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Restaurant operators have a constant stream of data flowing into their POS terminals – from in-store transactions, to mobile apps and online ordering, many restaurateurs are sitting on a goldmine of data. The question is, how can meaningful insights be extracted from all that data and turned into profit?
This is where data science comes into play. Knowing more about what affects your business, and being able to analyse the factors that affect sales and efficiency, presents many opportunities for operators to enhance the customer experience, streamline business operations and boost the bottom line. That’s the power of data science.
Here are five reasons why your restaurant should consider data science.
1. Increase overall revenue. By having access to your business data and, more importantly, knowing how to interpret the metrics, you can significantly impact your overall revenue. There are many ways restaurateurs can leverage their data to boost the bottom line:
- Provide targeted menu recommendations at time of transaction
- Identify which products, store layouts and locations drive revenue and replicate this across other stores
- Look at specific employee behavior and identify those generating higher revenue – then encourage other employees to replicate this behavior
- Sell more products with higher margins. Data science represents a huge opportunity for operators to know their customers more intimately and provide them with personalized service that will not only bring them back time and time again, but increase the probability of generating a larger purchase, by moving customers to a higher margin up-sell or cross-sell.
The concepts of ‘up-sell’ or ‘cross-sell’ are not new to the industry – ‘would you like fries with that’ has been around since the 60’s. However, as restaurateurs continue to collect more and more data, and customers demand a more personalized experience, we can know ahead of time that not everyone wants fries with that. For example a burger restaurant can provide personalized combos based on customer preferences, such as the addition of bacon, or extra cheese, to drive higher margins.
- Reduce costs. By identifying exactly how much stock to hold to avoid wastage or overstocking, or being able to identify labor scheduling challenges, operators can significantly reduce their operating costs. Being able to extract this data and analyse it to provide actionable business insights means being able to adjust inventory and staffing to increase savings and reduce waste.
- Improve customer satisfaction. Being able to provide a personalized service is paramount to a successful food service business and is often what will set your business apart from the rest. Personalization requires an in-depth knowledge about your customers – what items do they, what time of day, what extras do they like. This type of analytics is available today using many BI tools, however data science lets you find the dimensions you aren’t looking for. Data science to drive customer purchases with menu recommendations is a key area – think of the likes of amazon with ‘people who bought X also bought Y’ or ‘last time you purchased Z, would you like this again?’ By using both transactional data and unstructured data (e.g. weather patterns, demographics, local event information) timely recommendations can be provided to restaurant operators, to maximize every sales opportunity. This in turn improves customer satisfaction and keeps customers engaged with your brand.
- Increase customer return. If your business has happy customers, chances are they will return. To keep customers happy your business needs to continually evolve and innovate, and data plays a vital role in this. By tapping into your business data and knowing what to look for, your customers will benefit and will keep coming back. For example, you’ll have better knowledge about what new products to offer, allow your customers to re-order from previous times, keep track of customers’ purchase history so you can personalize their experience and offer appealing cross-sells and up-sells that actually get accepted.
The demand for personalized service will only continue, so data science will be fundamental to gaining a competitive edge. The key is to use it in a meaningful and timely way so that the benefits are tangible. This will include applying the science to all customer touch points – be it online, through the POS terminal, through 3rd party devices such as self-service kiosk and digital menu boards. Data science is going to open up a lot of opportunities for innovation and will quicken the pace of the food service industry even further.