*If you’re hearing about big data for the first time, take a look at Part 1 of our post on big data to get a better understanding of what it is and the effect it can have on your business.
“Big data” is a part of the restaurant industry now.
You’ve heard the term kicked around in conversations, or from staying up to date, but what does it mean for you? Big data is usually held behind an impenetrable wall of jargon like “machine learning”, “AI” and “resilient distributed datasets vs parallel operations approach” and a lot of it can seem absolutely insane.
But, data is everywhere. Every time you log a transaction into your POS, take an order from Uber Eats, or collect a customer’s email address, you accumulate data that you can use to improve your operations.
Best of all, there’s a lot you can do easily–and for free–to leverage the data that you have available to you. “Big data” at its core just means “lots of data about actions that you can look at in order to help your business.”
Using it doesn’t have to be awful—in fact, it should be fun.
In Part 1 of this series, we explored broad trends in big data that are making their way to the restaurant industry. But in this piece, we’re going to get tactical. Sure, some of this isn’t technically big data in the traditional sense, but it’s a stepping stone into the world of data analytics, and a great way to start thinking about the applications as the industry evolves.
Now, let’s take a look at how you can utilize the data that you have to boost your revenues, improve your bottom line, and delight your diners!
Your POS: A Big Data Goldmine
There’s a lot of data that you can collect from your POS, including:
- Sales by time of day, party size, menu items that were ordered, and the ingredients that go with them
- Peak times and slow shifts
- Comparison of credit card versus cash payments
- Inventory of your supplies
- How often certain customers visit, how much they spend on average and what they order most often
The spread of computerized POS systems has enabled more and more restaurants to get into big data. It gives you a way to collect all that information, but it doesn’t come with an extra price tag. If you utilize an electronic POS and are not using it to collect and analyze data in your restaurant, you’re missing out on a massive opportunity to increase sales and expand efficiencies. If you don’t know where to start, speak with your POS provider to find out what their data-collection capabilities are.
If you’re already beginning to collect restaurant data, it’s time for the next steps - putting that data to work.
1. Learn more about your restaurant's trends
Understanding the trends in traffic and sales that happen within your restaurant can be a wealth of insight. It enables you to see what’s happening, plan for specific trends, and create a strategy that takes advantage of the flow you’re already seeing in practice.
Here’s how you can easily analyze and learn from this kind of data:
- Take your POS data and export it as a CSV
- Upload it into Google Sheets and open it as a spreadsheet
- Select the data and hit “Insert chart”
- Play with the data until you’ve got transaction time on the x-axis (bottom) and the number of transactions on the y-axis (vertical)
- Look for interesting trends--weird stuff. We’re not kidding. Look for unexpected anomalies; sure, I’ll bet you get busy around lunch but what about that strange blip in your line graph where you see a spike around 10:30? What could that mean? Use that insight to ask your next customer who comes in at 10:30 if they’re on a break, or just came from a commuter train. Use the spikes you see to drive where to dig next.
- What about combo sales? Single item sales? Group transactions? You can learn a lot by just moving your data around, looking for trends and going from there to further your understanding.
Even if you’re not a data specialist, take a few seconds to familiarize yourself with the basics of spreadsheets and data analysis and you’ll have plenty of tools at your disposal.
If you don’t have a “fancy” POS that allows you to do this easily, you can use other methods to try to extract this type of time-based data. For one, you can collect paper receipts. While it may be tedious and time consuming, you can actually cobble together your own data set—and it will likely pay off big time.
You may also be able to get this data from other tech tools like your scheduling or reservation software.
2. Identify where core customers can be found
If you’re opening up a second location, chances are you have a strong customer base consisting of loyal customers. With big data, you’re able to have a deep understanding of that customer base and find new potential locations, with similar customers, to launch your next location.
Erik Oberholtzer, a founder and CEO of a fast-casual salad chain called Tender Greens, has been expanding his Los Angeles-based chain to New York and the Northeast U.S.
Big data has helped him make decisions about exactly where to expand. A customer analytics firm helped analyze customer data to choose optimal locations. That information combined with data about where Uber Eats and DoorDash make the most food deliveries helped Tender Greens expand into markets full of customers who love what it has to offer.
