We have seen that restaurants have been adopting technology like never before. From understanding the importance of data to knowing what their customer want; technology has helped restaurant in a big way. And, it has got at its peak during the pandemic when restaurants had to innovate and adopt technologies that were important for their fast growth.
As per a BCG report, the reach of food tech aggregators has grown six times from 2017 to 2019. At the same time, we see consumers spend more than double them e and order online, from 32 minutes per month in 2017 to 72 minutes per month in 2019. Riding on the wave of higher consumption in a growing market and maturing dynamics on the supply side, the industry is expected to grow from $4 Bn to $8 Bn in next three years, a massive 25% growth rate.
“When I think of digital from a customer perspective I look for a constant update of my order; where is the food, has the order been allotted, has the rider left the place etc whereas when we go to a dine in place we hear digital as those QR based menus, payments etc,” shared Rajat Tuli, Partner at Kearney by adding that there is a fare amount of digital that goes into operation as well whether it is robot preparing food or serving food or a sensor that helps a restaurant count inventory and is pretty much present everywhere in today’s time.
But as we have seen the coronavirus pandemic spreading across the globe, consumer preferences is changing with time making digitization, technology and data the most important tool for a restaurant to evolve and innovate. As per a LimeTray report, 83% restaurant operators prefer built-in features over integrations to be done later as they have seen that technology has changed the whole equation of the business.
Tech benefitting customer experience
More and more customers are ordering online for delivery or pick-up than ever before. According to forecasts, the Indian food service delivery market is expected to more than double to $13 billion (Rs 93,600 crore) by fiscal 2023 from $5.2 billion (Rs 37,440 crore) in fiscal 2020. Hence, for restaurants, this is an opportunity to reach more consumers with better technology and ordering services. Namely, restaurants can update their data strategies and partner with top food aggregators and platforms that provides data for better understanding of their clientele, supply chain, and point-of-sale information to get a complete picture of individual customers and hence can altogether enhance the consumer engagement.
“In my experience for an individual restaurant owner every experience counts and data is something that they will not necessary embrace as it takes away the flavor from the feedback. That’s how traditionally restaurant owners have looked at data. It has its pros and cons and pros obviously being personal with experience and the cons are when you start looking at expanding your business,” shared Rakesh Ranjan of Zomato who believed that there is lot of scope for improvement as there is a lot of input metric that goes into delivering the best customer experience.
Platforms like Zomato and Swiggy that changed the whole delivery and technology trend in India by adopting to these data and metric. A very close example of the same is ‘kitchen preparation time’ that’s not only relevant for delivery but also for dine-out. What happened in general is that many a times a brand optimizes its kitchen operations to have certain amount of kitchen preparation time but they do not optimize it for variation in kitchen preparation time and that’s where in-consistency happens that drives a customer not necessarily a high or low waiting time.
Not only this, research shows that 74% diners rank discounts and offers as the second most important feature for an online ordering website and it is also one of the metric when we look at customer experience.
How important is it to look at your data?
We all have been hearing a lot about data and its importance and have seen Restaurants collecting a huge amount of data to understand the consumer behavior. From getting to know about the popular dish on the menu, to including the number of times a particular dish sells in a day, popular times of day, average ticket cost, etc. These data really helps in understanding the market segment and consumer preferences very well.
“For a brand in the organized segment data is very important and they have understood the data very well as this has helped them deliver that customer experience to the table. So, if you talk about CRM in good old days it was when you enter a restaurant and the server greets you- from there your experience starts. In today’s world the CRM has turned into data analytic tools. So, when they go on expansion mode they use these data analytics to understand the customer taste, preferences and deliver the best experience,” pointed Vaibhav Singhal of DroptheQ by adding that smaller brands still doesn’t have an access to these data but there is requirement to help them as well and have some inclusivity in the industry so that everybody grows at the same scale. According to him, as the sector is all geared up to become $100 billion industry by 2025, where both organized and un-organised would contribute equally to the growth of the segment, data analytic is very important for governance, transparency, cost analysis and also the profitability and ROI of a brand.
