The most sought after secret weapon in the restaurant world is no longer a master chef or prime real estate; it’s big data. From online/mobile orders, to reservation services, to loyalty programs, restaurants are using data as a competitive differentiator. In 2018, 5% of total orders — or 2.8B orders — were placed digitally, up from just 1.7% in 2014. With total restaurant traffic staying flat over these years even as the total number of restaurant options rises, food purveyors are grasping for new angles to snatch up a share of the market.
NewtonX recently conducted a survey with 600 restaurants across the US that are collecting and leveraging customer data. The results revealed how restaurants are getting access to data, what they’re using it for, and what tools/partnerships are being used to turn data into a competitive advantage.
Personalized Promotions and Dynamic Menus: The Future of Data-Driven Dining
Increasingly, restaurants across the board — from fast-food to delivery to fine dining — are requesting diner data. The ways in which this data collection occurs vary based largely on dining type. For instance, Altamarea Group, a company that owns 16 Italian restaurants globally, uses a cloud-based reservation service that collects detailed customer data including allergies, wine preferences, and other various food tastes. Additionally, the company collects data on what customers order in the restaurant. So a diner who ordered a particular wine one time may be offered that same wine the next time they come in. The profile created from this data allows the company to offer personalized promotions and targeted offers.
However, SevenRooms, the Amazon-backed software powering Altamarea Group’s data-based personalization, is currently in the midst of a battle with OpenTable — the dominant restaurant reservation service in the US, over data ownership and access. According to the NewtonX survey, 78% of restaurants say any data collected on diners through a third party source belongs to them — to share with and use as they please.
Casual eateries have avoided the data ownership issue through providing their own apps and loyalty programs. For instance, the salad chain Sweetgreen uses its mobile app to get data on diners’ allergies and tastes, and then uses the information to make suggestions. The company has said that it expects its app to be able to make nutrition-based menu suggestions based on how certain foods make people feel.
In the mobile app space, Starbucks is an uncontested leader for how to turn an app into a data goldmine. A few years ago, the coffee behemoth opened its app up to all of its customers — not just loyalty members — and within three months gained an additional 5M customers. Starbucks also began requiring customers to check in digitally for afternoon “happy hours” as well as requiring patrons to login to the wifi with an email. The company is using its newfound customer data trove to offer targeted promotions and personalized offers.
Despite foodservice traffic being stuck at a less than 1 percent gain for multiple years, visits paid by mobile app have increased by 50% in the last year alone. Even fine dining restaurants have tapped into the need to provide personalized, efficient service that is accessible — at least in part— through mobile. When online reservations launched over 20 years ago, their primary selling point was ease of access; now that reservation companies have decades worth of data, restaurants and third parties are starting to realize what an opportunity that data represents.
Can Big Data Equal Big(ger) Margins For The Restaurant Industry?
The restaurant industry is notorious for its extremely low profit margins. Now, however, many tech companies believe big data could be the competitive differentiator to change this. Amazon’s Alexa Fund plans to introduce in-service, voice-enabled technology for the restaurant industry, while Cava, a startup mediterannean food chain that has raised $154.1M in funding, uses sensors along its queues to improve the ordering process and guest experience.
Investments in chains like Cava and SaaS platforms like SevenRooms indicate a shift in investment in the restaurant industry. What was once seen as an incredibly risky venture is now seen as an opportunity for disruptive technology.