What’s on the Analytics Menu for the Restaurant Business?

What’s on the Analytics Menu for the Restaurant Business?

The origin of restaurants can be traced back to the advent of civilization. In ancient Rome, there existed thermopolia (now popularly referred to as resto bars) that served food and wine to patrons. These establishments had counters in which earthenware could be placed to store different varieties of food. They catered to travelers and people who did not have the facilities required for cooking. Patrons could socialize while indulging in hot meals, including baked cheese with honey (a delicacy back then), and spiced wine.

Evolution of the Restaurant Business

The first modern restaurants came into existence in Paris during the 18th century and can be attributed to the French Revolution. In the 19th century, Paris saw the growth of restaurants in terms of both type (cafes, gourmet dining, etc.) and number. The concept of the French restaurant went global in the 20th century when the travel and tourism industry began to flourish. In the 1950s, McDonald’s set the precedent for franchise restaurants when it took inspiration from Henry Ford’s assembly line concept to produce low-priced food quickly in large quantities.

The restaurant business has since grown tremendously with the increase in demand for ethnic food, rise in population, globalization, and advances in technology. In 2016, the restaurant market in the US is expected to reach more than $782 billion. The market has sure come a long way considering the fact that it was worth 42.8 billion in 1970.

US Hotel Industry Size
Data credit: www.statista.com
Travel and Tourism Market Segmentation
Data credit: www.travelweekly.com

In 2016, the market will also retain its position as the second-largest private sector employer in the country with an employee base of 14.4 million (source: www.restaurant.org).

The catering business in Asia has also seen considerable growth over the years. As per the China Cuisine Association, the Chinese restaurant market was at 3 trillion yuan ($452.35 billion) in 2015. According to the Boston Consulting Group, the Indian food market was worth about INR 23 trillion ($344.85 billion) in 2014 and is estimated to reach INR 42 trillion ($629.73 billion) by 2020. 

In the Indian food and beverage industry, quick service (fast food) restaurants hold the highest share at 45%, followed by casual dining restaurants at 32% (source: Grant Thornton India and FICCI).

Data Generation and Analytics in the Catering Space

Similar to any other business, restaurants generate large amounts of data on a daily basis. Restaurant business owners have started deploying analytics to improve operational decisions and extract savings.

For example, analytics helps identify and eliminate menu items that are not meeting the required sales levels. This reduces food waste and thereby saves cost. Conversely, analytics aids owners in stocking up food items and beverages that are doing well in terms of sales. Further, it enables businesses to make impactful marketing decisions such as determining the most opportune time to offer discounts, raise prices on menu items  and boost profits.

For quick service restaurants that thrive on high volumes and low margins, profits are directly proportional to service speed. In such a scenario, restaurant analytics helps track the productivity and performance of individual members of the staff. This aids in choosing the right employees for front-of-house (FOH) and back-of-house (BOH) operations. This creates a win-win situation for restaurant owners; apart from improved customer experience, increased employee satisfaction is also achieved.

Application of Analytics: Use Cases

KFC uses data analytics to gain insights on how customers react to new product launches and restaurant revamps. Analytics helps understand the cause-and-effect relationship between business initiatives and results. The restaurant chain is, therefore able to make effective and data-driven business decisions to improve customer experience and boost sales.

Domino’s leverages customer segmentation data derived from big data analytics to create and implement upselling strategies and increase profits. The chain also uses this data to assess the performance of its individual stores and create growth plans. In addition, analytics facilitates the logistics pertaining to the timely delivery of orders within an area.

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Technological Advances in the Restaurant Industry

One of the major technological advances in the restaurant space is the introduction of smart restaurants. With rapid advances in technology and software, the way customers are serviced at catering establishments is undergoing a gradual metamorphosis.

For instance, Ebony Interactive Restaurant is an establishment in Dubai that has introduced smart tables to engage and serve customers. Smart tables are basically interactive tables with a touchscreen interface. Customers can not only use them to place orders but also play games, read the news, and pay the bill. These tables also have Internet and cable TV support. The tables here also have the Chef Cam feature, which allows customers to watch their food get prepared through the kitchen video feed. Inamo, an Asian fusion resto bar based in London, uses a similar interactive table system called E-Table. iEat is another smart restaurant table, which was developed by FORTH-ICS. Many restaurants are trying to tap this technology to reduce labor costs, provide a differentiated customer service, and improve customer engagement. Using this technology not only makes data collection less cumbersome but also expedites the processes related to customer analytics.

Restaurant Analytics: An Imperative for Continual Growth

Restaurant Analytics: An Imperative for Continual Growth

The rising popularity of smart technology, growing youth population, increasing disposable income and evolving consumer preferences are among the many factors that are contributing to the growth of the restaurant industry. Many restaurants worldwide are using big data infrastructures, high-end analytics solutions, and advanced algorithms to derive metrics pertaining to staff performance and customer needs. Restaurants that do not have data scientists and predictive modelers onboard are adopting analytics-as-a-service with no long-term contracts or heavy investments in hardware, software, and technical support. They are using scalable cloud services and POS systems to store customer data. Owing to the availability of such technologies, businesses in the catering domain can make data-driven operational and marketing decisions instead of relying solely on their experience and instincts. The restaurant market depends heavily on customer loyalty and feedback; therefore, competition among the market players is intense, to say the least. In this scenario, analytics will continue to play a critical role in helping businesses gain that competitive edge and propelling sales figures through the roof.

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