Your restaurant probably operates on tight margins (5 – 6% on average). Between supply chain management, marketing, and employee turnover, you deal with a plethora of variables. In the past, maximizing these variables meant thinking outside-the-box. Dick and Maurice McDonald figured out how to streamline outputs. Chick Fil A discovered how to leverage empathy. Meanwhile, Starbucks nailed branding. Enter Big Data. The question is: can you boost restaurant sales with big data?
What if you could maximize profits without resorting to untried (and expensive) operating methods? Think about an algorithm created from billions of points of data. One that garners immediate, meaningful results for your restaurant.
That’s the world of big data. Sure, branding and unique operations can still be critical drivers of success. But, data is one pillar that can instantly set you apart from your competitors. Packed in each customer interaction is billions of data points waiting to be utilized. They can tell you what your customers want and how you can create food faster, better, tastier, and at scale.
From the kitchen to your website, data can transform your restaurant.
Below, we talk about how restaurants can use big data to create tangible results.
What is Big Data Anyway?
Big data is everywhere. It’s mentioned in tech news articles, vendor software documentation, and almost every business-related blog on the planet. However, the term itself is a little confusing.
Big data isn’t so much about the data set itself; it’s what you do with it. Leveraging big data is also about using data intelligently, garnering meaningful business results from that data, and gathering it at every customer touchpoint. And there are many customer touchpoints in the restaurant industry.
Customers interact with you in-store, engage with you on social media, order from your online portals, and browse your website to look for menu information.
That’s a lot of data!
Hence big data.
In fact, we’ll have more than 40 trillion gigabytes of consumer data by 2020. That’s 1.7 MB of data per earthling per second. Sure, many points of data equal a data set. However, that doesn’t really explain big data’s significance. Essentially, big data is helpful only when you do something with it.
This is where data analytics, data scientists, and AI come into play.
The number one question about big data? Basically, restaurants want to know how they can transform all of that data into real money.
Understanding Big Data in the Restaurant Industry
Restaurants are the perfect blend of art and science. The kitchen pumps out delicious food for hungry diners. Meanwhile, the management team combines thoughtful business practices with key technologies to boost profits and earn new business.
Big data is similar. It’s an art and science. Finding ways to gather data, employing real-time data streaming, and using the right programs to store data is the art. The analyzing aspect — that’s the science.
And it pays. Businesses that use big data analytics see an average profit boost of 8 – 10%. Pair that with the average 10% reduction in costs, and you’ve got yourself an ROI machine. Heres’ why 79% of business execs say that ignoring big data is seppuku — there’s simply too much opportunity in data.
In a nutshell, big data means big profits. But, how? Below, we discuss 5 ways restauranteurs can use big data to their advantage.
1. Create Better Online Ordering Systems
So, maximizing your online portal’s value is crucial. And big data can help you do it.
Do you offer coupons? Great! How are your customers using them? Do they order pizza? What other kinds of foods do people who order pizza typically eat? Big data gives you the answers.
You can track customer order behaviors and use them to display recommendations to customers. Or, you can use big data to garner information on how much customers spend when they’re using coupons.
5 ways Restaurants Can Utilize Online Ordering Data
- Track coupons across channels to discover where customers are coming from and which source delivers the highest quality leads.
- Discover popular menu items.
- Figure out which coupons work best (both in terms of volume and ROI).
- Find out where customers are getting sidetracked during the ordering process.
- Garner intelligent behavioral data to provide insights on customer menu browsing methods.
This list isn’t exhaustive, of course.
However, utilizing one of the above insights can be huge for your restaurant. If you figure out which channels are most successful with coupons, you can reroute more marketing efforts to that channel. When you discover what menu item combinations are selling best, you can drive more profits. There’s tangibility in each of these strategies.
Your online ordering system is like a data cyclone. It captures all of the digital footprints that lead up to a purchase. All of the behaviors that begin with a click to your portal and end with a confirmed purchase are measurable, recordable, and useable.
To harness big data insights, you need a smart, sophisticated ordering system. Of course, you could pair your antiquated online portal with some of the modern digital SaaS offerings, but you’ll be adding additional data silos on top of your system. This can ultimately degrade the end quality of that data.
2. Leverage What Your Customers Want to Eat
The more you know about what and how your diners eat, the better prepared you’ll be to service those needs. For example, if you understand what kinds of food your customers order in the morning, you can recalibrate your menu and prepare the right ingredients ahead of time.
Knowledge is power. Some of the more prominent food brands already use big data to discover consumer tastes. For instance, Pizza Hut installed digital menus that track customer eye movements to garner information about the kinds of foods customers liked best. Meanwhile, Burger King’s mobile app tracks customer purchasing behaviors to help with broad menu reengineering. Not to be outdone, Starbucks uses big data to help provide best-of-breed UX through menu recommendations, which they say results in 18% of their customers driving 36% of their sales!
