Offering a targeted loyalty program will build your customer base — no big surprise there. But how much more effective is it to offer such a program than to not offer a program at all? And with so many businesses offering loyalty programs nowadays, how can you stand out? New research from Accenture Interactive found that members of customer loyalty programs generate 12 to 18 percent more revenue for businesses than customers who aren’t members of a program, Dine Engine reports. What’s more, 81 percent of consumers said they were more likely to continue giving their business to brands that offer a loyalty program and 73 percent are more likely to recommend a brand with a strong program. The report said consumers are more likely to adjust their spending based on a loyalty program by spending more money to earn more rewards. These programs may even help restaurants retain loyal guests during economic downturns when consumers are cutting back on discretionary spending. However, research from Forrester found that more than 80 percent of loyalty programs use currency such as points or miles, which can make it difficult for programs to stand out. To boost your program’s chance of success, it can help to remove the barriers that stand between your guests and the rewards they can earn. Show them a clear path to rewards and try to avoid having them encounter multiple barriers such as having to download an app, remember a membership card or login details at each visit, enter a code or register an account online. Also, take a look at potential experiences you can offer your guests. What memorable events or offers can you provide that won’t easily be replicated by your competitor down the street?
Adopting new technology for your restaurant may seem like a necessary evil — the initial investment can be substantial, there are multiple pieces and functions to consider, and it’s impossible to know how quickly the popular tech tool of the moment will become obsolete. Still, the numbers show clearly that restaurants that don’t adopt technology will be left behind. Operators from brands including Wings Etc., Fazoli’s and Your Pie have struggled with this dilemma and they addressed it at the recent Restaurant Franchise & Innovation Summit in Louisville. According to a report in Kiosk Marketplace, the leaders emphasized that operators feeling vexed over tech decisions aren’t alone. The best way to make progress, they agreed, is to focus on doing one thing (or a few small things) well and then gradually improving upon those efforts. Zero in on your biggest pain points or opportunities: Your Pie has set out to perfect its AdWord campaigns to find the right customers, while Fazoli’s has focused on building upon its data-rich loyalty program. For whichever tech tools you decide to focus on, create a broader strategy that considers all of your stakeholders and spells out how they might contribute to (and benefit from) your success.
Rising labor costs are forcing all restaurant operators to make tough decisions about how to manage staff and how to prepare the food they serve. But what happens when the decisions you have to make are central to the brand identity your guests associate with you? Case in point: Chop’t. The fast-casual chain is known for chopping salad in front of the customer, a practice that provides some visual intrigue while sending the message to guests that their food is freshly prepared according to their tastes. But the company announced recently that it would be making the switch to pre-chopped ingredients. (Guests can still have their salad chopped but have to request the service.) Darren Tristano of FoodserviceResults predicts that regular guests could be turned off by these changes — in the short term — but will probably forgive the changes and return to old habits eventually. Just the same, if you’re experiencing a similar need to cut back on services that are central to your brand and important to your best guests, what can you do? A well-executed loyalty program may help you bridge the gap. Chipotle, for example, recently unveiled a new digital loyalty program designed to both give guests what they want and continue to collect customer data that will help the brand feed future decisions that will keep guests engaged. Skift Table reports that the new loyalty program, which was market tested for months, awards guests with free chips and guacamole after one purchase. Each $10 purchase earns guests one point and after $125 spent, guests earn a free entrée. These enticements are encouraging more visitors to sign up for the loyalty program — and share their data in the process. From there, Chipotle can study what factors bring those guests back and make them spend more money, whether it’s discounts on certain items or special promotions. What can you do to keep your guests coming back?
