{"id":9572,"date":"2019-09-05T16:47:03","date_gmt":"2019-09-05T20:47:03","guid":{"rendered":"https:\/\/blog.brainstation.io\/?p=9572"},"modified":"2020-05-21T12:28:08","modified_gmt":"2020-05-21T16:28:08","slug":"how-data-is-being-used-in-restaurants-and-food","status":"publish","type":"post","link":"https:\/\/brainstation.io\/blog\/how-data-is-being-used-in-restaurants-and-food","title":{"rendered":"How Data Is Being Used in Restaurants and Food"},"content":{"rendered":"

BCG\u2019s 2018 digital maturity survey of top restaurant brands found that 80 percent had access to a wealth of data. There\u2019s a big opportunity there \u2013 BCG\u2019s numbers found that data and analytics programs<\/a> yield five to 10 percent increases in revenue, 10 to 15 percent reductions in store-level operating costs, and 10 to 20 percent improvements in EBITDA (earnings before interest, tax, depreciation, and amortization). Further, digital restaurant leaders\u2019 total shareholder return has almost doubled the S&P 500. And the National Restaurant Association\u2019s 2019 State of the Industry report found that eight in 10 restaurant operators agree that the use of technology provides a competitive advantage and many planned to ramp up their efforts in that area.<\/span><\/p>\n

In fact, data could be critical to the ongoing health of the restaurant business. An August 2018 report from The NPD Group found that the total restaurant count in the U.S. saw a one percent year-over-year decrease. Unlocking the insights of the reams of numbers available to restaurants could be crucial to their survival.<\/span><\/p>\n

Here are some of the ways big data has already transformed the food industry, and what further changes might be on the horizon.<\/span><\/p>\n

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Inspire \u2013 and Recognize \u2013 Loyalty, While Luring Back Lapsed Guests<\/b><\/h3>\n

If it seems like every fast-casual restaurant and coffee chain has a mobile app these days, there\u2019s a good reason \u2013 it\u2019s a crucial way to help you order faster while also learning more about you.<\/span><\/p>\n

And restaurant and delivery mobile apps are indeed more popular than ever. BCG\u2019s study found that the installed user base for three top apps \u2013 Starbucks, McDonald\u2019s, and Dominos \u2013 has grown from 45 million users to 76 million from June 2016 to 2018, while the number of users with Uber Eats, DoorDash, and Grubhub leaped from 9 million to 42 million over that same period. A survey <\/span>showed<\/span><\/a> that most diners use restaurant mobile apps to view menus and prices (55 percent), scour deals (38.2 percent), order food (30 percent), and reserve a table (23.8 percent).<\/span><\/p>\n

According to BCG\u2019s numbers, U.S. restaurant loyalty programs now also have a combined 130 million members, more than double their 2015 level \u2013 which means dining is the fastest-growing industry for loyalty programs. More than two-thirds of diners are members of at least one such program, and 25 percent say they\u2019re members of three or more.<\/span><\/p>\n

Apps generally have the effect of bringing customers back more often. In fact, 40 percent of app users <\/span>say<\/span><\/a> that they increased their visit frequency after downloading. Research from BCG shows that restaurant companies with \u201cwell-defined, strategically executed\u201d loyalty programs can boost incremental revenues by 10 to 15 percent.\u00a0<\/span><\/p>\n

How does your data play into that? Starbucks\u2019 app is a good example. The company\u2019s loyalty program is a gold standard for personalization, with tailored messages and offers being sent to people based on their ordering history. Starbucks often uses the program to get you in the door, whether you\u2019re a regular \u2013 for instance, if you ordered a Venti Americano three days in a row, you might receive an email with incentives to extend your coffee streak another few days \u2013 or a lapsed customer who might be tempted back with a too-good-to-be-true deal.<\/span><\/p>\n

\u201cThey have made massive investments and made progress on personalization, ahead of what I would say other restaurant brands to date have been able to accomplish,\u201d <\/span>said<\/span><\/a> Mary Martin, a Partner at BCG.<\/span><\/p>\n

The result? Their app just keeps getting more popular \u2013 according to Starbucks\u2019 2019 third-quarter results, active Starbucks Rewards Membership in the U.S. increased 14 percent year-over-year to 17.2 million users.<\/span><\/p>\n

Improve Operating Efficiency<\/b><\/h3>\n

Data isn\u2019t just being used to bring more hungry patrons into the restaurant \u2013 it\u2019s also having a major back-of-house impact.<\/span><\/p>\n

A recent report from Toast found that 78 percent of restaurant managers look at their metrics and finances daily, compared to 46 percent two years prior. And 95 percent of restaurateurs think technology improves efficiency.<\/span><\/p>\n