Commenting on the same, Mudit Tandon of Chuk added, “I feel data for all of us is very important when we look at consumer behavior, what kind of pricing or costing a restaurant need when they talk about disposables, their packaging. And, that’s how we design a product at Chuk with the help of data. So, it’s definitely important for the industry as a whole.”
How much can you customize?
Though data has helped us a lot in understanding what the customer wants more or less but what do we do to understand and do a customer specific innovation is important.
“As a chef for me it is important on how to make the brand’s reach available to the customer. It could be SMS, promotions etc but for me the first hunger pang starts with your eyes and then you get hungry to order from it and that’s how these platforms give you the kickstart,” commented Harangad Singh, Chef and Co-Founder at Gurgaon-based cloud kitchen Parat for whom when scaling a brand it’s very important to have digital partners to help them get certain visibility and clientele. And, unless one is not present across these platforms it’s very difficult to crack the same sale. And, also for him ‘customer is always the king’ and hence he has taken an extra effort for the customer experiences by following a simple theory of ‘never say no policy’.
But if we look at some of the global brands who have scaled to 1000+ outlets, expanding to geographies and boundaries, the ‘Dell’ model of customization has helped them reach to a set target of audience.
“If we talk about a QSR ( biryani, pizza, burger) where 80 per cent of the thing can be ready and last 20 per cent can be customized where your CRM will help you identify the exact need and history of the person who has come to you or whose order has landed in your platform,” added Singhal.
However, many a times customization beyond a scale of 2 doesn’t work as each brand has got its own identity and it has limited ways in which it can be customized. According to Ranjan who has always looked at data and dig deeper into it by understanding the consumer psyche, customization can be done in two ways- making changes to regional preferences that not many people do which means that the biryani taste in Delhi should be ideally different from its taste in Hyderabad. Lots of brands are now started warming up to it and some are already upfront and have done it. But when it comes with single brand customization, he has seen that lots of brands have come up with multiple brands which actually cater to different segment and that’s the right way to approach customization beyond the scale of two.
Own delivery fleet v/s a third-party data
The BCG report also claimed that the reach of food tech aggregators has grown six times from 2017 to 2019. At the same time, we see consumers spend more than double the time to explore and order online, from 32 minutes per month in 2017 to 72 minutes per month in 2019. Not only this, Zomato that’s one of the largest players in the delivery space earlier this November said that the next 10 years in the Indian internet ecosystem will be unprecedented and will create a tremendous amount of wealth and progress for our country.
“The brand need to ask itself that what is it that will create value and it should be in a place where it does so. It should not be doing the non-value added task. There could be a brand identity where last mile experience is highly value adding and it gives almost 70 per cent of the value then they should try and do it. But that’s happening only at 5-10 per cent of the brand,” added Ranjan who pointed that there’s an assumption that owning the supply chain or the last mile is cheaper.
However, when you calculate the cost in actual with brands who have their own delivery fleet of 200-300, the cost at the minimum is 1:2. So, if the delivery through the aggregator is X, the delivery through your own fleet is 2x.
“Initially, it is best to start with third party aggregators but over the period of five years it may want to have its own delivery fleet. But then, if this is the case, the brand has to have the strategy right and start working on it from the day 1 because it’s not just last mile delivery but also lots of others value that these aggregators add,” added Singhal.
And, there is no denying that it take years to get it right and not months and the best part is that the customer experience is continuously evolving. By the time you get to the stop you have thought, consumers have moved 3 steps ahead. So, one has to take their conscious call, I want to own it, I want to add value etc on time.
And, when the world is going through the biggest changes/ disruption, the customer experience will also adapt to these changes very quickly. Hence, with complete data insights, restaurants can learn to have better future perspective, manage and adapt to these changes efficiently to improve the bottom line.