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.
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.
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.
At a time when many famous chefs are having to come to terms with their missteps in managing restaurant culture, chefs Ashley Merriman and four-time James Bear Award winner Gabrielle Hamilton stand out for knowing how to establish a healthy one. Hamilton opened Prune in lower Manhattan in 1999 and she and Merriman have since made it into not just a successful restaurant but an employee-friendly place to work. Guiding them are five simple values, which they recently shared in a Quartz report: Be thorough and excellent at everything you do, even when no one is watching; be smart and funny; be disarmingly honest (that means willing to tell the truth, but not in a brutal or overly earnest way); work without division of any kind (strive to put the person who sweeps the floor on equal footing with the owner); and to use service as leadership. That final point implies that through serving people, you set the tone for an experience with your greeting, eye contact and demeanor. They joke that they are actually an institute for living masquerading as a restaurant.
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.
When food is prepared and waiting to be eaten by a hungry consumer, every minute can impact the quality of the meal. Now that so many operators are embracing consumer demand for delivery and are seeking to stand out in a growing crowd of off-premise dining options, the next push is to make that delivery as fast and seamless as possible. For a number of major brands, that means delivering in less than 30 minutes and striving to shave additional time off of that rate. In addition to restaurants adding pick-up shelves for delivery drivers collecting orders and opening delivery-only kitchens in locations with a critical mass of customers, Skift Table reports that some brands are introducing prepaid delivery for third-party couriers and retrofitting vehicles to become mobile kitchens that can cook a pizza on the go. (Pizza Hut, for one, is testing a robot-powered pizza kitchen that sits in the bed of a modified Toyota Tundra.) How can you shave minutes off of your delivery?
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.
Are you among the many operators trying to figure out how to make delivery profitable? At a time when off-premise sales account for 38 percent of restaurant sales, according to Technomic, delivery has become a must for restaurants, even when the margins aren’t necessarily making the service profitable for those brands. Fortunately, new models are beginning to make the numbers work out. Recent Technomic forecasts have predicted that “subscription models that eliminate per-delivery fees in favor of a flat-rate subscription will emerge to present a clearer value proposition to customers.” The Spoon reports that a number of third-party delivery providers have come up with palatable offers for restaurants and consumers alike: DoorDash’s DashPass offers a monthly subscription of $9.99 for delivery of orders priced $15 or higher from a selection of restaurants, and Postmates has a similar offer. In the UK, Deliveroo is offering a £7.99 per month subscription for orders of any amount, and Uber Eats is reported to be testing a loyalty program that could eliminate delivery fees — if the experiment works there, it is likely to make its way across the pond eventually. Even operators who aren’t opting for subscription models are finding ways to make delivery profitable. In fact, delivery may be helping Chipotle make a comeback. Skift Table reports that delivery sales climbed 13 times in the fourth quarter of 2018 as compared to the same quarter of the previous year. Chipotle’s CFO credits a couple of factors for the success: the creation of a separate, digital food assembly line for off-premise orders, which enables the restaurant to process a greater number of orders, as well as a delivery-friendly menu (burritos and taco bowls are good travelers).