Opportunity Analysis Report
Wrapped and Ready
Prof. Tom Byers
March 11, 2005
Convenience and innovation are ideas that have become irrevocably linked in today’s
society where consumer products are concerned. The same can be said about the
experience consumers have when they interact with the service industry. Online
shopping, self-checkout, and shipment tracking have become standard practices. One of
the few unexplored opportunities in this area is the restaurant experience. When people
go into a coffee shop or fast food restaurant, they still have to stand in long lines to order
food/drink before sitting down at a table and socializing.
There is a real opportunity to capitalize on this untapped market by introducing eWaiter,
an automated menu ordering system that allows the customer to order and pay via a touch
screen located at their table. The vision of eWaiter is to enhance and innovate the
restaurant experience by integrating cutting edge hardware technology with user-friendly
menu software. The eWaiter team plans to create Swipe n’ Serve menu software that will
provide the interface to the customer and integrate that software with wireless monitors
that are built into the restaurant tables. These eWaiter stations link the customer to the
restaurant staff for ordering. They also provide the restaurant the chance to still interact
with the customer by advertising its promotional ideas and keeping the customer aware of
the status of their order. Based on survey results, the potential of this product is vast and
should look very promising to eWaiter’s target customers. For a detailed visual
description of our technology, see Exhibit A.
There is a ready customer base for our product. The market that will benefit most from
our technology is the quick service restaurants and beverage retailers whose focus is on
increasing customer volume and differentiating their products in a highly competitive
industry. eWaiter will streamline the ordering process for retailers so that more
customers will pass through the store in a shorter amount time without increasing labor
costs. In addition, the eWaiter is a new way of interacting with end use customers that
has not been implemented on a large scale in any of the large quick service restaurant
In order to assess the end-user market of the eWaiter product we conducted an online
survey to learn about consumer behaviors, attitudes, and preferences. We collected 429
responses over two weeks and compiled the data 1.
The results of the survey show that there is a market need. 73% of respondents indicated
lines at coffee shops are a problem. If there is a long line, 61% indicated a willingness to
leave without ordering.
See Exhibit B for assembled data
The results also indicate that the eWaiter could be the product to meet this need. 84% of
respondents said they were open to the idea of using eWaiter and 54% gave strong
positive responses. In addition, those surveyed indicated that the eWaiter would enhance
their coffee shop experience. 34% said they would visit a coffee shop more frequently if
it had an eWaiter and 22% said they would order more drinks in one visit.
The potential for the eWaiter to expand beyond coffee shops is also promising. 71%
were open to the idea of using the eWaiter in fast food restaurants.
The global restaurant IT (software only) market is $1 billion annually 2. Internationally,
market penetration is 10-40%3. The underserved international market serves as a great
opportunity for growth, especially in densely populated areas, where long lines are a
problem. However, the eWaiter will only succeed in a country where labor costs are not
too low and the populous is accustomed to using electronics. Thus, Europe, Japan, and
possibly China are the most likely international markets for the eWaiter.
In the United States this market is projected to grow at almost 10% through 20064. The
market is highly fragmented and the most dominant player is IBM with a 19% market
share5. In the past, a lack of standards for restaurant point of sale systems meant that IT
systems were custom built for different restaurants 6. This paved the way for many
companies to enter the market with their own proprietary systems for their few
customers. However, the lack of standards made upgrades and flexibility difficult.
Recently, standards have been introduced for restaurant IT systems, and more than 50%
of restaurants plan to upgrade their systems within the next two years to improve
compatibility4. With standards, it will be easier to create the eWaiter such that it
integrates easily with the restaurants’ other line of software for accounting, customer
The main differentiating factors of restaurant IT systems are how the systems improve
employee efficiency and customer satisfaction 7. The eWaiter improves employee
efficiency by allowing employees to spend more time processing orders and less time
taking orders from customers. The eWaiter gives restaurants the power to serve their
customers faster, which in turn leads to increased customer satisfaction and creates a
Yin, Jim. “Enterprise Software Industry Research.” Ehrenkrantz King Nussbaum, Inc. 15 Feb. 2005.
“US Retail Springs for IT.” eMarketer. 07 Aug. 2002.
“Market Share of Point of Sale (POS) Software by Vendor.” Infotechtrends. 01 Feb. 2003.
Ferrara, Carol. “FAQ: POS – Getting What You Pay For.” Gartner. 21 June 2001.
Point of Sale (POS) Software by Vendor.” Infotechtrends. 01 Feb. 2003.