A growing number of fast-casual restaurants are becoming less about having guests stay and eat and more about letting them pick up food to go or have it delivered. Eatsa, the fast casual bowl concept that pioneered the idea of automating food to go, is now focusing on helping many of these fast casuals launch virtual restaurants, which can help brands test potential concepts or service models with minimal investment. The Spoon reports that Eatsa’s new tech offering, dubbed Omnichannel Intelligent Queue Software, can calculate the exact status of an order, send customers a down-to-the-minute update, and alert delivery drivers about the exact time to pick up an order so it doesn’t wait for long. When a driver arrives, a branded pickup station directs the person to the specific order that needs to go. (Deliveroo is the first customer to put the new Eatsa tech into practice at its 10-kitchen food hall in Singapore.)
A Harvard Business School study found that by increasing customer retention rates by just 5 percent, profits will climb anywhere between 25 and 95 percent. It pays to identify your regulars and find ways to keep them coming back. Katrina Kutchinsky of KK Communications, a public relations and social media agency focused on the hospitality industry, told OpenTable she recommends restaurants focus on offering added value over any type of discount. So once you have regulars who have already joined your email list and your loyalty program and you’d like to go the extra mile to take care of them, taking after-dinner drinks or dessert off their bill may go further than offering them 10 percent off their next visit. (This also makes your specific experience harder for competitors to copy.) There are other ways to build value into the experience you offer too. Offering free samples of a new appetizer, a bookshelf of donated books or games accessible to guests waiting for food, tableside entertainment, live music offered by musicians from a local college, or small gifts for children and for special occasions like birthdays and holidays can all communicate value as well. You don’t even have to spend money to generate value: Create memorable ways to involve guests in your decision-making, like asking them to vote on a variety of dishes you’re considering adding to the menu. Or simply be present. Having your manager make a brief stop at a table to ask for feedback or help with a concern, or to invite guests to take a post-meal survey or join your loyalty program — can go far in helping you demonstrate that you care about guest preferences.
Hospitality Technology’s 2018 Restaurant Technology Study found that 45 percent of operators said they planned to increase their spending on back-of-house software — up from 25 percent the year before. The key factors driving that spending were the need to provide better service, manage rising labor costs and consolidate disconnected technology tools used within their business. Nation’s Restaurant News reports that Arby’s Restaurant Group has been rolling out technology that has been addressing those specific pain points. They installed mobile app-connected HVAC systems that can generate monthly usage reports, as well as automated cook and hold ovens, Bluetooth-connected ovens that “can sense when the roast beef is perfectly cooked,” and hardware that can make it possible for traditional kitchen equipment to send time, temperature and cooking data to the cloud. Peter Cryan, senior director of equipment innovation at Arby’s parent company, said the savings have been dramatic. The cook and hold ovens alone have saved the restaurants 67 percent in energy each year, two hours of daily labor related to checking manual processes, and $45 million in energy costs since the changes began in 2011. Cryan said the tech platform more than paid for itself in the course of a year.
It’s pretty simple: Your regular guests are motivated to earn points for their purchases and to get transparent communication from you about what it takes to redeem those points. It’s a lesson many major brands have learned and are now adapting to accommodate. Skift Table reports that Starbucks, Chipotle, Pizza Hut and TGI Friday’s are just a few of the brands that have implemented new points-based loyalty programs in recent months, and to positive reviews. Some of the results have been dramatic. The report said that Punchh, a digital marketing company that helps a range of restaurants with loyalty program development, helped TGI Friday’s UK generate a 66 percent increase in revenue from loyalty program members and a 51 percent increase in new unique guest visits in the first four weeks of launching a new loyalty program in July. According to Mobile Marketing, the number of users referred by the app who made a verified visit to TGI Friday’s UK skyrocketed 300 percent in that same timeframe. The new loyalty program stands out not for its bells and whistles but for its transparency. While it started in 2015 (also with Punchh) as a “scratch, match and win” game designed to generate probability-based rewards, the new program has a spending-based system of points or “stripes” to help customers see the path they need to take to earn rewards.
