To stay competitive, restaurants must be willing to adapt to changing market conditions and embrace innovative solutions. A great way to better understand their customer's preferences and behaviors is by collecting first-party data, which can then be used to create more effective and targeted advertising
As we approach the end of 2023, restaurant owners are facing a multitude of challenges that are affecting their businesses. One of the most pressing issues is the rise of food inflation and supply chain disruptions, resulting in increased costs for restaurant owners. To attract budget-conscious customers, it's become increasingly crucial for businesses to adopt data-driven marketing strategies. However, conventional marketing technologies are no longer effective, and there's a need for next-gen solutions for effective customer targeting and messaging customization. According to recent research, nearly half of consumers plan to spend less on dining out due to inflation concerns.
Additionally, 40% of customers find eating at home not necessarily cheaper. To combat these challenges, restaurants can offer incentives such as coupons and loyalty programs to attract customers. However, high-quality insights into customer preferences are essential to promote discounts effectively.
Analytics for Restaurants
Restaurant data analytics involves analyzing all the available data on a restaurant's operations and performance to gain meaningful insights. This approach can help businesses identify trends, and make more strategic decisions. Overall, the process consists of two main components: gathering restaurant data and interpreting that data for meaningful takeaways to optimize a restaurant’s strategy. The data can be grouped in many ways, but it is crucial to monitor data to guide where to focus marketing resources. Sales data includes tracking the number of online vs. in-store orders, identifying best-selling menu items, knowing which menu items are generally ordered together, the average value of each order, and the total revenue generated. Customer data, on the other hand, reveals consumer demographics, customer tastes, visit frequency, preferred locations, participation in loyalty programs, and which offers are most enticing.
The Current Third-Party Data Landscape
Over the past decade, the advertising industry has witnessed a significant evolution in how restaurant owners utilize third-party data to target customers and increase their spending. However, due to growing concerns over consumer privacy, several measures have been taken to restrict or eliminate the use of third-party data. For instance, California's CPRA and the European Union's GDPR have made it illegal to collect consumer data without their consent. As a result, leading technology companies like Apple and Google have also implemented measures to curb third-party cookies and ad-tracking tools.
The limitations placed on third-party data have created a challenging environment for brands, particularly restaurant owners, who rely on data to manage their advertising budgets effectively. With their previous sources no longer viable, restaurant owners face the task of changing their approach to data from third-party data sources and taking control of the Data Environment firsthand. In this new reality, restaurant owners must prioritize collecting first-party data to maintain a competitive edge. First-party data includes customer data collected directly from the source, such as online ordering, app downloads, and loyalty program sign-ups.
Shifting the Focus to First-Party Data
Restaurants need to focus on using the data they already have from their customers. This data can include demographics from loyalty programs (birthdays, location preferences, anniversary dates), email/SMS/MMS lists, and restaurant management systems like POS data, inventory management (upselling data and menu metrics), CRM (coupon redemptions), or reservation systems. By analyzing this data, restaurants can improve their marketing costs and branding while personalizing the customer experience. However, some business owners may feel overwhelmed by the amount of data available, especially with the influx of data from online ordering and reservation apps. For example, DoorDash experienced a significant increase in customers from 2018- 2022, going from four million to 32 million users, while OpenTable reported connecting more than 1 billion people with restaurants annually.
How to Use Restaurant Analytics
Managing and sifting through customer data is complex, especially for restaurants without access to a team of data scientists. However, gathering insights from this data is essential to stay ahead of the competition. By utilizing first-party data, restaurants can enhance customer retention, drive more foot traffic, and gain valuable insight into customers' preferences and satisfaction levels. Moreover, by adopting innovative approaches, restaurants can attract new customers and optimize all strategies up and down the conversion funnel. Despite recent challenges, restaurants can maintain customer satisfaction and develop a steady stream of business by leveraging next-gen marketing technologies that unlock first-party data to inform successful marketing techniques, such as coupons and loyalty programs.
In order to combat the negative impact of inflation, it is crucial for restaurant owners to keep up with the latest trends and technological advancements for efficient operations. By adopting restaurant analytics software, businesses can reduce their costs and provide better value to their customers, which can ultimately lead to higher profits. With Appfront, capturing data to better understand, segment, and optimize communication with customers is simple. Discover how to learn all about consumer behavior and turn data into revenue today.
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As online ordering becomes increasingly vital for restaurants, Appfront is pushing the boundaries with its latest offering: Ordering Premium.
It is expected that global revenue from online food ordering will reach 1.22 trillion this year. Therefore, a restaurant's online presence is as important as the physical ambiance, service, and food quality.