Outside Insights | September 2017 | By Guest Author

Can Chatbots Revolutionize the Restaurant Industry?

The growing technology is changing how customers interact with businesses.
Wingstop launched a bot service built into both Facebook and Twitter. Wingstop
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What is a chatbot? Chatbots have been around for a while now. But it is only recently that bots or, more specifically, chatbots have started making waves. New generation chatbots have the capability to become smarter over time due to their machine learning capabilities. These are sophisticated products and not merely pre-programmed bots.  A recent market study expects chatbots to dramatically reduce human intervention and result in lost wages of $262.7 billion by 2021. Gartner has predicted that “Artificial intelligence and advanced machine learning” shall be the top technology trend in the coming years.

Growing popularity of chatbots in the quick-service industry

One industry that has really warmed up to this new technology is the quick-service industry. Traditional marketing methods like SMS or email score poorly in terms of customer engagement. Are promotional offers and heavy discounts not translating to sales growth? Are you not able to get more customers despite providing delicious food, great ambience and excellent service? Investing in a chatbot might do the trick and help your restaurant business turn a corner.

Quick-service giants have already woken up to this fact. Taco Bell has built a bot named Tacobot in collaboration with the office productivity tool, Slack. Burger King has been testing a bot built into Messenger that enables customers to place orders as well as make payments. Wingstop recently launched a bot service built into both Facebook and Twitter. It is interesting to note that online sales for this Dallas-based brand account for 16.9 percent of total sales and are growing rapidly. Moreover, the average ticket price is higher by $4 when compared to in store orders. Subway also recently launched an order-ahead bot on Facebook Messenger. Jack in the Box also has a bot live on Kik and Facebook Messenger to promote their new Triple Bacon Buttery Jack.

And its many uses …

Imagine having a chatbot built into Facebook Messenger. Businesses have the opportunity to tap the wide user Facebook messenger user base that is totaling nearly 1.3 billion at the moment. A chatbot can have multiple uses for any player in the industry. A chatbot can be used as:

  • A tool to increase brand engagement with customers. The bot is constantly evolving via customer interaction, which results in effective engagement.
  • A marketing tool, which will enable you to learn about customer habits. You can send targeted promotional messages. For instance, if you order Noodles every Sunday for dinner, the bot can be programmed to send out a reminder to order your favorite noodles at 6pm on Sunday.
  • A 24/7 customer service tool which lets you operate with low functional costs. A chatbot would be more efficient and less expensive in dealing with customers than a human.
  • A means to let customers order ahead. Leaders like Burger king have the “order ahead” option built into their chatbots already.

A wise substitute for third-party delivery companies

Let us take a moment to consider the options that we have. You can chose to work with third party delivery companies like UberEats, Postmates or Doordash. But is it really economically viable? Many restaurants do not chose to work with third party delivery companies since the service cost can go as high as 30 percent of sales. Moreover, the customer has no interaction with the restaurant. He orders via the third party delivery company. This arrangement results in the restaurant losing out on the opportunity to interact with the consumer. Chatbots have low functional costs and result in enhanced customer interaction. They are surely a wise substitute for these delivery companies with regards to the restaurant and quick-service industry.

A Massive VALUE proposition

Adopting this technology does not require huge investments. If you decide to opt for logistics service providers, there will be a heavy upfront capital cost involved. Moreover, integration is cumbersome and complex. Chatbots are quite straightforward and this technology can be speedily integrated with web and mobile apps.

Moreover, as a quick-service player you can avoid the risk of developing your app. You app might not succeed in gaining popularity and you will be catering to a limited user base when compared to a Bot built into Messenger.

An Untapped Opportunity

As per a report by Lux research, customers are willing to pay 11 percent more for the convenience of not leaving the comfort of their homes. What does this indicate? It indicates that there is a huge untapped market opportunity in the quick-service industry. And the stage seems set for chatbots to fill this gap via the convenience, economic viability and enhanced customer interaction that they offer.

Jonathan Shriftman is Director of Business Development at Snaps, the first conversational marketing cloud. Snaps is behind the largest chatbot and branded keyboards for over 120 major brands including Nike, Marriott Rewards, L’Oreal, Dove, Pepsi, Victoria’s Secret & Nordstrom. Snaps’ mission is to connect the world’s leading brands into the 250 billion conversations happening every day in mobile messaging. Before joining Snaps, Jonathan founded Humin (acquired by Tinder), an artificially intelligent address book & messaging app named one of the “100 Best Inventions of the Year" by Popular Science.