By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
Amidst so many sensationalized stories about COVID-19 or
politics throughout August, you may have missed the coverage of what is
potentially a gamechanger in the foodservice and retail industries. First
announced over a year ago, Starbucks is now readying to deploy a blockchain
network for end-to-end coffee bean traceability and greater product
transparency, and this will soon influence what motivates customers to buy at
your restaurant, sundry or store.
I love Starbucks. Not only are its products consistently
great but, as a former advertising exec, the company’s branding and marketing
are perennially some of the best in the world. While undoubtedly you can find
better coffee at independent cafés throughout the Mediterranean and Middle
East, as a global franchisor Starbucks has revolutionized the way the world
views and values coffee.
Awhile back, I wrote an article entitled, “Fast
Food Restaurants are Where Food Trends Go to Die,” describing how, by the
time you see a food trend being advertised by a major chain, it’s a mature
concept and can no longer generate buzz for your own business. The underlying
lesson here was to differentiate your product by not directly copying what
dining patrons could find everywhere else. Starbucks, however, may be the
exception to this principle in that it is the gold standard for premium coffee
service and often the trendsetter for the industry rather than a laggard.
In essence, if you can’t do better than Starbucks then why
even bother? Now after its latest partnership with Microsoft to build a
verifiable coffee production blockchain, Starbucks is raising the bar again –
where it goes, the competition will be forced to follow or inevitably lose
market share.
As a start, blockchain is far more than just swanky
cryptocurrencies like Bitcoin or Ethereum, and it would certainly help for you
to cultivate a basic understanding of how the technology works. You won’t need
to become versed in distributed systems architecture, but you should know how a
decentralized hyperledger with algorithmically linked – or hashed – and
timestamped transactions can be used to authenticate a product’s origins.
Plenty of resources exist online for you to peruse.
Now let’s look at how the application of blockchain will
evolve our current practices. Over a decade ago, hotels and restaurants started
to embrace the concept of ‘authentically local’ as a means of product
differentiation and commanding higher prices. For eateries specifically, the
locavore movement and reducing food miles became a way to simultaneously
improve ingredient quality, support the region, take a stance against
environmental degradation and justify upcharging customers to cover the
increased costs. But how do you truly know if something is local besides taking
a restaurant at its word?
Just as Burger King or Subway putting sriracha on the menu
signaled the omnipresence and inert familiarity with this once-buzzy, Southeast
Asian hot sauce, ‘local’ has also lost much of its luster simply because
everyone else is doing it. When you say that all your ingredients are locally
sourced, it still adds value to the experience, but this messaging can no
longer be assumed to be a primary motivator for customers to choose you over
the competition. And at the luxury end, local in all things is now a firm
expectation rather than a value-add.
Traceability, as powered by blockchain, is a strong contender
to be the local for the new decade because it deepens the trust that guests
will have with your products and it allows you, the purveyor, to source from
niche producers around the world while also limiting the unethical interloping
of middlemen. When it comes to marketing coffee, ‘single origin’ has been a
powerful trend for helping brand luxury products over the past five to ten
years as people can choose between beans produced on an individual farm or
small geographic territory in, say, Nicaragua versus from a Columbian finca,
enriching the customer experience in the process. Blockchain adds an extra
layer of security and authenticity to this model in that the beans are now
exactly where they say they are from.
While setting up your own blockchain is likely an
insurmountable task for any enterprise not approximating the size of Starbucks,
perhaps in the near future there will be a consortium blockchain that you can
subscribe to. Piggybacking on these networks may also entail many other
operations besides supply chain management, notably facilitating secure
contactless payments without the worry of chargeback disputes. In the
meanwhile, what’s important is that you grasp how this latest news will come to
heighten guests’ demand for digital product transparency.
Soon it will no longer be a matter of just listing all your
niche providers but being able to prove their legitimacy. This is not just for
coffee either, so think of every ingredient or item on display whose price
could be enhanced through more granular traceability.
Do you believe that showing the exact cow pasture where a
steak came from will allow you to charge more for that piece of meat? How about
chocolate where cocoa is mostly produced in West Africa and yet those countries
have largely failed to develop a homegrown direct-to-consumer industry because
of too much exploitation by nefarious wholesalers? What if, instead of
trumpeting your Belgian or Swiss chocolates, you vended products from an Ivory
Coast startup that used blockchain to verify that its beans were wholly
fair-trade or responsibly farmed.
Next, look beyond the restaurant to spas, gift shops,
in-room amenities or practically any other merchant related to a hotel where
craft goods are either sold or utilized to enhance the guest experience. While
blockchain is a lofty goal these days for just about any hospitality
organization, there are other ‘old school’ ways you can deploy in the meantime
to attain better product transparency, and you should consider them to help
drive revenues for the decade ahead.
About Larry Mogelsonsky
Larry Mogelonsky
One of the world’s most published writers in hospitality, Larry Mogelonsky
is the principal of Hotel
Mogel Consulting Limited, a Toronto-based consulting practice. His
experience encompasses hotel properties around the world, both branded and
independent, and ranging from luxury and boutique to select-service. Larry is
also on several boards for companies focused on hotel technology. His work
includes five books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule”
(2013), “Hotel Llama” (2015), “The Llama is Inn” (2017) and “The Hotel Mogel”
(2018). You can reach Larry at larry@hotelmogel.com to discuss hotel business
challenges or to book speaking engagements.
Email: larry@hotelmogel.com
Website: http://hotelmogel.com/
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