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jerryking : fixed_costs   5

Ghost kitchens : the next disruption in the restaurant industry ?
8 Jan, 2018 | intotheminds | Posted By Pierre-Nicolas Schwab.

(1) https://www.restaurant-hospitality.com/operations/ubereats-nudges-operators-toward-virtual-restaurants
(2) https://www.theguardian.com/business/2017/oct/28/deliveroo-dark-kitchens-pop-up-feeding-the-city-london#img-3

ghost kitchen make perfect economic sense : margins are thin in the restaurant industry, driven by high employees-related costs, rent, expensive equipment and variability in demand. Setting up a restaurant is a bet with a 5 to 20-year time horizon depending on myriad factors : your positioning, the location, and many exogenous factors out of your control. Eliminating all those risks seems like a logical move :

how to make a restaurant less location-dependent ?
how to adapt quickly to demand ?
how to reduce fixed costs (renting and equipping a place) ?
The bright sides : 3 major advantages of ghost kitchens

**The 3 major advantages of ghost kitchens are their answers to the 3 problems listed above :

the restaurant is not location-dependant anymore. If there is an event likely to generate massive flow of potential customers, you can move
ghost kitchens can adapt quickly to demand : the standardized kitchen unit just has to be multipled, which is not possible with street food vans unless you own several of them (which brings us to the 3rd advantage).
ghost kitchens, because they are rented from online platforms like Uber Eats and Deliveroo, transfom fixed costs into variable ones. This is great to test your idea and is a cheap way to do market research and test traction on a market.

** The dark sides of Uber’s and Deliveroo’s ghost kitchens
1. Why would one still rent a place to operate a restaurant ?
Good question indeed. If all hurdles and risks of operating a brick-and-mortar restaurant can be removed, why would you still want to rent a place (fixed costs), buy the equipment (fixed costs), hire employees (fixed costs) and wait on patrons to come in (variable revenues) ? If a platform like Uber or Deliveroo can provide you with customers’ orders, the need to have a brick-and-mortar place would vanish.
But if every single restaurant owner adopts that posture, how will city centers look like on the long run ?

2. Dependence towards platforms
What happened with the hospitality sector may well happen on the middle-term in the restaurant industry too. Uber eats, Deliveroo have disrupted the way we consume food. This is a new societal change that is most to be felt in Europe (urban Americans use already to get food delivered to their homes, most restaurants in US cities proposing at home delivery) : it has become easier than ever to get food delivered at home.
If enough restaurant owners make a significant percentage of their revenues through those platforms, they will eventually become dependent on them and will struggle like hotels are now struggling with Booking.com. Using platforms is a wise strategy to grow revenues but it can also become a very dangerous one if your dependence to them increases.
beyond_your_control  commercial_kitchens  disruption  fixed_costs  food_delivery  kitchens  platforms  restaurants  variable_costs  Deliveroo  Uber  asset-light  event-driven  experimentation  test_marketing  pop-ups  cold_storage  on-demand  dark_side  virtual_restaurants  bricks-and-mortar 
january 2019 by jerryking
Robocalypse Now? Central Bankers Argue Whether Automation Will Kill Jobs - The New York Times
By JACK EWING JUNE 28, 2017

artificial intelligence threatens broad categories of jobs previously seen as safe from automation, such as legal assistants, corporate auditors and investment managers. Large groups of people could become obsolete, suffering the same fate as plow horses after the invention of the tractor.

“More and more, we are seeing economists saying, ‘This time could be different,’”......among the economists in Sintra there was plenty of skepticism about whether the Robocalypse is nigh......Robocalypse advocates underestimate the power of scientific advances to beget more scientific advances, said Joel Mokyr, a professor at Northwestern University who studies the history of economics.....Hal Varian, the chief economist at Google — whose self-driving technology may someday make taxi drivers unnecessary — said that the plunging cost of information technology “has virtually eliminated the fixed cost of entering a business.” Companies can rent software and computing power over the internet..... disruptions caused by technology help account for rampant pessimism among working-class and middle-class people across the developed world.
artificial_intelligence  automation  Benjamin_Bernanke  central_banks  David_Autor  developing_countries  economists  fixed_costs  Hal_Varian  job_destruction  job_displacement  job_loss  Joel_Mokyr  pessimism 
june 2017 by jerryking
The Amazon-Walmart Showdown That Explains the Modern Economy - The New York Times
Neil Irwin @Neil_Irwin JUNE 16, 2017

The decision by Amazon and Walmart to compete for my grocery business — as well as for space in my closet — is a tiny battle in a war to dominate a changing global economy.

And for companies that can’t compete on price and technology, it could cost them the shirt off their backs.....[Amazon's purchase of high-end grocery chain Whole Foods places it] on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.

Each one is trying to become more like the other — Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.....in turn...this has more worrying implications for jobs, wages and inequality.

Amazon vs. Walmart

Both want to sell everything!!!!

Walmart is buying Bonobos, an omnichannel innovator. Its website and online customer service are excellent, and it operates stores in major cities where you can try on garments and order items to be shipped directly. Because all the actual inventory is centralized, the stores themselves can occupy minimal square footage. The acquisition helps Walmart build expertise in the very areas where it is trying to gain on Amazon.

Walmart and Amazon have had their sights on each other for years, each aiming to be the dominant seller of goods via omnichannel.

Amazon's purchase of Whole Foods helps it to understand the grocery business which has a whole different set of challenges from the types of goods that Amazon has specialized in heretofore.

A Positive Returns-to-Scale World
The apparel business has long been a highly competitive industry in which countless players could find a niche.....any shirt-maker that tried to get too big rapidly faced diminishing returns.It would have to pay more and more to lease the real estate for far-flung stores, and would have to outbid competitors to hire all the experienced shirt-makers. The expansion wouldn’t offer any meaningful cost savings and would entail a lot more headaches trying to manage it all....in the digital economy, rather than reflecting those diminishing returns to scale, show positive returns to scale: The biggest companies have a huge advantage over smaller players. That tends to tilt markets toward a handful of players or even a monopoly....The apparel industry...is moving in the direction of being like the software business (high fixed costs, zero variable costs, enormous returns to scale)..... the reason why Walmart and Amazon are so eager get into the shirt business is because retailers know that they need to figure out how to manage sophisticated supply chains connecting Southeast Asia with stores in big American cities so that they rarely run out of product. They need mobile apps and websites that offer a seamless user experience so that nothing stands between a would-be purchaser and an order....Larger companies that are good at supply chain management and technology can spread those more-or-less fixed costs around more total sales, enabling them to keep prices lower than a niche player and entrench their advantage....large companies will invest in automation/robotics...the future of clothing/apparel might be a handful of companies with the very expensive shirt-making robots---and everyone else shut out in the cold.

What It Means for the Economy

A relative few winners are taking a disproportionate share of business in a wide range of industries....in turn may help explain why the income gap has widened in recent years. How much on income inequality is driven by shifting technology — as opposed to changing corporate behavior, or loose antitrust policy — is an open debate.
increasing_returns_to_scale  winner-take-all  fixed_costs  variable_costs  Amazon  Wal-Mart  Whole_Foods  retailers  economics  Bonobos  shirts  mens'_clothing  omnichannel  apparel  digital_economy  automation  robotics  competitive_landscape  market_concentration  barbell_effect  income_inequality  antitrust  market_power  corporate_concentration  grocery  fresh_produce  supermarkets  large_companies  UX  inventory-free  global_economy 
june 2017 by jerryking

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