The foodservice delivery industry seems to be evolving by the day. If you’re adapting your operation for more efficient delivery or thinking about offering it as a new option, take note of how third-party delivery companies are changing the market. Bloomberg reports that Uber has a pilot program underway in Paris that rents commercial kitchen space to restaurants selling food via the Uber Eats app. While the company has not commented publicly about this yet, it raises questions about how such developments could change the industry, perhaps controlling the choice consumers have when searching for a certain kind of restaurant, for example, or giving third-party providers a greater say in the branding of a restaurant business. Uber isn’t alone in this either: Grubhub, Door Dash and others have been investing in ghost kitchens in recent months. Postmates is adding yet another wrinkle to delivery by launching a new app, Postmates Party, to select cities that allows consumers to pool their orders and have them picked up and delivered (for free) by one courier.
The California Consumer Privacy Act (CCPA) could have nationwide implications for how restaurants manage their data, protect consumer privacy and market their business. The National Restaurant Association hosted a webinar recently with Helen Goff Foster, a partner in the Technology + Privacy & Security for Davis Wright Tremaine, who reviewed the implications of the law, which is set to go into effect next year and could likely set similar legislation in motion in other states. The act will impact how businesses manage the consumer data they collect and the loyalty programs they operate. Unlike GDPR, which is about having consumers opt in to providing personal information, CCPA is about allowing them to opt out. In broad terms, for a wide swath of businesses, the law requires businesses to let consumers access the personal information you track, and gives them the right to delete information, and to opt out of the sale of that information. It also requires you to give consumers two methods of contacting you about it (including an 800 number). Businesses must therefore be able to retrieve consumer information across its affiliates, business units, product lines, etc. The law is intended to prevent businesses from providing discounted service or price to certain customers but not others (which clearly creates some hazy territory for businesses operating loyalty programs). There are fines in the thousands of dollars for violating the law and businesses could also be exposed to a private right of legal action by consumers against the business and its affiliates. Franchises could be especially vulnerable because they could bear legal risk but aren’t able to dictate privacy policies of their parent company. Foster advised that the best thing businesses can do now is identify where their consumer information is and how to access it. You’ll need to determine how to provide opt-outs for most of your consumer data and assess the ability of your vendors to do so as well, so update (or establish) your information security program. For more information about the law’s potential effects on restaurants, access Foster’s webinar and Q&A here.
The real power may lie not with restaurants but with the delivery apps and food delivery companies that help them get their food to consumers. That’s the implication of two recent reports in the Wall Street Journal, which indicate that these companies are poised to move away from traditional introductory offers and toward subscription-model services designed to entice consumers into becoming habitual “superusers.” At a time when millennial consumers are believed to lack loyalty, delivery providers have noticed that offering a one-time discount won’t translate to follow-up business. How does your delivery provider entice customers to return regularly? DoorDash, one provider offering a subscription program, says it has more than 30,000 users signing up each week for their service. It now leads the online food delivery market in total consumer spending.
Long relegated to side dishes and light options for the calorie conscious, vegetables are getting comfortable in the center of the plate as entrées, presented as filling and complete on their own. A GrubHub report found that its customers ordered vegan food 19 percent more in the first half of 2017 than in the same period a year earlier. Sports icons are also lending their star power to the plant-based trend — Shaquille O’Neal and more than a dozen other top athletes recently invested in the vegan Beyond Meat to promote the performance-enhancing benefits of plant-based diets. Menu trends analyst Nancy Kruse told Nation’s Restaurant News that vegetables are standing out on menus in three key categories. One dish doesn’t necessarily work for every restaurant, however, so if you understand who your guests are and what they crave, you can add subtle nuance to your vegetable-based dishes in ways that boost sales. First, veg-focused foods feature vegetables in place of grains and meats in dishes such as the potato lo mein (with potato strands standing in for noodles) at Philadelphia’s Vedge. Veg-forward options promote the craveability and health of vegetables, with well-sourced animal proteins playing a supporting role as condiments or a condensed choice of entrées. At DC’s Beefsteak, for example, the BEETSteak burger features marinated beets and condiments like pickled onion, lettuce, sprouts and vegan chipotle mayo. Finally, veg-friendly options vie for the attention of carnivores, flexitarians and vegetarians alike. Operators have to get creative here to stand out. Kruse says Park City, Utah’s Twisted Fern succeeds with dishes such as a root-veg cassoulet with stewed white beans and herbs, then adding roasted root vegetables in place of animal protein. If you need help with plant-based menu and ingredient development, new options are appearing on the horizon all the time. (One example is Fieldcraft, the Austin-based startup that is rapidly developing a large B2B marketplace for plant-based ingredients.)
