AlixPartners: Restaurants should embrace technology

08 January 2015

According to a recently released report from AlixPartners, if used wisely, technological innovation can help the restaurant industry boost traffic, while lowering costs and improving customer experience. To make strides toward the future, restaurant owners are urged to increasingly add IT and innovation as ingredients of their business recipe.

In the report, entitled ‘Apps as a Main Course’, the consultancy finds that the restaurant industry continues to face challenges, costs are up while competition remains stiff. Getting people to come to a restaurant over that of the competition takes not only good quality food in the relevant price bracket, but also an effort to continuously reach out to and maintain customers. While the macroeconomic fundamentals and consumer interests remain relatively stable, a tough cost landscape has emerged which is putting increased pressure on margins. As a result, many companies are placing cost and margin management on the front burner in terms of their strategic priorities. One emerging method of dealing with costs, say the consultants, is to find innovative ways in influencing possible customers though technology.

Digital Medias influence on dining decisions

In their survey of how mobile and internet technologies are being used, about 30% of respondents said that in the previous month, they had used a mobile device to make restaurant reservations or order a meal. However, the two biggest reasons diners use the Internet are to look up directions to a restaurant and to get discounts and coupons offered by restaurants. Social networking was engaged, for instance, by 19% to follow a favourite restaurant on Facebook or Twitter, which is up from last year’s 15%. Email too was used by respondents, with company’s emails helping to direct customers to their seats. None of the communications technologies however, were ‘very influential’ on getting customers through the door.

Technological engagements
The survey explores four general ways in which companies are attempting to boost their current effectiveness by accessing and attracting customers through digital channels: Loyalty Programs, In-Restaurant Tablets, Mobility Platforms and Focused Targeting.

Loyalty Programs, In-Restaurant Tablets, Mobility Platforms and Focused Targeting

Loyalty programmes were found to effective, and to benefit from the advanced analytics companies are able to create about customer groups, and even individuals. Respondents point out however that they are generally only engaging with loyalty to one or two chains or individual restaurants. Indeed, when asked how influential restaurant loyalty programs were in their selections of restaurants to visit, 34% of the survey respondents said such programs were not at all influential, 26% said they were only slightly influential, and 28% said they were somewhat influential. Just 12% described such programs as either very or extremely influential in their dining out choices.

Restaurant chains using tablet technology

Another way in which customers may be engaged by technologies is to have tablets available in store. When asked whether the availability of technology at the table affects their decisions on where to eat, 37% responded “Not much—I don’t think it helps, but it’s not bad,” and 25% said, “Somewhat—I would consider it helpful but not necessary.” There are risks associated with the introduction of technology as the first face the customer meets instore, with 16% saying they would never consider eating at a restaurant that had technology at the table. This technology, when engaged with by customers is used in a number of different ways, the most common use is for customers to pay their bill through the technology. With reviewing the menu and attending the server following in order. The downside, noted by the report, is the high investment costs, with creating app platforms that provide the same service but without a company equipped electronic tool potentially being more cost effective while delivering relatively the same service result.