Butler, Steve. “IT Spending in the Retail Industry.” eMarketer. 15 Sept. 2003.
In the past, price was not as much of a factor in point of sale systems since different
companies offered different options. Now, with emerging standards, the feature set of
most IT systems does not vary greatly. Consequently, price has become a more
important factor. Since most restaurants are looking more closely at price, we must
consider first selling our product at cost in order to compete with other systems.
The key to the success of our product is based on how quickly we can scale up. It would
be to our advantage to partner with an entity such as Starbucks that already has a
distribution network in place to allow us to become immediately visible to the public.
As an incentive to enter into a partnership, we will sell Starbucks our eWaiter consoles
and software at cost initially. When our product is proven, a premium will be charged.
In addition, we will be able to adapt our consoles to Starbucks’ corporate strategy in the
upcoming years. To explain, Starbucks’ strategy to further expand into China can benefit
from eWaiter’s ability translate the Starbucks culture into local language and customs. In
addition, eWaiter can integrate with Starbucks’ HEAR Music division to allow the user to
order drinks and listen to music at the same time. Our ability to customize eWaiter
means the same technology can be used for other chain stores and demonstrates that the
model is scaleable.
The cost to fully outfit a coffee shop with the eWaiter system, including 15 table
consoles, is $25,000. In order for Starbucks to agree to a pilot program we will charge
them monthly fees at cost. For an expected three year product life this means about $700
per month. Once the product is proven, we can increase the price.
Based on survey results, the eWaiter will generate a 6% increase in new business for
Starbucks. This increase results from customers coming more frequently as well as
ordering more drinks in one stay.
For an average coffee shop that serves 1000 customers per day, this 6% increase means
60 additional sales per day. At about $4 per sale, this is $7,200 per month in revenue.
Take away the cost to produce each sale (~50%) and the monthly cost of the eWaiter
($700) and the coffee shop is still netting $2,900 per month.
If our volume projections are accurate, we could increase the $700 monthly price to as
high as $2,600 (73% profit margin) and still give Starbucks $1,000 per month in profit.
The hope is that once customers become familiar with the eWaiter and the superior
experience it provides, business will grow even more and both sides will benefit.
Customer demand will force Starbucks to expand the eWaiter system to all its retail
locations, and the eWaiter will become the industry standard because of its first strike
The primary risk that our product faces is that it will not be able to substantially increase
the volume of sales for quick service restaurants. If the customers find our consoles
difficult to navigate or inconvenient to use, then the added value of streamlined ordering
would be lost. Consequently, quick service restaurants would have no incentive to invest
in eWaiter. However, based on our market survey results, we are confident that
customers are ready for a change in their restaurant experience. Another risk is that there
are no great obstacles in creating similar products to eWaiter. The hardware technology
already exists while similar software can be developed. If we do not scale up quickly and
take a significant portion of the market share early on, we could lose the opportunity to
succeed in this industry. With our partnership with Starbucks and other large chains,
however, we will be able to quickly distribute our product through their network and
establish our brand.
eWaiter has the capability to expand the current customer base of the clients that
purchase it by offering innovation and improving the experience people have when they
go to restaurants. Survey results, discussion with restaurant managers, and observations
of market trends all signal that this is the appropriate time to fund and nurture eWaiter.
This allows it to realize its first-strike potential in a new, developing market. Early
partnerships and pilot programs with established companies like Starbucks will allow
eWaiter to gain its own following in the end-user market and attract other restaurant
industry customers. Premium charges after market entrance will be able to generate a
large amount of profit for eWaiter and its investors. It is important that the drive for
innovation continue, and the eWaiter team wishes for nothing else than to have eWaiter
and its investors be that driving force.
Exhibit B: Relevant Survey Results
Are the lines at coffee shops a problem?
10.0% 2.6% 0.5%
never 25% of the 50% of the 75% of the always
time time time
If there is a long line at the counter, do you leave without
10.0% 5.2% 6.0%
never 25% of the 50% of the 75% of the always
time time time
If the eWaiter was installed at individual tables and you could
order and pay from your seat, would you use it?
not at all probably not maybe most likely yes definitely
In one visit, would you order more drinks from the table eWaiter
than you would in a visit to a coffee shop without an eWaiter?
the same 1 more drink 2 more drinks 3+ more drinks
Would you visit the coffee shop more frequently if it had eWaiters
installed at its tables?
10.0% 4.0% 5.6%
much more more a little more the same