traffic by 1.6 percent. The company has been working to improve its digital technology and delivery, and recently hired its first chief information officer. It has also been expanding across the country and making strides abroad, with as many as 18 new international locations planned for this year in markets including China and Mexico.
The coming months, of course, should bring future clarity about the new PepsiCo innovation effort, but it’s easy to imagine, at least in general, where that work could lead.