How Restaurant Chains are Leveraging Big Data to Serve Up Revenue - Lift361

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How Restaurant Chains are Leveraging Big Data to Serve Up Revenue

By Ed Higdon. Posted in Insight

September 12, 2019

When you think of “big data” you probably think of “big business” like Amazon and Google. However, every industry can benefit from big data, and the restaurant business is no exception. Major chain restaurants are getting in on the data buffet to serve up big lifts in sales.

The Perils of Ignoring Customer Data

But why should restaurants care about data? After all, it can be expensive, time-consuming, and restaurants have survived for decades without it. The truth is, in today’s competitive landscape, there are risks associated with ignoring data.

It’s easy to forego the expense of investing in data analytics and to just make assumptions about a customer base using broad, third-party data. Take Applebee’s, for example. As a leader in fast-casual dining, they took notice of a U.S. Department of Agriculture report that showed Millennials eat the highest share of their meals out at fast-food or fast-casual establishments, get prepared food to go or use a delivery service. And when it comes to the food they prefer to order, Millennials choose fresh, natural, organic and locally sourced offerings

So, without looking inward at their existing customer data, Applebee’s made a bold leap to grab for the Millennial share of wallet by overhauling their menu and focusing on more fresh and organic options. Not only did the initiative not attract Millennials, it alienated the Baby Boomers and Gen Xers. After stock prices decreased by 50% and forced the closure of 99 restaurants in 2017, the company decided to go back to its roots – and to lean more on data to make stronger choices.

Restaurants Are Taking A Page From Retail

Retailers use big data to identify patterns and insights among their customer base and subsets of that base, and they leverage those insights to personalize communication and service delivery. Restaurants are starting to follow suit – after all, few things are as personal to individuals as their taste in food. Applebee’s recognized this need to balance personalization against mass appeal, so they tossed out their ill-fated Millennial-focused menu and embraced a data-first approach at the end of 2017.

Today, over 5.7 million diners provide feedback to Applebee’s on tabletop devices – feedback that has led to a 7% rise in total customer satisfaction. The company is also using its mobile app to collect information, drive personalization and deliver customized interactions via a diner’s smartphone.

Through data, Applebee’s was also able to understand that they were, in fact, doing just fine in the Millennial market, making their disastrous menu change completely unnecessary. It turns out their demographics are fairly evenly split between Boomers, Gen X, Millennials and Gen Z.

In the end, Applebee’s misstep may have been good for the company over the long-term as it forced them to address the need for data-driven decisions rather than reactionary decisions to broad-spectrum reporting. Other restaurant chains can learn from this mistake and start to look at their own data to deliver what their customers are looking for.

Cultivating Relationships Through Data

Like retail, success in the restaurant industry depends on cultivating a loyal customer base, and with data, it’s never been easier to do that. In the restaurant business there are three main types of diners:

  • The loyal customer: Returns regularly, typically orders the same thing or one of several favorites.
  • The single visitor: The customer who came to the restaurant once to try it out but has not returned.
  • The to-go diner: The customer who orders to go either in person, or via mobile app or delivery. They rarely ever sit down to eat their meal, but could be a loyal customer, or a one-time diner.

Through data collected at checkout, mobile apps and other means, restaurant chains can now deliver personalized and customized communication and service to people in each group. Loyal customers can be nurtured through offers on their favorite dishes or via loyalty rewards programs. One-time visitors can be offered surveys to learn why they have not returned and can be incentivized to return with discounts or offers based on their responses. And to-go customers can be reached via mobile apps with highly targeted offers and loyalty rewards based on previous orders.

Marketers can now gain a full understanding of what drives customers to dine with them and enhances their ability to deliver customized and personal messaging that boosts loyalty, increases engagement and ultimately, lifts sales.

Putting Data To Work

Gathering data is the first step to gaining insight, but it takes true experts to uncover those insights and offer actionable, data-driven recommendations for cultivating customer relationships. Partnering with an expert like Lift361 can help restaurant chains find solutions to boost their share of the market and lift sales.