Restaurants are increasingly facing challenges posed by Food Tech startups. Here’s how restaurant marketers can use omnichannel marketing and customer engagement to stay relevant and enhance their marketing efforts.
The restaurant business is a service-driven industry but is recently being challenged by food tech startups. These food tech startups operate on different business models such as online aggregation, order-only, delivery-only, cloud kitchen, etc.
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Although food tech startups are a boon for consumers from the convenience perspective, they are hampering the restaurant industry in the following ways:
- Massive discounts are causing small and medium scale restaurants to face heavy losses as diners prefer ordering food from plush restaurants at discounted prices.
- Since online aggregators charge commissions for delivering food, as the commission percentage increases, the profit margin decreases for restaurants.
- Restaurants need to pay a premium amount to get noticed on the aggregator platform.
- Online aggregators are slowly integrating cloud kitchen in their business model. Self-promotion and customer data availability will make it easy to scale their business, and it may hinder the profits of restaurants in the process.
While many restaurant chains are evaluating options such as dark kitchens (back-end kitchens for delivery only) to tackle these issues, here is how omnichannel marketing and customer engagement can help restaurant businesses enhance their marketing strategies.
1. The Change Begins With Digital Transformation
Successful restaurants have already adopted digital transformation in their strategy to face the challenges posed by food tech startups. A well-rounded MarTech stack will enable restaurant marketers to connect with their customers effectively and build a loyal customer base over time. Here is how going digital for restaurant businesses looks like:
- A digital presence via a website, mobile app, social media, niche portals and directories, etc.
- Food ordering or reservations through the website or mobile app
- Restaurant POS system, digital ordering system, or restaurant management system
- WiFi-enabled premises
- Flexible payment options through credit cards, phone payments, etc.
- Implementation of AI-driven programs such as chatbots and recommendation engines
- Analysis of customer data to tailor the menu based on preferences, tastes, food allergies, average order value, and so on.
Learn More: How the Restaurant Vertical is Leveraging Data-Driven MarTech for Success
2. Build a Customer Engagement and Retention Strategy
Restaurants thrive on repeat business, making customer engagement and retention an essential component of a restaurant’s business strategy. Restaurant marketers need to integrate SaaS solutions in their MarTech stack that would amplify their customer acquisition, engagement, and retention efforts.
Customer retention and loyalty are the results of value and convenience. Value is mostly the output of the food and ambiance, whereas convenience is the output of the following aspects:
- Ease of ordering food — can be done via mobile apps, websites, or self-service kiosks
- Exceptional customer service
- Collecting customer feedback and acting on the suggestions
- A customer loyalty and retention program with incentives for providing feedback can get them to return to redeem their reward points
- Distributing coupons and gift cards based on customer loyalty
When talking exclusively with Shyam Rao, CEO, Punchh about how restaurants can face threats posed by food tech companies, he says,
In some ways, customer engagement and loyalty not only CAN tackle these threats, they are one of the ONLY ways restaurants can avoid being cannibalized by these 3rd parties. That said, many will make the mistake of conflating “engagement” and “loyalty” with marketing campaigns rather than what it truly means: using data to drive relationships and relationships to drive revenue. The biggest challenge Restaurants face these days is how the keep owning their customers rather than having 3rd parties own them – the only way to effectively do this is by integrating directly with your customer engagement solution like those provided by Punchh and others.
While there certainly is some overlap between customer engagement and retention activities, here are some activities that are specifically geared towards customer engagement:
- Using a Customer Relationship Management (CRM) software to maintain customer data
- Keeping customers engaged using push notification, SMS, emails, and social media
- Introducing native and messenger chatbots that allow customers to communicate with the restaurant
- Running contests on social media to increase reach along with driving engagement
- Being proactive by responding to customer reviews and feedback on social media, third-party portals, and directories
Learn More: How Restaurants Can Box-out Competitors and Win Market Share
3. Create Winning Customer Experience (CX) Strategies
Restaurant marketers must be on their toes to cater to ever-increasing customer expectations. Deloitte has identified the following five elements that a diner/guest expects from a restaurant:
- Engage me
- Empower me
- Hear me
- Delight me
- Know me
Restaurants can address all these expectations through an essential component of a winning CX, i.e., personalization.
Personalization is about delivering a splendid CX while the guest is at the restaurant and away from the restaurant. Personalization begins by creating guest profiles and storing individual data such as date of birth, previous orders, preferences, allergies, etc. for later use. This data also forms the basis for the loyalty program. Shyam Rao further comments,
Loyalty programs that treat all customers as “loyalist #424”, “loyalist #345” rather than “Jeremy Smith” or “Megan Brown” are bringing a slap to a boxing match. The only way to take on these convenience-focused threats is to use your data to create an individualized experience that is dramatically removed from what these 3rd parties can offer. It’s no small task, but given that all of these services are born online, they already maybe 3 steps ahead of you in their use of customer data. Any restaurant that doesn’t get ahead of them now WILL eventually lose that battle.
Besides delivering an engaging and attentive service, when the guest is at the restaurant, you can personalize the dining experience by catering to their individual preferences. For example, the chef can prepare the meal considering the guest’s taste preferences and allergies.
While promoting special offers based on birthdays or anniversaries is a great idea, you can tie-in the off-premises experience with loyalty and rewards program. Restaurateurs can ask guests about their dining experience and prompt them to provide feedback and leave reviews on online portals. If you incentivize these actions, guests will look at it as a win-win situation.
4. Using Artificial Intelligence (AI) and Machine Learning (ML) to Enhance Marketing Operations
The impact of AI/ML can be seen in how restaurant businesses are implementing them to improve how they work. Here’s how successful restaurants are leveraging this technology to get ahead in the game:
- Chatbots: Chatbots are used by restaurants to take orders, reservations, and feedback, reply to customer queries, etc.
- Digital Assistants: Restaurants such as Denny’s and Dunkin’ Donuts allow customers to place orders through Amazon Echo and Google Assistant.
- Recommendation Engines: Recommendation engines can suggest customized meals based on individual preferences and patterns. When used in mobile apps, you can send out customized meal recommendations through push notifications or identify upselling and cross-selling opportunities.
- Kiosks: AI-enabled self-service kiosks integrate the best of everything. These kiosks use facial recognition technology to personalize orders. Customers can smile in front of the kiosk to view their previous orders. Along with these new and emerging applications, kiosks are also useful to gather feedback and gauge customer satisfaction.
Learn More: Why Mobile Apps are Key for the Customer Experience
Takeaways for Restaurant Marketers
Restaurant marketing is all the more challenging now that food tech has disrupted the industry. Here are some tips to help you:
- Focus on local Search Engine Optimization (SEO)
- Be truly omnipresent and active across all social platforms your target audience is on, especially Instagram, Facebook and Pinterest
- Get your customers to review you on Yelp, TripAdvisor, etc.
- Leverage geolocation marketing to target audiences near you
Restaurant marketers need to rethink their marketing, customer retention, loyalty, and engagement strategies. You need to implement modern solutions by integrating AI-driven programs in your MarTech stack.
Which restaurant marketing and customer retention strategies have worked for you? Tell us on Twitter or LinkedIn or Facebook. We’re listening!