Experts from our Digital Team recently authored an article about helping restaurants shift to curbside pickup and delivery based on conversations with some of our clients. Now, as we are deep into the shut down (or should I say, "shut in") it's becoming apparent that restaurants need to think beyond short-term and temporary business adaptation efforts amid this crisis.
They should not be asking themselves, “how am I going to survive this?” but “how am I going to come out of this stronger?” Every single industry is experiencing accelerated transformation of their business without choice. And that change is happening right now — every second matters.
Just four months ago, facilities management firm Vixxo released research showing that 62 percent of Americans preferred dine-in over take out or delivery. So while drive-thru, delivery and grab-and-go have become popular concepts in recent years, the restaurant industry has long been geared toward the dine-in experience.
However, in the wake of recent events, The NDP Group recently came out with preliminary findings that suggests restaurant digital orders are now projected to triple in volume by end of 2020. This radical shift in customer need and behavior requires immediate and intense recalibration in QSR and casual fine dining digital strategies.
Right now, many brands are in triage mode. Expanding to delivery and curbside options are table stakes. But companies that are actively reevaluating their marketing, customer experience, operations and fulfillment practices are going to come out of this smarter and better prepared to evolve their brand and grow their business.
A re-calibration of marketing is required
More than likely, every 2020 marketing plan is now being rethought. Today, more than 50 percent of Americans get their news from social media. Streaming is at an all-time high, from mobile to TV.
Content creation may have stalled for platforms like Netflix and Amazon, but we're already seeing an increase in user-generated content that will continue to push platforms like YouTube and others to evolve. Shows that reach mega-hit status, like Stranger Things, might soon be created by your next-door neighbors.
Gaming has become an increasing source of entertainment as reports show that video game sales have skyrocketed. Platforms like Twitch are seeing an increase in viewership of up to 15 percent. The current social guidelines have allowed companies like Twitch and other platforms to roll out new features, and it has given rise to new products and channels so we can all better occupy our time — in different rooms from the rest of the household, of course.
Playbook steps to drive outcomes
Now is the time for restaurants to laser focus on business outcomes and the underlying marketing (read customer) data. Restaurants need to understand what is changing about their customers’ expectations and where they spend their time digitally.
The playbook for any restaurant should include close evaluation of the following:
- a shift from national to neighborhood marketing;
- ROI of current marketing strategy and channels;
- value of new vs returning customers;
- order recency, frequency and size;
- A/B testing of promotions, offers and menu items; and
- customer satisfaction metrics.
Segmentation and analysis will be required to predict behaviors and find opportunities to create connections. How quickly can channels be abandoned and new ones acquired? How important are a restaurant’s safety and cleanliness measures? What about the importance of safety for employees, customers and vendors? These things matter right now.
Many companies are identifying causes to align with to create deeper customer connections, and they are doing this on a hyper-local level. National efforts should now be neighborhood based, fueled by strategic promotions designed to show their place in a community.
Takeaway 1: Your marketing efforts should be data driven, as local as possible and focused on clear revenue-generating business outcomes.
Customer experience has never been more important
The consumer experience changes when customers can no longer step foot inside your four walls. While everything is now rooted around convenience and the experience associated with it, what restaurants need to understand is that experience is still controllable. Restaurants that already have native delivery and pick-up built into their model are obviously better suited to act, but there are still plenty of opportunities for every business to control the customer experience.
While third-party delivery services like Uber Eats and Grubhub may expand fulfillment opportunities, they also present a handful of issues. For one, their experience does not have a restaurant’s brand in mind — neither do their drivers. This creates distance between the brand and customer experience. It also makes it difficult to capitalize on loyalty and rewards initiatives, or surprise and delight opportunities through these channels.