It’s not enough to have a loyalty program: 59 percent of millennials quit loyalty programs because the rewards were not valuable enough, according to a recent study by Software Advice. Other common complaints: Guests feel like some restaurants string them along too long before they can earn a reward, and they feel bombarded with emails and other notifications. The right use of tech can help. The Rail suggests operators first find ways to clarify the path to rewards. So instead of saying “50 points earns you a free appetizer,” show the guest how many meals she has purchased or points she has earned toward that free offer. If you have a mobile app, integrating mobile payment into it is a bonus because it helps guests speed past the steps typically required to make an online purchase. Finally, when you send notifications, aim to customize them based on the guest’s past buying behaviors to better your chances of translating promotions into sales.
If your guests are game to load funds onto a digital wallet or prepaid gift card in exchange for a special offer, you can help cut back on the fees you have to pay to support credit card transactions. While retailers are charged a fee by credit card companies each time a customer pays with a credit card, Skift Table reports that many of those retailers are bypassing the fees by joining the lower-cost Automated Clearing House network, which was set up decades ago by U.S. banks to facilitate the exchange of money between banks. Other companies, like Starbucks, are encouraging customers to load funds onto a prepaid gift card — a setup that means Starbucks only pays a swipe fee when a customer loads funds onto the cards, not each time she buys a latte. Still others are joining networks (LevelUp is one) that help businesses band together and use their combined scale to negotiate more
How well does your menu use vegetables as not just vegetables, but as ingredients that blend into the background — and in the process, make for a healthier dish? Cauliflower, for one, has surged in popularity in recent years, with sales of its products climbing 71 percent last year according to Nielsen data. (Having taken hold as a pizza crust ingredient and rice substitute, it is now moving into the snack category: Fast Company reports that a number of brands are releasing cauliflower-based snacks such as pickled cauliflower and cauliflower-powder based pretzels, crackers and chips.) But since cauliflower is expensive and difficult to mass-produce, there is room for other vegetables to take hold as undercover ingredients. This New Year, as people look to reset their health, where can you incorporate nutrient-dense vegetables in ways that allow them to disappear into the background?
Launching a loyalty app? Walk your talk.
Having a loyalty app is a great way to build a strong following — if you don’t look at it as a “set-it-and-forget-it” kind of tool. As Cake suggests, having a loyalty app can go far in helping you connect with your audience — especially Millennials and Gen Z, who are apt to spread the word about you on social media. But on the flip side, those guests also have high expectations of your transparency. If you’re targeting this population with your app, be willing to share details about how your food is made, where it comes from and how you manage your business (or at least be ready for questions about it). Having an app is a strong upselling tool, helping you to build check totals by suggesting menu items that may not have been front-of-mind for customers. Just be sure to focus on your guests’ preferences and frequency of visits, as visibly focusing on check tallies (and tying rewards to dollars spent) can be a turnoff. Finally, having a loyalty app can be a data goldmine — but you need to have the foundational technology in place to funnel that data into insights that feed your broader marketing strategy.