One example of that is the fast-casual chain Panera Bread, which unveiled its Panera 2.0 plan to drive digital orders in 2014. Panera collects information about orders on all its digital channels to prepare for in-store labor and product needs, and that data has informed real changes at the chain, including redesigned kitchens and a reworked assembly line. As a result of those changes, the chain \u2013 which now <\/span>expects<\/span> half of all sales could soon be digital \u2013 <\/span>managed<\/span><\/a> to cut its wait time to order food from eight minutes to one minute.<\/span><\/p>\n

They\u2019re not alone in leveraging data to smooth their operating process. Domino\u2019s <\/span>built an algorithm<\/span> to predict how long it would take to make and deliver a pizza \u2013 with factors including number and tenure of staff in the restaurant \u2013 while UberEats and DoorDash are <\/span>competing<\/span> to develop the best model to predict delivery time, taking into account weather data, sports schedules, and seasonal irregularities.<\/span><\/p>\n

Data is also helping restaurateurs recognize their star employees \u2013 and who might be underperforming. It\u2019s especially helpful for people managing multiple restaurants.<\/span><\/p>\n

For instance, Charlee Williamson of the New Orleans-based Ralph Brennan Restaurant Group oversaw six managers and 78 servers on the other side of the country, at California\u2019s Jazz Kitchen. She <\/span>uses<\/span> the Server Scorecard, offered by the restaurant management software company <\/span>Avero<\/span>, which ranks servers on multiple criteria and helps match the right waiter to the right table. For instance, a server who ranks higher in sales might be the right fit for a high-rolling party, while another who excels at tip percentage could be best-suited to handle a difficult table full of rowdy children.<\/span><\/p>\n

Nailing the Menu (and Finding Flavor Trends)<\/b><\/h3>\n

When Applebee\u2019s made the rather radical shift in 2016 to what was thought to be a millennial-friendly menu, it didn\u2019t work out \u2013 to put it mildly. The chain announced in 2017 plans to close over 100 locations, and executives pointed to the fact that the youth-focused offerings had alienated what they believed to be their core guests: boomers and gen-Xers.<\/span><\/p>\n

When the company went back to the drawing board, they did so armed with data. Adrian Butler, the SVP and Chief Information Officer of Dine Brands (the parent company of Applebee\u2019s), outlined a 4D technology strategy to help the restaurant regain its momentum: Data, Discovery, Dining, Delivery. The focus was on \u201cleveraging data and analytics of our guests and operations to craft personalized experiences,\u201d beginning with the menu.<\/span><\/p>\n

Applebee\u2019s began to poll its customers via tabletop device surveys, and by the end of 2017, the chain had noticed a 7 percent uptick in overall guest satisfaction. As they dug deeper into data, they also realized why their millennial-focused menu had been such a misfire \u2013 their clientele was already evenly <\/span>split<\/span><\/a> among generations, with 26.4 percent boomers, 28.3 percent gen-Xers, and 29.9 percent millennials.<\/span><\/p>\n

Data isn\u2019t just useful for restaurants looking to make their menus shine. It also helps us understand what foods are whetting American appetites.<\/span><\/p>\n

The pork lovers among us might have noticed that bacon is suddenly everywhere \u2013 in <\/span>sundaes<\/span>, cocktails,\u00a0<\/span>and even <\/span>beer<\/span>. And thanks to Wired, which <\/span>partnered<\/span> with Food Network to analyze 49,733 recipes and 906,539 comments from their website, we learned that everything really is better with bacon. Together, they searched all the recipes that fit a certain description \u2013 pizza, for instance \u2013 and calculated the average rating for those foods that did not include bacon. They found that the recipes with bacon did score higher \u2013 and the only exceptions were among pasta and desserts.<\/span><\/p>\n

They drilled deeper and looked at other food fads and how they\u2019ve waxed and waned over time, with ingredients like Portobello mushrooms and sriracha seemingly being past their moment in the sun. Lada Adamic, a Computer Scientist at the University of Michigan and Facebook, <\/span>took<\/span> Wired\u2019s research even further and found that feta, cream cheese, cranberries, strawberries, and avocado were also reliable recipe hits.<\/span><\/p>\n

In a separate project, Adamic wanted to see if it was possible to create a predictive algorithm to see how a recipe would turn out. She and her team took nearly 50,000 recipes and 2 million reviews from allrecipes.com and created an algorithm to extract out all the ingredients, cooking methods, and nutritional profiles, then looked at how often two ingredients were paired together in the same recipe. She <\/span>found<\/span><\/a> that her algorithm predicted with nearly 80 percent accuracy how many stars a recipe would get on the website.\u00a0<\/span><\/p>\n

Initially, Adamic was inspired by her own kitchen frustrations.<\/span><\/p>\n

\u201cI was having trouble moving beyond literally reading the recipe and then following it exactly,\u201d she said.<\/span><\/p>\n

\u201cIn general, I just believe in data,\u201d she added. \u201cNow I feel more comfortable using spices more freely.\u201d<\/span><\/p>\n