All things considered, you don’t have to be a big wig to nail big data. Oriole — a Michelin restaurant in Chicago — uses big data to figure out who its repeat customers are. Since Oriole can only seat 100 people a night, they depend on use analytics to cater specifically to repeat customers.
Meanwhile, Dicky’s developed its own in-house big data solution — Smoke Stack — to discover which items should be on its menus.
Each new menu item must meet the following specifications:
- high sales potential
- simplicity of preparation
- high-quality selection
- peak brand recognition potential
Additionally, if Dicky’s is having a particularly slow day at one of its locations, it will send out coupons to offload its excess inventory.
All of the above is accomplished by the simple mixture of data and algorithms.
3. Optimize Your Daily Workflows
Big data may be an incredible consumer-facing tool. However, it also shines as a management assistant. Undeniably, reducing labor, food, and operational costs can be massive for restaurants. Going from a 5% margin to a 6% margin is a 20% profit bump. Big data can help you find areas of revenue leakage and provide insights to increase your takings.
Are there specific dishes you can create from repurposed ingredients to drive profits? Can you reorganize staff to lower labor costs? Do your produce shipments cost more than they should? Is there a way to revamp your menu to move people towards specific menu items?
Big data figures this out for you. By combining all of your guest, labor, shipping, and behavioral data, you can determine exactly what’s happening at your restaurant and make the necessary changes to create new profit avenues.
Here’s an example: Levy’s provides food service for over 45 sporting events. It uses big data to figure out customer food purchasing and consumption trends during big games. This helps optimize sit-down workflows and as a result, Levy’s can position employees at the right touch points during game events.
Remember Dicky’s? It uses big data to dispatch additional resources to any of its locations by the hour! If a restaurant has low KPI scores, big data helps it deploy the right resources to correct those scores almost instantly. That’s the power of big data!
4. Improve Your Marketing Mojo
When it comes to marketing, big data is crucial. You’ll want the highest return-on-marketing-investment (ROMI). Really, you NEED a high ROMI to compete in today’s limited services industry. 60,000 new restaurants open their doors each year, but 50,000 eventually close them. Winning at marketing is how you keep your doors open.
Yet, winning doesn’t just rest on creating compelling campaigns. You need to know who to target and when to target them. So, how do you use big data to figure that out?
Let’s take Fig and Olive as an example. It tracks all of its customer purchasing behaviors and leverages them in marketing campaigns. Recently, it sent out “we miss you” emails with coupons to select customers who met specific criteria but hadn’t visited in nearly 30 days. The results? $36,000 in sales — or 7x the cost of the program itself!
Dicky’s Smoke Stack takes this to a new level.
First, Dickey’s figured out that customers who finance Ford vehicles within 30 minutes of the store are prime advertising targets. Next, it also figured out that most of its guests have dogs and love fantasy football. So, it now targets those verticals in advertising campaigns. Yes, big data provides granular results to help you drive profits.
That said, you don’t have to build a hyper-complicated cloud-based big data solution to utilize big data. Your social media campaigns already use big data! You just need to figure out how to optimize it. The same can be said for your online portals. What kinds of customers are ordering your food? Which channels are they coming from? What do they like?
Figure it out, and use it to create better marketing campaigns.
5. Implement A Better Restaurant Expansion Strategy
Determining the best location for expansion requires some forward thinking.
You have to consider:
- Your target demographics
- Area competition
- Real estate costs
- Labor costs
- Location nuances
- Local ordinances
- Cultural habits
Opening a new location requires A TON of data. If you’re thinking about using big data to figure out your next location, you aren’t alone. Starbucks relies on big data to scout store locations. Meanwhile, Marco’s combines population density, income, psychographics, competitor, and behavioral data to choose ideal locations for each restaurant.
Opening a new location is a significant investment. And big data helps make that investment worth your time and energy.
What 9Fold Can Do For You
While much of the restaurant world is still in-the-dark when it comes to big data, many brands are already combining big data with unique marketing campaigns to drive real, meaningful results. As restaurants lag behind other consumer-facing businesses in both big data adoption and utilization, there will be a massive gap in the market that savvy restauranteurs should take advantage of.
Standing out from the crowd, keeping your doors open, and crushing your competitors may be a data point away.
So, are you interested in leveraging real consumer analytics in your online ordering portal to your advantage? Want to track what channels consumers are coming from and combine that with extensive couponing capabilities and email marketing? Contact us! 9Fold gives you the tools you need to win more customers in the digital age of food consumption.