If your restaurant does not have a blog — or could stand to improve its existing one — now is a good time to work on it. A solid blog presence will make your website more of a destination for consumers at a time when they are eager to interact with restaurants online. (A Technomic survey found that 42 percent of consumers said they would choose one restaurant over another if it offered the ability to order online.) A strong blog can be a hub for your other content, referencing your social media accounts and featuring the kinds of images and personality that infuse your website with your restaurant’s atmosphere. To build engagement via your blog, Next Restaurants suggests you first set it within the right URL structure — i.e. host it on your website via a subdomain or subdirectory. Next, think about the kinds of terms people would use when searching for your restaurant online so that your blog content meshes with what terms people are using to search for restaurants like yours. A search term such as “restaurants with creative cocktails” might spark an idea for a blog about how you weave local, seasonal ingredients into your beverage menu — or a recipe for how guests might make their own version at home. There are some blog post-building tools available online if you need more help in triggering ideas. Finally, don’t be a stranger. While you don’t have to post content daily, you should post at least once a week. Each year or each season, you can take a look at what’s happening on your menu or with events you have planned and then write (or outsource the writing of) a large chunk of related blog content at once. When business is busy and you don’t have time for pulling together a post, you will have a ready supply of content to choose from throughout the year.
What does loyalty mean to you?
Any restaurant consultant will tell you to have a strong loyalty program. But within those programs, there is plenty of opportunity to differentiate your particular restaurant. Take McNellie’s Restaurants, an Oklahoma chain that is using different methods for generating traffic and valuable feedback via their loyalty program. For one, members of the program are invited to come to the restaurant on specific days and get 50 percent off their bill if they ask to meet with one of the restaurant’s managers and have a conversation about their experience. Another offer encourages members to bring a friend (and get a discount if that friend signs up for the loyalty program). The brand also has different levels of loyalty and associated benefits that members need to work to retain. For example, the restaurant gets a 90 percent conversion rate when they send an email to guests telling them they need to come to the restaurant at least once that month to retain their VIP status.
Build a loyal following
Are you putting your loyalty program to work? Research from Accenture found that 66 percent of consumers in the United States spend more money on brands to which they are loyal. Offering the right mix of benefits can generate a significant boost to sales — one extreme example is Starbucks, which has 11 million members and, as of early 2016, $1.2 billion in customer funds loaded onto its plastic and mobile Starbucks cards, Upserve reports. The brands reaping the biggest benefits from their loyalty programs are using a combination of discounts, targeted marketing and experiential rewards to motivate their guests. Upserve recently assessed some of the most forward-thinking brands in this area. The Palm’s rewards program, for example, carries a $25 fee but that is returned to guests in the form of a $25 gift card after sign-up. Members get changing rewards each month, including exclusive wines and cocktails, as well as substantial discounts on wine. Panera, a longtime innovator in this space, is another to watch, with 28 million members who can easily reorder favorite purchases via the program, receive personalized offers based on those orders, and get recipes and cooking suggestions from the brand. Panera also makes the experience of collecting food more convenient for its members — they can order online, then visit a store and pick up their food from a designated Rapid Pick-Up shelf in the store, avoiding a long wait in line. To maximize your program’s power, Accenture advises you regularly identify and eliminate aspects of it that aren’t working, encourage your members to be your advocates and try to attract new customers through existing ones. Also note that millennials can be tough to attract to these programs — mine your data to understand what range of offerings brings them back.
Prepare for the packaging revolution
The year 1894 brought the “paper pail” now ubiquitous in Chinese food takeout. The early 1960s brought us the cardboard pizza box. Now, in the face of consumer demand for eco-friendly packaging and growing demand for off-premise dining in general, we could be on the cusp of another big change in takeout food packaging. Technomic reports that in 2016, 60 percent of consumers said they would pay more for takeout meals if they were packaged in an environmentally friendly way. That number decreased to 52 percent in 2017, not because the demand for such packaging had fallen but because consumers now expect restaurants to offer it. If you currently provide single-use plastic for your takeout business, it’s time to offer alternatives and work with partners who support them — some third-party delivery partners now notify customers that they will not receive non-recyclable items like straws or packets of ketchup unless they request them. Shake Shack, for one, is now looking to bypass materials that are simply recyclable in favor of options that are biodegradable on their own.
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