Here’s how you can do a similar analysis:
- Take your mailing list that you’ve set up on your website (hopefully something cheap and cheerful like Mailchimp).
- Add a “Neighborhood” field to your signup list, meaning that anyone who subscribes will put their neighborhood into the form
- After some time has passed, export your list
- Drop the data into Google Sheets
- Select the data, insert a pivot table, place “Neighborhood” in the rows column and then “count by emails” in the value column
- You now know where your patrons live, down to the neighborhood (generally speaking)
Such data can easily inform where you may find more customers and where it may make sense to open your next location or expand service. If you have many regulars who come from a certain district, key in on that area for a potential opportunity.
This is just one example. If you have a couple of bucks to spend and are comfortable with it, try buying some data about your Instagram followers and filtering using a similar method.
Here’s another pro-tip: Add a birthday field to your email list form and then send out happy birthday notes to your customers.
Not only will they love you for the gesture, you’ll get more data about your customers that you can easily analyze and use, like the average age of your clientele.
One caution: Don’t ask too many questions that’ll dissuade people from signing up in the first place.
3. Personalize the dining experience for your most valuable customers
With so many companies focused on the customer experience, customers often expect to be wowed—including by their favorite restaurants.
One of the best applications for big data on your customer base is personalizing their dining experience with you. A tip would be to start with your most valuable customers (say the top 5%) and then eventually scale to the rest of your guests.
Michelin-starred Oriole in Chicago uses big data to identify its top 100 customers so when they come in, they can be greeted by name. It’s a small touch that makes a big difference, according to Co-Founder Cara Sandoval. "It surprises people, in a nice way, when they didn't make the reservation themselves," she told The New York Times.
How to create a “wow” moment
First of all, you need to be able to access customer-level data. Depending on the type of restaurant and what technology you’re using, you may be able to get your hands on this data from one of a few different systems.
Most likely, you can get data on individual customers through the following means:
- Reservation or wait list application
- POS and credit card processing system
- Food delivery or ordering apps
If you’re able to get your hands on this data, then the process of identifying your top customers is pretty simple.
It just takes a few steps:
- Export your data from your account
- Use the pivot table method above to sort customers by row and sum number of orders in the value section of the table
- What do you see? You’ve just pulled out an aggregated list of every time someone has visited your location, whether or not you were there to personally shake their hand.
But, the raw customer data is just the beginning. It’s what you can do with this data—how you can make these regulars feel like rockstars—that’s really important.
Here are a few ideas for how you can “wow” them:
- Print off a list of your best customers’ names. Put it next to your terminal and watch for the orders to come in. When a frequent shopper pops up, take a second to write an extra note or add something complimentary into their order, and ask your staff to give them the gold star treatment.
- Match the names in the system up with your email list, loyalty program, or business card free-lunch raffle jar. Reach out to them to thank them.
- Just watch for them. Look at the profile picture that’s required to identify a patron when they place their order ahead of time, get to know the people you see all the time and let them know the next time you see them.
Does this feel a little creepy? Use your judgment—don’t get too Orwellian with it.
The most important part of creating an incredible experience for your customers is to be sincere. There’s nothing wrong with a little tech help to help kick off a good old fashioned conversation.
4. Evaluate your marketing efforts and focus on what works best
Depending on how sophisticated your digital marketing strategy may be, you can uncover a trove of insights by looking at online traffic and advertising data.
This information may lead you toward all kinds of conclusions and practical steps that you can take and apply to how you’re running your business. The trick here, though, is that you have to actually look at—and analyze—the data that’s available.
Many restaurants outsource their online marketing and website “stuff” to a third-party contractor or agency, which is totally fine (they’re the experts, right?). But that means that you need to be proactive if you want to get useful data from these folks that can help you make smarter decisions.
What kinds of marketing data to ask for:
- Page visits, signups, reservations (top line).
- Page visits, signups, reservations segmented by campaign and date. This will tell you specifically what ads work and which ones are best.
- Traffic sources. Similar to the campaign info, this will tell you where your advertising is working, be it social media, web advertising, or even email.
- Traffic location: See Tactic #2 above. Maybe you’re big in Japan and you don’t even know it!
5. Make your loyalty program easier and more effective
Big data gives you a variety of new ways to put your existing loyalty program to better use (or launch a program if you don’t have one already).
