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Eatsa and the Challenges of Innovation

As part of my job as a retail strategy consultant, I travel the country and the world preaching the need for innovation in an industry that is being overrun by the growth of e-commerce on the one hand and the generally poor experience at brick and mortar retail stores on the other. After dutifully cataloging the woes of the industry, I then give numerous examples of companies, large and small, who are changing the retail experience for the better through innovative new ideas.

Enter Eatsa, the fully automated restaurant that allows for seamless ordering via an app or ipad and tremendous speed of delivery, delivered into a touchscreen cubicle that harkens back to the day of the automat. Not only was the concept cool and fun, but also delivered some of the best technology I’ve seen. It is seamless, efficient and customer centric, offering real time feedback, as an example, with every order and a memory for past purchases.  In other words, a poster child for great disruptive innovation.

Eatsa recently announced a significant retrenching of their business, closing all of their New York stores and one in Berkeley, while retrenching back to their two San Francisco locations. This move is eerily reminiscent of another similar innovation darling, Pirch, who is also retreating back to its California base. Pirch offers a joyful experience in creating high end kitchen and baths, and like Eatsa, also is an example of a “too good to be true” customer experience. Yet, both have suffered in their quest to redefine retail.

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What are some key takeaways from these two innovation retrenchments?
  • Change is incredibly hard in an industry that is resistant to innovation. Not only do you need to get the concept right but you also need to get customers to come along with you. Meeting the sweet spot of what customers want and a profitable business model is incredibly difficult.
  • Retail expansion is extremely difficult. Like Pirch, eatsa’s decision to move across the country was probably fueled by the conventional wisdom of getting there first. Plant the flag in New York, as the wisdom goes, and you are well on your way to becoming a national chain and avoid someone else pre-empting you. I dispute this notion—eatsa would be better off building a brand in California first before jumping across country. A fledgling chain needs to manage their resources carefully. The rent factor and operational complexity of New York City is not one to be taken lightly.
  • Retail is hard but it begins with the basics. Even with great innovation, you still need to get the business basics right. For eatsa, this has to start with the menu itself and then move on to costs, operational efficiencies and the like. While I love eatsa technology, I’m not sure the menu is ready for prime time. Eatsa is focused not just on technology but also on healthy eating—is the world is ready for a concept built primarily on quinoa bowls? It’s great but very narrow.  For Pirch, delighting customers is one thing…making sure you are closing and converting traffic to sales is quite another. Retail may be changing but basic retail math does not.

As a teaser among the bad news, eatsa suggested this technology platform will soon appear in other restaurants. It would be great to see this applied to other retail businesses—it doesn’t need to be limited to their food platform and the technology is really spectacular.

Like any innovation idea, I urge existing brick and mortar retailers to see beyond the limitations of the current business model and focus on what lessons can be learned from the disruption. While eatsa has suffered a setback on its way to becoming a chain, the question I ask when I present this case doesn’t change—how can you adapt the great ideas of an eatsa or a Pirch to reinvigorate an existing business.? The lessons are there even if the originator struggles.

Neil Stern for Forbes


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1 Comment
  • Gary Beckerman

    October 26, 2017 at 2:23 pm Reply

    Thanks Neil. I ask readers who follow Neil’s Forbes articles and McMillan Doolittle blog, is there any strategic consultant out there better? No, presently Neil is the brightest…Gary B.

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