Improve Customer Experience<\/b><\/h3>\n

Since few are forecasting a big leap in restaurant patronage, many restaurateurs have shifted from focusing on the number of customers to the quality of experience each visitor has \u2013 and data has been a big help.<\/span><\/p>\n

\u201cTotal restaurant traffic is not growing, so anything restaurants can do to offer a better customer experience differentiates them from the competition,\u201d <\/span>said<\/span><\/a> David Portalatin, a food-industry adviser at market-research firm NPD Group Inc. and author of <\/span>Eating Patterns in America.<\/span><\/i><\/p>\n

And the primary way most restaurants are capitalizing on data to form a better bond with diners is through personalization.<\/span><\/p>\n

TGI Fridays, for instance, began gathering data from point-of-sale systems, social media, credit-card transactions, and mobile devices to create personalized campaigns for the four million-plus guests who have given the company permission to contact them directly. The <\/span>result<\/span> was stark: the chain doubled its to-go business in the 12 months leading up to August 2018 and increased social media engagement by more than 500 percent.<\/span><\/p>\n

\u201cGone are the days of trying to figure out what millennials want versus boomers,\u201d <\/span>said<\/span><\/a> TGI Fridays Chief Experience Officer Sherif Mityas. \u201cWe want to know what Mary wants versus Susan, and we need an unprecedented amount of data, analytics, and machine-learning to utilize this data in the best possible way.\u201d<\/span><\/p>\n

Cloud-based reservation systems allow restaurants to create detailed profiles on patrons with notes on everything from dietary restrictions to beer preferences. That information could be shared across an entire restaurant group, allowing servers to offer a customer their favorite IPA or a not-too-spicy appetizer they might love.<\/span><\/p>\n

Restaurants have numerous ways to collect that data. McDonald\u2019s and Chick-fil-A dangle free food in exchange for diners filling out surveys rating their experience. Starbucks has always offered free wi-fi, but as of April 2018, the coffee chain <\/span>required<\/span><\/a> users to submit their full name, email address, and zip code before surfing the web.\u00a0<\/span><\/p>\n

California-based chain Tender Greens, meanwhile, uses the <\/span>Punchh<\/span> mobile app to log each customer\u2019s name, email address, and purchase history.\u00a0<\/span><\/p>\n

\u201cIt gives us ways to recognize people who\u2019ve been in regularly or haven\u2019t been in for a while or have specific preferences,\u201d <\/span>said<\/span><\/a> founder Erik Oberholtzer.\u00a0 \u201cWe want to accommodate everyone\u2019s needs, sometimes before they even mention them.\u201d<\/span><\/p>\n

It\u2019s not just fast-food or fast-casual restaurants that are using data to boost customer service.<\/span><\/p>\n

Chicago\u2019s Michelin-starred <\/span>Oriole<\/span> uses data from the <\/span>Upserve<\/span> system to determine who are their top 100 guests (in terms of the number of visits and amount spent) and creates a profile with every first-time reservation. Upserve also tracks the top 100\u2019s dining companions when they divide up the bill, sending a list of credit-card numbers, dates of visits and what was bought. The restaurant matches the numbers to a name, then uses social media to put a face to that name.<\/span><\/p>\n

\u201cYou can\u2019t know that someone\u2019s going to become a regular, so you don\u2019t necessarily keep track of those people. But the system does,\u201d <\/span>said<\/span><\/a>\u00a0Co-Owner Cara Sandoval, adding that they\u2019re sure to recognize regulars when they come in.<\/span><\/p>\n

\u201cIt surprises people, in a nice way, when they didn\u2019t make the reservation themselves.\u201d<\/span><\/p>\n

Then there\u2019s the simple fact that ordering via a mobile device \u2013 whether for pickup or delivery \u2013 is just faster and more convenient than standing in line.<\/span><\/p>\n

In fact, restaurant digital orders have grown at an average annual rate of 23 percent since 2013 \u2013 now <\/span>representing<\/span> 3.1 billion visits and $26.8 billion \u2013 and will triple in volume by the end of 2020, according to the NDP Group.<\/span><\/p>\n

\u201cDigital orders will remain an outsized source of growth for the restaurant industry over the next few years and operators who desire to grow need to embrace a digital strategy,\u201d <\/span>said<\/span><\/a> Portalatin.<\/span><\/p>\n

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The food and restaurant industry has found a new key ingredient that is having a transformative effect on every dish, drink, and diner: data.<\/p>\n","protected":false},"author":7,"featured_media":9578,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[330,644,336],"tags":[332,331,164,1054,1053],"yoast_head":"\nHow Data Is Being Used in Restaurants and Food | BrainStation\u00ae Blog<\/title>\n<meta name=\"description\" content=\"Here are some of the ways big data has already transformed the food industry, and what further changes might be on the horizon.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/brainstation.io\/blog\/how-data-is-being-used-in-restaurants-and-food\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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