When you have demographic information about your customers, as well as their names, addresses, emails, birthday, and phone numbers, it’s easy to automate a loyalty program that will catch their attention.
But the trick is that you first need a digital loyalty program that allows you to capture this information.
Once you have that initial data, your loyalty program itself becomes a powerful source of information that you can use to analyze and identify trends, as we did above.
Setting up a digital loyalty program
When it comes time to create a digital loyalty program, you basically have two options: Build it, or Buy it.
In most cases, it’s much more cost-effective to simply use an off-the-shelf solution rather than to build your own program from scratch. Depending on your goals, the type of establishment, and any specifics about the program that you want to implement, that may not always be the option.
The decision really depends on your context. You should start by doing a lot of research on what successful loyalty programs look like and what options are already available. You may find that a vendor already has the perfect solution for your needs—or you may decide that you definitely need to design and launch your own.
Here’s where to start the process:
- Read this extensive guide and develop questions to ask yourself while you’re brainstorming
- Check out these examples of some best in class apps
- Explore solutions from established brands like Belly or explore a white label solution (Meaning: their product customized for your brand) from a POS provider like TouchBistro
- Look into hiring a developer from Upwork or an agency, depending on how much you’re willing to spend, but expect the cost to be higher
- Decide how you’re going to execute it
The important thing to ask yourself is, “Will gathering the data from my business offset the development costs?” This is a critical point for every restaurant owner to consider when deciding to invest any sort of data-driven effort—whether you can put it to good use and make it profitable.
Don’t rush into it lightly, but if a loyalty app makes sense for you and the data you’re looking to compile, you’ll likely never look back after the initial build.
6. Maximize sales and profit from your menu
The data you collect on your sales by menu item and ingredients can help you create an efficient menu that’s full of the items guests order most frequently, while identifying dishes that are less popular. As a result, you can increase your bottom line by cutting costs on having to store several ingredients you may not use or will end up throwing out.
Dickey’s Barbeque Pit, a U.S. chain with more than 500 locations, has put big data to use when it comes to maximizing their menu profit potential in a number of ways.
The restaurant chain accomplished this by designing a drink menu to complement the food options on offer, leading to an increase in average ticket size as patrons ordered the proper beverage pairing. Another way they’ve used data is by analyzing the performance of all menu items and removing the ones that were the least popular. That freed them up to add in new options and double down on popular items that increased revenue and profit.
How to analyze your menu data
This tip takes some of the examples from above and brings in some principles of menu hacking, but with fluid, powerful, and accurate data on which to base your decisions. Most likely, you’ll want to turn to your POS, again, as the main source of data:
- Export data on every order, including items, price, time, and location
- Visualize the data using Google Sheets
- Look for trends or anomalies--you know, weird stuff
- Identify what these anomalies may be telling you
- Act on it!
Maybe you’ll discover the popularity of a certain dish wanes during certain hours?
Consider offering a special during that time, which may help you sell more and justify the cost to prepare the dish. Even better, maybe your diners will get a taste for the dish and order it during regular hours when they just have to have it.
Maybe you’ll notice your most popular dish features salad instead of that saffron rice?
Try different combinations of your most popular items, accrue some sales and see what happens to popularity. Paying attention like this can yield massive results from small changes over time to your bottom line while ultimately providing a better experience for your customers.
The art and science of perfecting your menu—often known as “Menu Hacking”—is a beast all its own. To learn more about how you use this data to make smarter decisions, check out these two resources:
1. Menu Hacking: Cost Per Meal & Smart Design to Maximize Profits
2. The Ultimate Guide To Running a Restaurant
Becoming a Data Master.
Big data may seem like a daunting addition to your restaurant marketing toolkit. But as collection and analytics tools become more accessible, it will become easier to learn from the numbers and apply the insights accordingly.
It will also become more likely that your competitors are using data to their advantage—and therefore increasingly important that you do, too.
There are tons of resources on the internet that blow our simple examples out of the water, and we’d love to hear about any guerrilla efforts and hacks you’ve pulled together yourself. Send them in and we’ll feature you in a future article!
Get ahead of the curve and start collecting and using your restaurant’s big data today!