As more restaurant operators choose to create their own proprietary technology solutions — including big name brands like Domino’s Pizza, Wingstop, and Sweetgreen — the build vs. buy decision has become one of the most hotly debated topics in the industry. That debate took centerstage at Informa’s FSTEC conference in Grapevine, Texas. last week, where operators from Papa Johns and Kura Sushi (representing the “build” side), Potbelly and Brooklyn Dumpling Shop (representing the “buy” side) and Dine Brands (for both sides) discussed the merits and challenges of both.
Here are some of the pros and cons of each side from the Buy Vs. Build panel at FSTEC that can help other operators figure out which option (or combination) is best for their brand:
Build: Ownership and control
One of the biggest points in favor of building proprietary technology is having full control over both the technology itself and the customer and company data that comes out of it.
“Knowing we don’t have to outsource everything, and we can scale and take the approach we like, is a huge benefit,” Jamie Riley, vice president of information technology for Kura Sushi, said.
Dine Brands, parent to the IHOP and Applebee’s Neighborhood Grill & Bar concepts, has a mix of both proprietary technology and vendor partnerships, but it uses in-house technology specifically for the website and app. Being able to customize what the customer sees is crucial to brand elevation:
“On the build side, it’s about owning and differentiating the experience,” Chris Padilla, vice president of brand technology for Dine Brands, said. “For us, it matters most on the consumer journey. That’s why we want to pay attention to owning the process and leveraging our scale.”
Buy: Building is a slow process
That being said, even though building technology can let operators completely control both the technology experience and the data that comes out of it, the process can be slow-going, particularly since operators have plenty of other operational hurdles on the table.
“The full life cycle of product building involves quarterly product planning, and technology is a small portion of the strategic planning needed to make sure all cross-functional resources are aligned to that strategic vision,” Sarika Attal, vice president of enterprise architecture and store platforms for Papa Johns International, said.
Riley added that building a piece of technology from scratch is a very “slow process” so as not to “disrupt the current systems.”
Build: Product differentiation
The operators on the build side agreed that differentiation through custom-built technology is most important on the consumer end, especially as that’s when elements like branding and marketing come into play. Brands don’t want customers to have the same experience moving across different restaurant apps.
“We apply a very simple principal: Buy for commodity and build for differentiation,” Attal said. “We have a hybrid tech stack and every time it comes down to where do we want to differentiate our customer experience and control their journey and own that data.”
Buy: Cost-effectiveness
Another point for the buy side is that it is much cheaper to partner with existing vendors rather than trying to use the company’s time and financial resources to invest in a new piece of technology. This is especially important for emerging operators.
“Being a startup and earlier in our journey, we have 10 locations and the focus on cost and resources are our two biggest criteria when choosing tech,” Shaina Himelstein, head of operations excellence for Brooklyn Dumpling Shop, said. “It’s cheaper to go with third-party vendors who have the reputation, skillset and tools to assist our franchisees. We have eight corporate employees, so being able to rely on vendors is what we focus on.”
Build: Easier than it used to be
It used to be impossible to build your own tech stack without a full team of software engineers, but as Attal pointed out, nowadays, there are code generation tools and development operations tools that can help operators learn on their own.
“This is building the confidence at a lot of brands to start from scratch even at a smaller scale into different parts of their ecosystems,” Attal said.
Buy: Partner with the experts
For operators on the “buy” side, a strong partnership was the key to confidence in using off-the-shelf technology instead of DIY tech stack elements.
“Look for partners with experience,” Jeff Douglas, senior vice president and CIO of Potbelly, said. “We don’t want to be the first. Take a look at their road map and note -- is this a stagnant product or are they evolving it? We don’t want to implement a solution just for today and have to change something after that.”
Both: Customization is key
Whether you’re building your own technology and partnering with a vendor for an off-the-shelf solution, customization came up over and over from both sides of the debate. Different brands have different tech needs, and a good vendor partner should be able to work with an operator to build a customization — if not, it might be time to give DIY technology a try:
“We ask ourselves, ‘Are they flexible? Are they open to certain customizations with your tech stack?’” Himelstein said. “For us, integrating with our lockers is a must…. I’d rather go with a vendor that’s slightly more expensive if they can meet the other criteria we’ve laid out.”
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