Data Wars: A Guide to Restaurant Success in the Digital Era
The restaurant industry is in the midst of a digital revolution, facing a new challenge: the lack of access to valuable customer data. Beyond recipes and flavours, key information is at stake, and many restaurants are not yet fully aware of this growing threat. It’s time to understand the critical importance of maintaining and managing this data to ensure a restaurant’s control and success.
In this article, we will explore where this problem lies, the importance of this data in today’s landscape and provide key strategies that will enable restaurants to not only handle information effectively, but also ensure their triumph in this ever-evolving digital environment.
The rise of food delivery has transformed the restaurant world. Approximately 70% of restaurants in Spain have partnered with one of the big delivery platforms (Uber Eats, Glovo and Just Eat). However, this phenomenon has revealed a problem that has not yet received the attention it deserves: the lack of information about the restaurants’ customers.
The dilemma is that while delivery companies are a great start-up option to launch a brand, as they promote them heavily, they do not share customer data with restaurants. This poses a significant problem, as experts say that, in many cases, revenue from these platforms can make up more than 40% of some restaurants’ total revenue. In other words, almost half of a business in this circumstance is under the external control of the marketplace, making it the dominant player that will determine the future of the business. The non-access to customer data translates into the loss of an essential element for the success of any restaurant. In this scenario, restaurants are operating in the dark: they receive orders but lack visibility on who their customers are, and even regular customers may go unnoticed.
Why is this happening? In this age of comfort and immediate access, fast food chains have embraced the power of delivery to reach their customers in new ways. In the aftermath of the pandemic, many establishments turned to these platforms as their lifeline. However, over time, they have come to realise that, while this solution was beneficial in the short term, in the long term it seriously harms their restaurants.
The commissions of these companies, which range from 15% to 35% of the sales of an order, represent only the tip of the iceberg. In addition to depleting profitability, restaurants are virtually paying hefty commissions to have their customer data fall into the hands of third-party providers.
You’re probably wondering,“what data are we talking about?” Let’s explore what are the main types of data that third party delivery companies keep to themselves.
Personal Data: This data includes customers’ personal information, such as their gender, name, address, date of birth, telephone and email address.
Behavioural Data: This encompasses information detailing how customers interact with the platform, including their food preferences, frequency of consumption, order history, as well as average order costs.
Attitudinal data: This type of data reflects customer attitudes and preferences, manifested in metrics related to customer satisfaction, service quality, product desirability, purchase criteria, and other factors influencing the customer experience. This information is gathered through surveys and feedback.
Having gained an understanding of personal, behavioral, and attitudinal data – the key ingredients for gaining a deeper understanding of customers – let’s redirect our focus. Now, we’ll explore how this treasure trove of customer insights plays a strategic role, steering the marketing efforts of delivery platforms and reshaping the restaurant scene.
Undoubtedly, through complete ownership and control of customer information, delivery platforms use this data to their own advantage. This means that the marketplace can carry out marketing campaigns to promote their own brand and increase their presence in the market. However, in this process, a conflict of interest arises. The marketplace is primarily interested in ensuring that people continue to use its service to place orders, whether it is at one restaurant or at a competitor’s establishment.
These platforms evolve into data monopolies, holding intricate details on when, where, and by whom orders are placed, thereby commanding significant market power. This monopoly status not only empowers them to promote their own brands and retain customers within their platform but also grants them the authority to shape the narrative and determine which restaurants are successful and highly visible, and which are not. They even possess the capability to monitor the demand and growth potential of particular food types in specific neighbourhoods, enabling them to favour specific restaurants and enhance their visibility through targeted marketing strategies within their app. Definitely, the main goal of these companies is not to promote restaurants, but to boost their own business and get commissions for each order placed through their platform.
This approach can be straining for restaurants that rely on the marketplace, as they need to access their data to gain a deeper understanding of their customers and provide a more personalised service. Consequently, investing in marketing strategies and loyalty programs not only strengthens customer relationships, but also results in a significant increase in revenue, giving restaurants greater control over the direction and performance of their business.
Harvard Business Review supports the idea that retention is more cost-effective than acquisition, stating that attracting new customers costs five times as much as retaining existing ones. In addition to the savings associated with loyalty, this strategy generates higher revenues, as loyal customers not only spend 60% more per transaction, but also make purchases 90% more frequently. This approach can achieve an impressive 23% increase in revenue and profitability compared to first-time buyers.
In essence, the challenge that the foodservice industry faces in the digital age is clear: the scarcity of valuable data and, consequently, the lack of direct communication with its customers.
Therefore, the most important question is: How can restaurants acquire their consumer data?
The solution involves taking measures to ensure that, alongside the ongoing collaboration with delivery platforms to attract new customers and enhance awareness, restaurants should strive for partial independence from them. This is accomplished by introducing a loyalty program and establishing a direct sales platform as a crucial complementary strategy in this endeavor. As the in-house channel accumulates data gradually, it will evolve into a more influential and relevant channel. It is noteworthy that online rewards programs have demonstrated the potential to boost total revenues by an estimated 5-10%. Ultimately, this approach will empower the restaurant chain with greater control over its customers and future trajectory.
This is where Zuplyit comes in – the optimal solution for restaurants seeking to reclaim control of their customer data in a digitized world. Our company is committed to assisting restaurants in breaking free from marketplace dependency through specialized software, enabling them to own their customer data, shape their future, and manage their business without the necessity of complete detachment from these delivery platforms.
At Zuplyit, we have witnessed first-hand the remarkable benefits that direct communication with customers can bring to restaurants. Therefore, one of our primary objectives is to dedicate ourselves to helping restaurants regain insights into their customers by creating their own ordering system and loyalty program designed to maximise efficiency and boost customer loyalty.