Change of a Revolutionary Nature
Those in the restaurant business have seen some notable change over the past few years, but certainly it’s not limited to just this sector of the economy. Advancements in technology have affected us all, from those remarkable pocket computers we now refer to as “phones” to, (less obviously perhaps), the software tools for the restaurant business.
It wasn’t too long ago that we had just a few options for eating out, but now, in the blink of the proverbial eye, we have virtually unlimited types of dining experiences from which to choose. One of the latest taking the industry by storm is known as “fast-casual” dining. Where I reside, (Los Angeles), the first couple of examples that come to mind is the chain called Lemonade, along with all the ubiquitous Poke joints that seem to be sprouting up around So-Cal like mushrooms after a rain.
What, Exactly, is “Fast Casual”?
Some of the more prominent elements that qualify an eatery as such include the choosing and ordering of menu items at the counter, (as opposed to front-end table service), and the exceptionally high quality of said menu items enjoyed in a more upscale (yet casual) environment.
These so-called fast-casual restaurants are such disruptors that many of the more traditional fast-food chains are starting to feel the pain of market share loss. One recent study in 2014 concluded that fast-casual chain sales had expanded by a significant 11 percent in just one year.
Is Something Missing from the Menu?
However, what seem to be often missing are the exploitation of advanced analytics and the build-up of large data infrastructures. Once an exclusive resource limited to the larger market entities, these digital resources have shown to be a catalyst for unleashing higher levels of ROI and growth for many segments of the restaurant industry.
Now that access to the “Cloud” and “Analytics as a Service,” (which refers to web-sourced software used by businesses to define, predict, and improve their performance), are more universally available to restaurants chains large and small, these kinds of tools offer restaurant businesses an easier option that avoids the time, expense and hassle of creating their own internal hardware systems to accomplish such helpful yet complex analytical tasks. What was once financially out of reach for a newly emerging fast-casual chain is now affordably attainable. These smaller fast-casual restaurant chains can now share in the spoils of the revealed insights from such sophisticated software, just like the bigger players do. This means they can now glean valuable marketing information that goes further than the usual point-of-sale system data and that the wealth of advanced analytics can now be accessed by these smaller companies to help bolster their economic performance.
Beyond Old-Fashioned Business Intelligence
Business Intelligence (BI) makes available information on what occurred in the past, which can be somewhat helpful, but doesn’t deliver on how or why these things happened in the first place. On the other hand, advanced analytics reveals the “why,” which helps a business to predict possible outcomes for the future based on sophisticated analysis of data. Once upon a time all a restaurant owner had was his or her intuition and experience to draw upon. Now the business owner can reap the harvest of remarkable access to objective, data-based information that can help to reveal a company’s potential future.
Don’t be Misled by Averages
Restaurant management can be easily drawn astray by the averages revealed by their Point of Sale (POS) systems. Such data can be quite illusory if it isn’t more deeply analyzed with an eye toward its multi-layered and multi-dimensional implications.
A good example would be how average monthly sales can indicate noteworthy and seemingly impressive results for a particular product, yet once examined more deeply it is revealed that the figures were boosted artificially by discounts due to a limited-time promotional effort. This would still appear as high volume sales on average, but the all-important profit margins may very well be non-existent or one might even be facing a loss in that case.
The Parts of the Analytics Whole
Restaurants accumulate POS system data as the first step in analytics reporting, which helps show restaurants what has occurred in the past. For instance, management could access the number of appetizers sold in the previous week, month, or last quarter. More helpful however would be the drilling down into all the implications. For example, why are appetizers having better sales on Wednesdays as opposed to Tuesdays?
Fast-casual outfits are now empowered to learn the catalysts and factors that boost revenue and, by exploiting predictive analytics, better plan for the following quarter’s revenue or to adjust to be more competitive. By exploiting software that provides analysis and predictive analytics, fast-casual chains can undertake actions to improve their operations and to employ strategies to encourage better profitability.
The Fast and the Casual
Below are some of the ways these restaurants are improving performance with the application of advanced analytic software:
The Maximization of the Menu
The optimization of a fast casual menu by utilizing analytics can help in boosting profits via the offerings on said menu. For instance, if one’s menu has way too many choices, both the kitchen and, by extension, the staff can more easily get bogged down, resulting in longer wait times for customers. Conversely, if the selections are too limited then various opportunities for increased revenue might be missed. The reconfiguring of a menu via analytics can increase both profits and customer approval.
Restaurants can categorize customers by their purchasing preferences, demographic specifics, and other characteristics so as to better target them with pertinent promotional actions to help in improved engagement and profitability.
- Improving Staff Efficiency
Exploiting the power of analytic software can assist restaurants in better optimizing their staff throughout their stores so as to increase customer satisfaction by meeting various observed needs and preferences, whether within the context of a typical hour or day or in a more general sense. This technology can also be exploited to get a far better idea of staff details, such as individuals’ performance and how to more efficiently allocate one’s human resources, to name just two.
- The “Fast” in Fast Casual
Fast-casual establishments obviously need to live up to their name and desire their food deliveries to happen quickly. The use of analytic software can assist in the achievement of these goals by increasing service speed, which leads to more customer satisfaction. An example would be the ability to observe the individual register and drive-through window speeds and then make the necessary adjustments, human resource or otherwise.
Analytical Tools, ROI and a Stand-Out Service Provider
Research has shown that using advanced analytics can reap a 3 to 1 ROI. This is not insignificant, especially given the huge upfront costs and thin margins for much of the restaurant business.
Due to technological advancements and economies of scale, advanced analytics is now available to even those with smaller budgets. A good place to start your investigation is an extraordinary service provider called “Acutely.” This service provider combines industry experience with result-focused data science to deliver on real-world business data. Acutely helps restaurants to make smart real estate, operational, and marketing decisions with their data insights. It also assists with site selection and data analysis for both restaurant and entertainment operations. The core of their analysis is a custom segmentation model, which allows them to accurately predict consumer behaviors and to identify those who are more likely to become VIP, core, or infrequent customers. They apply this ingenious model in a variety of ways, depending on a company’s needs and aspirations.