The challenge for restaurants is not only staying in control of the experience, but optimizing channels where the brand can be present. Doing so will allow restaurants to better manage timing, safety and overall quality. Just having an app or online ordering option isn’t a silver bullet. Platforms like Facebook Messenger, SMS and iMessage — which offer true 1:1 engagement and are payment ready — offer new opportunities and can be augmented or managed via chatbot to eliminate some of the manual management required.
The telephone may be the oldest ordering mechanism, but it doesn’t have to be the most analog. In an era of personal assistants, IVR (Interactive Voice Response) is a technology that is quickly becoming ubiquitous and easy to implement. There are a number of platforms designed specifically for food ordering, making phone orders one more thing businesses can automate.
Takeaway 2: If the bulk of your customer experience are happening through third-party services, you’re losing the ability to differentiate your brand and control valuable customer data. Restaurants need to make sure they control customer engagement.
Operations and fulfillment
Every restaurant is adapting its fulfillment process at this time. One of the key factors to successful implementation of “contactless” experiences is to bolster the existing technology stack to ensure it can stand up to new integrations and operational irregularities.
One must not only be able to expand, but also have the ability to extract and review data to help inform the topics discussed above. Restaurants that have this in check — that have a modern and modular stack — are better positioned when adding new SaaS-based features or refining existing purpose-built e-comm platforms.
Operationally, restaurants built for dine in may have an advantage. Along with business models, physical spaces can (and should) be adapted. Spaces that were once bustling with dine-in patrons can now be utilized for any number of things:
- quarantine and sanitation spaces for supplies deliveries;
- extended prep areas to allow for kitchen expansion;
- queueing areas for curbside or delivery;
- space for extra coolers/heaters, as needed; and
- storage of hard-to-find or specialty items.
A number of recent articles have highlighted restaurants moonlighting as grocery stores, along with temporary deviations in menus and business models. But what if these temporary shifts become long-term ones? Restaurants and retail may look drastically different in the future.
Even the outside perimeters of restaurants are changing. Chains like Texas Roadhouse and Applebee’s are utilizing the entirety of their parking lots to streamline their queueing and curbside systems. If everything we’ve discussed so far (marketing, experience and fulfillment) are running harmoniously, then why not take advantage of this space?
Likewise, food lockers originally popularized by Instacart for grocery pickup can be an advantage for restaurants not reliant on delivery or drive-thru. For one, it allows them to continue to own the customer experience and keep more of the bottom line.
Takeaway 3: Reevaluating business models, operational processes and menu offerings may not just be a short-term exercise. Consider how adaptations for convenience might affect your brand’s long-term goals and plans.
The restaurant industry is changing before our eyes on a daily basis. Is your business doing enough, fast enough? While it’s important to make the adaptations necessary to survive in the short term, there’s an opportunity to view these trying times through the lens of long-term opportunity — as a chance to rethink and evolve your approach to digital channels and customer engagement.
Could the future of restaurants be a mix of dining and retail? Or what about the concept of a restaurant hub and satellites system, where the hub handles the prep and distribution of key items while satellite locations serve customers with minimal staffing or full automation (think of bank chains with branches inside of grocery stores)? These ideas don’t sound as crazy today as they did a few months ago, do they?
One thing’s for sure: this experience we’re all going through is forcing the restaurant industry to push the envelope of convenience, and that’s a concept most likely here to stick around long after we put these pandemic worries to bed.
In the meantime, we recommend keeping these takeaways in mind as you assess your options and work your way through the playbook steps we outline above.
- Your marketing efforts should be data driven, as local as possible and focused on clear revenue-generating business outcomes.
- If the bulk of your customer experience are happening through third-party services, you’re losing the ability to differentiate your brand and control valuable customer data. Restaurants need to make sure they control customer engagement.
- Reevaluating business models, operational processes and menu offerings may not just be a short-term exercise. Consider how adaptations for convenience might affect your brand’s long-term goals and plans.
See how we collaborate with HPE, one of our strategic partners, that helps us bring solutions to life. And as always, if you need any guidance, we’re here to point you in the right direction. Let us know how we can help.