What’s New in Restaurant Tech? Data Partnerships

    As the coronavirus pandemic drags on, customer preferences are liable to turn on a dime.

    Computers on a table with people writing on paper.
    Unsplash/Scott Graham
    Restaurants are already collecting a huge amount of transactional data.

    Increasingly, the restaurant industry is aware of the tremendous value of data for quick-service restaurants. Data can help restaurants better understand who their customers are, what they like to order and when, which in turn can help optimize supply, streamline menus, staff efficiently and drive sales.

    As the coronavirus pandemic drags on, customer preferences are liable to turn on a dime, making data more important than ever. Restaurants are facing narrower margins for the foreseeable future, especially as some states are reopening restaurants while others remain closed and vice versa. Even McDonald’s saw a 39 percent decline in year-over-year global sales in April, though that number has improved slightly each month since.

    Now, more customers are ordering online for delivery or pick-up than ever before. eMarketer forecasts the number of smartphone delivery app users will rise 25.2 percent to 45.6 million this year. For quick-serves, this is an opportunity to reach more consumers with better messaging. Namely, restaurants can update their data strategies and partner with these “food tech” providers to better understand their target audience, supply chain, and point-of-sale information to get a complete picture of individual customers and usher in a new era of precision consumer engagement.

    First-Party Data

    Restaurants are already collecting a huge amount of transactional data, including the number of times a particular dish sells in a day, popular times of day, average ticket cost, etc. This is helpful to understanding market segments and broad audience patterns. The next iteration of data is a more personalized look at the customer, or the collection of first-party data, combined with data collaborations.

    First-party data is information a consumer has opted to share. It’s crucial this data is safe and consented to avoid penalty and maintain consumer trust. Restaurants might encourage this data exchange through a number of different ways. Perhaps they offer a discount in exchange for an email address, include login information for a proprietary app, or ask a consumer to opt-in at the point-of-sale. In the data economy, the most valuable currency is trust. In order to make first-party data truly valuable, it’s crucial restaurants collect data in a safe and privacy-centric manner.

    While this data can begin to paint a vivid picture of the individual diner, it’s likely not a complete image. Consumers don’t always order directly from the restaurant or through the loyalty program. For example, two roommates may take turns in ordering takeout each week.

    Data Partnerships to Drive Sales

    In addition to a first-party data plan, restaurants can collaborate with other brands and partners to generate exponential insights and eventually create a better customer experience. By joining forces with one another to connect data across audience segments, restaurants and their partners can expand their spheres of influence and generate more value for diners.

    With the most recent digital transformation, the industry evolved to include apps for everything—from restaurant reviews, to reservations, to delivery and pickup—forcing restaurants to partner with these services to survive. Sometimes, this resulted in the loss of control, customer loyalty, and insight compared to previous business models in which the restaurant delivered food directly to the customer.

    Now, restaurants can form meaningful data partnerships, rather than being forced into them. This can be done with a variety of services, safely and securely connecting two parties' first-party data segments to make data-driven decisions. These second-party, data collaborations, can take on a variety of forms:

    1. Journey—Restaurants work with many entities on the path to purchase—e.g.,. GrubHub and UberEats. By partnering with these companies to exchange data, restaurants can better extract meaningful insights and gain visibility into granular data in a safe and controlled way. For example, data could show geographic distribution of orders, time of high and low volume hours and ordering preferences. They can also pick up additional satisfaction signals. For example, was a customer unsatisfied because of the means of delivery or was it a food quality or packaging issue? This is a particularly good time to implement such a partnership. Delivery services in particular have seen an increase in usage since the start of quarantine, with average check size increasing by as much as 30 percent as people place larger orders for their entire family.

    2. Supply—In sharing data with suppliers, both parties benefit operationally. If a restaurant can seamlessly share which products are increasing in popularity, suppliers are better able to pinpoint the exact quantity for a given customer. On the flip side, suppliers may know something restaurants don’t, e.g. that a particular food item may be increasingly difficult to source. At the beginning of the pandemic, when scarcity was a real concern, only those quick-service restaurants leveraging data along the supply chain were able to make adjustments quickly based on customer needs.

    3. Customer preferences—While restaurants have transactional data, not all of it is tied to loyalty programs or a specific customer identity. To understand more about the individual diner, restaurants can partner with other brands in a similar category to understand customer preferences. Take a quick-serve specializing in salads, for example, which might partner with a consumer packaged goods brand in the wellness space to better understand what their customer eats when they are cooking at home, thus informing more customized menu and sales offerings.

    4. Point of Sale—A restaurant’s audience often overlaps with business partners, including credit card and financing options. A credit card partner might be able to offer an additional 1 percent cash back at a certain restaurant in exchange for a co-marketing opportunity.

    Data-driven decisions rely heavily on accurate data. Initiating a data partnership to leverage second-party data from delivery apps and other platforms allows restaurants to learn much more about their target consumer, beyond what they recently ordered, allowing restaurants to customize advertising campaigns for consumers and increase brand loyalty.

    During this time of rapid disruption, the customer experience is bound to change just as quickly. With complete data insights, restaurants can learn to predict, manage and adapt to these changes efficiently to improve the bottom line. There is room for growth in how restaurants interact with consumers through safe, strategic data use. If used correctly, first- and second-party data have the potential to ignite momentum for QSRs and increase revenue.

    Alice Stratton is global managing director at LiveRamp (NYSE: RAMP), a leading data connectivity platform, where she oversees LiveRamp Safe Haven (LSH) new business, customer success and global revenue growth strategy. In the past year, Stratton has been instrumental in scaling LSH, expanding its footprint from Europe to five markets worldwide and overseeing the acquisition of Acuity Data to enhance retail trade analytics capabilities. Today, LiveRamp Safe Haven is internationally recognized for revolutionizing how companies collaborate with customer data in a privacy-first world.  Stratton has over a decade of experience in customer success, leading customer-centric services and relationship-building with retailers, global consumer packaged goods brands and Fortune 500 companies. She specializes in understanding business-side challenges, to help clients future-proof their enterprise and marketing data for the privacy-centric, post-cookie ecosystem.