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Restaurant operators make big data small

Restaurant operators make big data small

This article is part of a special report exploring the new tech boom that is drastically changing how restaurants do business.

Restaurants know more about the customers who walk through their doors today than ever before.

What those customers like or don’t like to eat; what they’ve ordered in the past; how frequently they visit; how much they spend and how they like to pay. Restaurant operators might know a customer’s age, gender and zip codes; whether they prefer Pinot Noir or if they are allergic to pine nuts.

In this age driven by technology, the amount of consumer data that restaurants can mine is virtually endless, and increasingly sophisticated tools are now available to help restaurant operators big and small collect, analyze and manage that data in ways that can intelligently impact all facets of operations.

“Technology that helps you in understanding who your guest is, that’s the holy grail,” said Bill Chait, managing partner and CEO of Sprout LA in Los Angeles, the multiconcept operator of 13 concepts including Bestia, Republique, Redbird and Petty Cash.

Restaurants today have many potential data streams, from loyalty programs and e-mail clubs, to social media channels and payment providers. To meaningfully make sense of it, however, is the challenge — and also the opportunity.

“If you don’t have the ability to capsulize it in ways that become useful,” Chait said, “you’re just going to end up swimming around.”

It’s a challenge affecting all restaurants, large and small. Last month during the McDonald’s Corp. latest quarterly earnings call, the new CEO Steve Easterbrook, who is tasked with retooling the brand, said data can help chains become more “consumer-centric.” And that investment in the space should be expected.

“This means deeper understanding, better listening, better segmentation, genuine sharp insights regarding what our customers want and need and when they want it, as determined from the smart use of data and analytics,” he said. “We need to be the best at knowing what matters most to consumers and we will focus our best talent and prioritize spending.”

Getting to know you

Once upon a time, full-service restaurants relied on general managers or hosts to keep notes on regular customers and their preferences, like what Mr. Smith wants when dining with his wife opposed to his associates, which table he preferred and whether it was his birthday.

Now restaurants have a growing number of tools to know so much more. Online reservation providers like OpenTable allow restaurant companies to keep a digital equivalent of customer notes that provide a stream of information about Mr. Smith.

Using third-party guest intelligence firms like Venga, multiconcept operators like Chait can integrate reservation data with point-of-sale systems across all of his concepts. That tells him Mr. Smith is a frequent diner, whether he’s tried the group’s other restaurants, that he’s a vegetarian who eats eggs, what he typically spends on wine, and whether he prefers dessert.

As a result, service can be tailored to the guest’s liking. There’s no need for Mr. Smith to explain at each of the group’s concepts that he’s a vegetarian who likes a certain style of wine service. They already know — and that efficiency frees servers to attend to other guests.

“The challenge is how do you use the information in ways that feel engaging?” Chait asked. “That’s very different from having a bunch of data and trying to make decisions on the back end. How do you harness this on a personal level to really make a difference?”

Customer engagement isn’t just the goal of high-touch, full-service brands. Some of the largest restaurant chains are tapping social media streams for information about their customers.

Irvine, Calif.-based Taco Bell has pioneered the art of social media listening across many public platforms, from Facebook and Twitter, to Instagram and YouTube.

Taco Bell has a team that listens and responds to all posts that have to do with the brand in a room they call “the Fishbowl.” Every morning, executives across the brand’s various functions meet for a 15-minute “daily stand up,” where the Fishbowl team provides a rundown of social news and insights. The team discusses what people are saying about Taco Bell and its competitors, as well as overall news and trending topics.  

“We do this every day,” said Rob Poetsch, a Taco Bell spokesman. “We see this as the heart of collaboration and breaking silos down.”

The information can give real-time feedback that can be responded to immediately, said Lynn Hemans, Taco Bell’s senior director of business and social intelligence.

When Taco Bell rolled out breakfast nationwide, for example, social media feedback from the East Coast indicated lines were too long because some restaurants had underestimated demand. By the time restaurants opened in later time zones in the Midwest and West that day, Taco Bell had corrected the problem by making sure restaurants were better prepared.

Hemans, however, is now looking to use the data mined from social media in more proactive ways.

The chain is working with media analytics firm Net Base to further segment Taco Bell’s social media audience. Not only can it identify the most passionate customers or brand fans, Taco Bell’s goal is to isolate that segment and understand more about them, like what other brands they love, what they’re talking about more generally and how they behave.

Taco Bell is looking to use the information collected to develop the creative used in marketing campaigns and messaging that will more directly engage that very specific audience. Digital media buys indicate that such specific segmentation enhances engagement.

“This goes way beyond just our fans,” Hemans said. “We do a lot of campaigns with things like value messaging or unique craveable tastes. Now we can create different audiences with different products.”

The process is still in test, but Hemans said the ability to distill millions of social media conversations into action is a game changer.

Of course, the sheer volume of information available is a challenge, she said.

