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Despite the importance of data, it remains largely an untapped opportunity for operators.

Why customer data is the holy grail of restaurant success

Nearly half of operators say they’re not optimizing their data enough, but it’s the key to unlocking better customer relationships and return rates

For the modern restaurant, data is power. Data can tell you approximately how much beef you need to purchase for a typical Saturday evening shift, and it can tell you how many employees to put on the schedule for that evening, and perhaps most crucial of all—it can tell you what percentage of customers are ordering a beef entree, where they come from, and how likely they are to return on the following Saturday night.

But despite the importance of data, it remains largely an untapped opportunity for operators. In fact, according to the 2023 Restaurant Technology Outlook survey recently released by Nation’s Restaurant News, seven out of 10 operators question whether they're optimizing the customer data they already source. Only one-third of operators believe that they’re definitely or probably optimizing data overall, while 43% of operators say the opposite. 

So, how can operators turn this trend around and begin educating themselves to better optimize performance and customer satisfaction?

While we will cover other types of data (including employee-facing, supply chain, and security data) moving forward, right now we’ll be focusing on how to best collect, optimize and use customer-facing data to your advantage.

“The most advanced operators understand that guest data is their lifeblood, and that it should be used not only for marketing, not only for operations, but for improvement across the entire operation,” William Wilson, CEO of Bloom Intelligence, an AI-powered restaurant marketing platform, said. “[...] I don't go out and make decisions around any of the businesses that I own and operate based upon my gut […] We measure everything, from selling cycle to customer reviews. This allows us to make intelligent decisions. Otherwise, you’re just playing in the dark.”

How do I collect data?

Likely, you are already collecting plenty of customer data through multiple mediums. From the moment a customer orders food through first-party delivery or makes a reservation, you get some data through them. Even if all they do is walk in through the door and swipe their credit card or pay through Apple Wallet, you can collect information about them (including name, phone number, zip code, etc.), through what Peter Dougherty, executive vice president and general manager of hospitality of POS platform Lightspeed, calls “customer touchpoints.” These simple interactions are already part of the day-to-day operations of a restaurant, but you can also go even further in your initial reactions with customers to begin to build a profile on them:

“When a customer walks into your restaurant, the key factors you have to know are have they been here before, how much do they spend in my restaurant, and what are their dining preferences? Do they usually order chicken or fish? Red or white wine?” Dougherty said. “It’s about understanding diner preferences not by asking them these questions outright but by having your POS [or data tools] build a profile of them without them even realizing it’s happening.”

By building customer profiles via your point of sales system, you can couch “recency and frequency” of guest visits and start to infer customer behavior. But if the only way you learn information about customers is when they swipe a credit card at your restaurant, you’re missing out on opportunities. According to the NRN tech survey, most operators (58%) get their customer data from daily transactions or from loyalty programs (53%).

For some, email marketing (47% of survey respondents) – or the more modern versions of these marketing tools: SMS and push notifications — is an opportunity to both collect data about customers through collecting their email addresses, and using profiles you’ve built on them based on their ordering habits to start utilizing data to create more personalized digital experiences for guests.

How do I use data to drive digital marketing tactics?

This is exactly what Kristen Corral, cofounder of Las Vegas emerging plant-based taco concept, Tacotarian, does. The brand started using MailChimp to curate an email list of loyal customers and have since migrated to Toast’s email marketing tool. Email, she said, is much more reliable than social media, which is more fickle and the reach is algorithmically based so you can’t guarantee your posts or ads will be seen.

“I can take my email list and then I can upload it and create a Facebook ad audience based on only people that subscribe to my email list,” Corral said. “[…] I can email people that are just customers of our Las Vegas store or just customers of our San Diego store. […] I think restaurant owners in general fail to understand how to reach out to their customers and retain them. You can get them to come in, but how do you get them to come back? Maybe you send them a coupon for free dessert on their birthday or you send out an automated email to frequent guests that have not dined at your restaurant in more than 30 days with a $5 off coupon.”

To summarize, email marketing may be as old as Internet shopping itself, but the data collection and integration portion of it is new and more relevant than ever. You could even begin implementing the same techniques to SMS marketing and app push notifications. Text message marketing should only be reserved for special occasions, Kim Teo, cofounder and CEO of mobile ordering and payments platform, Mr. Yum, said, since a constant barrage of brand texts would be a very quick way to get customers to block your number. But they do have a higher read rate than emails. In-app push notifications are usually for your most loyalty customers, since they’re (usually) the ones that liked you enough to download your app.

