When Ray Reddy was a product manager at Google, he learned a trick from Larry Page: the toothbrush test. If you can use a product twice a day, it will become habit-changing. A ritual.

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Reddy took this premise and applied it to the last frontier of digitization: the local market. His mobile pickup app, Ritual, delivers the one thing a global giant like Amazon can’t: a hot coffee on your way to work, and a burger that’s ready when you arrive at the food court.

“Line-ups annoy me,” Reddy told the crowd at RBC Disruptors, our monthly conversation about technology and innovation.

As Ritual’s CEO, he’s working to make lines a thing of the past, allowing customers to place orders ahead of time. It’s shaving time off daily routines, and creating a new way for eateries to attract new clientele.

In just five years, Ritual has grown from a test bed in Toronto to a global company operating in Canada, the U.S., the U.K and Australia. Reddy is looking to triple their restaurant count by the end of 2019.

At its core, Ritual is about connecting the physical and digital worlds by monetizing the local, in-person experience. It’s an area ripe for disruption.

Local businesses have fallen significantly behind larger companies that have the time, money and talent to make big investments in the digital future. A BDC survey of small and medium businesses found that only 19% have strongly adopted digital technology and culture. More than half of SMEs were described as having “weak digital maturity.”

As he studied the problem, Reddy concluded that the reason previous attempts to digitize the local market had failed was because of a lack of density. People don’t care if you cover 500 restaurants — they care if you cover the 15 restaurants closest to them.

“We benefited from the 15 or 20 companies that tried before us,” Reddy said. “We’ve been able to analyze why they failed.”

Ritual took a block-by-block approach, making a product that was compelling for just one neighbourhood before moving on to the next one. For businesses, Ritual offers exposure to new customers — and access to data about their clientele that they’d been missing out on in the analogue world.

“Once you give people data, it’s hard to imagine how you ran a business without it,” Reddy said.

Now as the company scales, it’s confronted with the challenge of making the digital work with the physical.

Small businesses are entering a digital market where expectations are high. “Customers have been spoiled,” according to a recent McKinsey report. They expect a seamless user experience – no surprises, no delays. Companies have to go beyond automating an existing process, reinventing the entire business process to offer greater value and cut the number of steps required.

If a Ritual customer arrives at a food court and can’t find their order, or a bottleneck means it isn’t ready in time, that’s a problem — and it does happen. Restaurants and food courts weren’t designed for the digital user. So Reddy to helping to reshape their layout for a new era.

This means putting the pickup window front and centre, adding vertical shelving to accommodate all the orders that are ready for pickup, and making staffing changes to shift cashiers into “concierge” roles focused on connecting customers with the food they’ve pre-ordered.

As digital food ordering expands, it has interesting implications for the physical world. If 60-70% of customers are discovering a restaurant through an app, it doesn’t need to be located on a busy street. It can move to where the rent is cheaper. This is giving rise to “dark kitchens” operating outside city cores, purely focused on food delivery.

The digitization of our towns and cities is just getting started, and the stakes to get it right are high. Digitally advanced companies are 62% more likely to have enjoyed high sales growth, according to the BDC report on small and medium businesses.

In 2019, when your local mom-and-pop shop is competing with Silicon Valley, that’s a game changer.


John Stackhouse is a nationally bestselling author and one of Canada's leading voices on innovation and economic disruption. He is senior vice-president in the office of the CEO at Royal Bank of Canada, leading the organization's research and thought leadership on economic, technological and social change. Previously, he was editor-in-chief of the Globe and Mail and editor of Report on Business. He is a senior fellow at the C.D. Howe Institute and the Munk School of Global Affairs and Public Policy. His latest book is Planet Canada: How Our Expats Are Shaping the Future, which explores the untapped resource of the millions of Canadians who don't live here but exert their influence from afar.

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