Our Take

Musings on the Foodservice Industry

The UBER of Food

Jul 24 2014

If you do not know what UBER is, look it up. The short version is that UBER is a Silicon Valley company that changed the old established business of taxi service. UBER makes mobile apps that connect passengers with drivers of vehicles for hire and ridesharing services. The company arranges pickups in dozens of cities around the world.

Traditional taxi companies are furious. Taxis must pay for “medallions” controlled by cities to regulate the number of cars in service. In theory, “medallioned” cars are inspected for safety and driven by trained drivers to insure safe passage and fair pricing. If you have ever hailed a cab in a big city, you might question that outcome. The monopoly power exerted by taxi companies and the municipalities that back them created the demand for a modern service that is responsive and priced fairly. In other words, a free market system. 

Most government regulation originates from big companies that lobby the government on some false premise, usually public protection. The reality is that big companies attempt to drive up the cost of delivering a product or service in order to drive out smaller competitors that are not in a position to finance the cost of compliance.

UBER, like many companies before it, disrupted an established business model so consumers get better, faster, cheaper goods and services. disruption

The food industry is dealing with disruptions too. Think of Amazon Fresh; Open Table, Yelp and Restaurant Depot to name a few. Each of these companies saw an opportunity to create a more efficient, faster, or less expensive way to serve customer. This is how change takes place today.

You have to live with the constant threat that someone will figure out how to do what you do better, faster, or cheaper. As a result, you have to challenge the status quo in YOUR business and force yourself to be both more effective and more efficient.

Look at your business, what problems have you accepted because of the belief that “that’s the way it is?” Look carefully at the regulations that “control” your workflow. Think deeply, if you could eliminate a law, what would you do differently? You likely have a competitor who has already asked that question and is working on a solution. Think it can’t be done? California passed a law outlawing the sale of foie gras or goose liver. High-end restaurants just charged more for wine and “gave” patrons the foie gras.

Another example is San Francisco’s Healthy Food Incentives Ordinance, commonly called the “toy ordinance.” The law precluded fast-food companies from giving away toys in kids’ meals unless they met certain nutritional criteria. Instead of meeting these standards, fast-food companies started charging for toys rather than including them free.

The taxi guys were certain that just paying for a piece of metal to rivet to the hood of their car ensured them a lifetime of high fares paid by people standing in line to pay it. Our world is disrupted, now is the time to think through how you survive and not get UBERED.