“Email marketing may be 15-year-old stuff but what being able to collect that transaction data linked to a profile has really been a gamechanger,” Teo said. “And that has really only been a thing since post-COVID. Prior to that, your favorite restaurant or coffee shop didn’t necessarily know who you are, unless you had a loyalty profile created with them. So now, being able to collect that basic data has been a huge catalyst.”

Are customer surveys worth implementing?

Another method of collecting data is through partnering with customer survey companies like Tattle, which prompt customers with questions about the quality/temperature/timeliness of their food order. This method might not work for all brands or demographics (some customers would be too impatient to sit through a survey after a digital order), but it’s a way to not only collect data about who your customers are, what they’re ordering, and how often, but what exactly they thought about the experience. According to NRN, only 43% of operators procure customer data from surveys. 

This has been a successful method of customer data collection for Jamba and Auntie Anne’s parent company, Focus Brands.

“Just asking customers how their experience was has been a tremendous source of information because it tells you directly what they liked about it, what they loved about it, and what might not have been as ideal,” Claiborne Irby, senior vice president of strategy and insight at Focus Brands said. “[…] For example, we were able to fairly quickly get to the root cause of a programming issue where we had flipped the ordering options on our website, where if you ordered one thing, you got the other. So that was a user experience design opportunity that came from our data.”

How do I integrate this data and put it to use?

Now that you’re more in tune with the data you’re either naturally collecting through customer purchases that go into your POS system, or through other outside vendors, one of the biggest challenges is integrating and organizing your data.

“To take action with your data, you need to coalesce it into a digestible system, whether that’s a dashboard or database,” Troy Hooper, founder and CEO of Kiwi Restaurant Partners said. “It's just about bringing these different elements of the lifecycle together, […] so we can do something with it in the long run.”

For example, Focus Brands has narrowed its scope of data implementation over the years so that the company is not “swimming in data,” as Claiborne Irby said. The company created a common data platform for all of their brands in one place, figure out any anomalies, and work through the data in aggregate to understand what the customer wants and needs but might not be getting. In other words: the better you organize your data, the more you can get out of it to improve operations.

For the larger chains and restaurant groups out there like Focus Brands, translating and integrating your customer data might be the job of a chief information officer, but emerging brands will have to outsource these jobs since they likely don’t have the resources to hire a full-time CIO or CTO. However, that doesn’t mean smaller brands are out of luck:

“For emerging brands, keep collecting your data and try to put it all in one database so you can easily access it in one place,” Hooper said. “So that when a digital tool is presented to you that can interpret your data utilizing your existing database, then you will work faster than most to be able to leverage it and put the tool to work.”

How do I improve hospitality through data?

Although we’ve already given multiple examples of how to use data to respond to customer complaints and create personalized marketing tools for your biggest customers, another way to implement data is to automate hospitality. Just like a mom-and-pop restaurant might know their regulars by name and their preferred drink or entrée of choice, you can emulate that old-fashioned sense of hospitality by gathering data on your customers’ purchasing habits and implementing these findings for their next visit:

“If you go to an old restaurant and are served by someone who has served you 50 times before, there’s something endearing about that experience,” Kim Teo said. “But [with technology] you can broaden that experience to include an employee that just started in your restaurant yesterday and can surprise and delight any guest by knowing their birthday or bringing out a free tiramisu on their 10th visit.”

 In a sense then, utilizing customer data can help to democratize hospitality, so that every return guest can receive a special experience without relying on the long memories of servers.

What are the limitations of data today?

Of course, customer data is not a miracle cure-all for operators, even for those that know how to use it well. There are still challenges, like third-party delivery companies, which still keep much of their customer data behind firewalls (though that’s starting to change). Overall, the restaurant industry is behind many other industries when it comes to using customer data to build personalized guest profiles and marketing deals:

“Restaurants aren't using data in the full capacity that they can,” William Wilson said. “[…] Data is about intimately understanding your guest: who they are, their behavior, what they like and dislike, and then shaping your messaging around that information. Think about when you go to your Amazon homepage, it’s suggesting different types of products you would like and diving into your purchasing habits to serve you with information that is relevant to you.”

Ten years from now, could restaurant delivery portals look and feel more personalized like Amazon? It’s quite possible. The future of restaurant experiences could also be entirely personalized due to technology advances like facial recognition, license plate recognition and palm recognition (which is already being implemented with Panera in partnership with Amazon). Then, when you walk in the door of your favorite restaurant, the technology will immediately recognize you and tailor your experience based on the data it already knows about you. This might sound dystopian, but consumer needs are trending toward ever-personalized and hyper-specific retail experiences, and data is the number one tool that can help us get there.  

Contact Joanna at [email protected]

TAGS: Operations
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