“We try to make the complex simple,” Hemans said. “The simpler we can make it, the more people will engage and the more action we can drive.”

Leveraging loyalty

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Loyalty programs also offer a wealth of information that can inform more targeted marketing efforts.

Los Angeles-based casual-dining chain California Pizza Kitchen, for example, has been working with Paytronix Systems Inc. to study members of the chain’s two-year-old loyalty program, which has more than 1 million registered members.

Ashley Ceraolo, CPK’s vice president of marketing, said loyalty club members tend to spend more, typically adding on to checks with appetizers and desserts. “We also know they come in more frequently the more they are engaged,” she said.

Rather than sending out generic e-mails or texts to the entire base, CPK focuses on more direct messages based on consumer behavior.

Discounts might be used to lure in lapsed customers, she said, but most of the messaging is designed to spotlight CPK’s brand renovation as restaurants are transformed by the ongoing remodel program. So far, 20 of the chain’s 192 company units in the U.S. have been redone, with another 60 on deck to be completed before the end of the year.

“Really, it’s more about talking about our great food, great drinks and that we’re changing and evolving,” Ceraolo said. “Loyalty club members are the forum that’s best to get people talking about that.”

The fast-casual Uncle Maddio’s Pizza Joint, based in Atlanta, has been using the brand’s 30,000-member e-mail club list to develop data for more targeted marketing.

Jennifer Rotondo, Uncle Maddio’s senior director of marketing and branding, recently sent a survey to e-mail club members asking what they liked and didn’t like, who the pizza chain competes with and more.

About 2,800 responded and Rotondo learned that club members “loved exclusivity.” So Uncle Maddio’s created a Secret Pizza Society, with off-menu pizzas only known to members, who are notified of the secret item via text every two weeks.

That base has also brought in more demographic information. The group’s feedback and response to new items helps the culinary team design limited-time offers, and decide whether LTOs should be made permanent, Rotondo said.

As Uncle Maddio’s rolls out a new point-of-sale system that will be integrated with the loyalty program, the chain hopes to capture even more data, said Scott Goodrich, senior vice president of operations and franchise support at Uncle Maddio’s.

Working with PAR Technology’s Brink Software, the cloud-based POS system is an “all-in-one” solution that connects the loyalty program, online ordering and gift cards, Goodrich said.

“We’ll be able to see trends and purchase habits,” he said. “If a customer comes in twice a month and gets a 9-inch pizza and a Coke every time, we can target offers to prompt them to try a salad or something else on the menu.”

As the 34-unit chain grows to an expected 64 locations by the end of the year, the new POS system also provides data that enables Uncle Maddio’s to streamline the menu and become a more efficient and focused operation.

“The overarching vision for the company is to own flavor and taste,” Goodrich said. “We need to be more simplified in our messaging and more simplified in operations. We’ve got to be quick and focused.”

Integrated information

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For most restaurant companies, the POS system is the most crucial data source, but integration across functions is key, said Dave Bennett, president and CEO of software solutions firm Mirus Restaurant Solutions.

“It’s all about grabbing the pieces of the puzzle that is the customer,” Bennett said. “The more data you collect from inside the restaurant, outside and even across the industry, the better picture you have of where you’re executing well and where the opportunity is to do better.”

For example, integrating data from a kitchen display system with the POS and adding in feedback from Yelp can help a restaurant identify that a customer’s bad experience could be blamed on line productivity slowing service times for the front of the house.

“That was rocket science a few years ago,” Bennett said. “Now it’s achievable.”

The next emerging area is predictive data, he said, something Mirus is working on. Already managers have predicting tools for scheduling and inventory management, but that’s another set of silos.

“In no situation are all those forecasts synchronized,” he said. “It should be integrated and it would benefit from the most recent information of that restaurant, not a model that would apply to all restaurants.”

Mirus client Brian Anthony, chief information officer at the Carl’s Jr.’s franchise company Star Chasers Oklahoma Inc., has already begun using the data he collects to make predictability forecasts.

On a Tuesday, for example, units get information about how many dough balls to thaw for fresh-baked buns based on what’s happened over the past four Tuesdays. Star Chasers can cross reference data from a text marketing campaign run by mobile marketing vendor Waterfall with the franchise company’s Expedient POS system, its scheduling program HotSchedules and its mystery shop program Sassie.

The result: If a restaurant gets a bad mystery shop report, Anthony can look at who was on the schedule that day, how sales were trending 15 minutes before and 15 minutes after the mystery shopper visited.

“It paints a canvas,” he said.

As a California-based company that operates 38 restaurants in Texas and Oklahoma, Anthony said, “We want to grab anything we can in terms of data out of our stores and outside and try to examine all of it.”

It’s an investment that has proven worthwhile, he said.

“We’ve done it in pieces over the years,” he said. “But every time we make an investment in big data, we see a return within six to eight months.”

The key is filtering out what you don’t need. “If you don’t have the right tools to analyze, you’re just going to get a lot of noise,” he said.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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