COVID-19 has changed how we eat. The food and beverage industry has had to adapt to massive pandemic-wrought shifts: supply chains have changed, new hazard controls have been imposed, and — perhaps most pertinent to the layman consumer — consumer preferences have been upheaved.
At some point during the quarantines, you probably gave up on cooking dinner and ordered food in. And, chances are, you did so through a food delivery platform. Food delivery services experienced an unprecedented surge in use, as an important (and in some cases, only) conduit between restaurants and grocery outlets, and their customers.
And, according to research from Bain & Company and Facebook, this habit is likely to persist even post-pandemic — people are expected to continue shopping for groceries and other essential items online even after the coronavirus pandemic ends.
And as our (quite literally) consumption habits go online and stay there, it’s become important for food services to abandon the idea of a return to old processes. They need to consider how many of the newly-implemented processes we see as part of the “new normal” will last in the long-run, and how to use them to stay ahead of the curve.
Consumer data has become even more important
Going digital makes collecting data easier than ever — and the collection and use of consumer data is a key part to the success of the new trends we’ve seen emerge during the pandemic.
Besides food delivery services, another trend that has seen a surge amidst the pandemic are cloud and ghost kitchens: food production and delivery services that are entirely online, with no physical store presence whatsoever. An idea that is more than a decade old and originally conceived as a solution to increasing property rentals, the cloud kitchen’s catapult into prominence came amidst the pandemic, when social distancing norms and quarantines kept people out of physical restaurants.
And, much like the convenience offered by food delivery, the lower overhead costs of maintaining a cloud kitchen means that they are likely to remain after the pandemic. In China, cloud kitchens are expanding rapidly, as they ride the wave of online food delivery — a market already worth a whopping US$37 billlion.
These services — be it tech platforms such as Grab Food and Foodpanda, or even the in-house delivery service of your favourite local restaurant — benefit greatly from understanding data.
With an understanding of their peak periods and their consumer preferences — such as their best-selling products and what products are bought together — restaurant and delivery companies are able to make informed decisions on sales strategies and minimise inventory wastage.
And, with information on delivery times and where their customers are ordering from, they can ensure they have sufficient riders at busy locations, resulting in a smoother delivery process and satisfied customers.
Of course, data can’t do everything yet: Ensuring the quality of food still requires a discerning tongue, and is highly subject to human error. We can only rely on data that is being collected via customer feedback, and improve from there.
Let’s talk about the elephant in the room
It’s come up time and time again, but it bears being said: For all that they have been a lifeline amidst the pandemic, in the long run, these food delivery services may be hurting the very industry that they are claiming to help.
Food delivery services were conceived of in a different time: Before the pandemic, they often weren’t the only or even the primary source of revenue for restaurants. Rather, they were an additional revenue stream, and an additional way for them to manage excess inventory — they were a nice thing to have, but most of a restaurant’s income came from its physical visitors.
Yet, times have changed. Now, for many dine-in restaurants, online delivery is the only way to survive. Further, as delivery habits have shown themselves to be sticky consumer behaviour — the Asian market for restaurant dining is expected to fall to 7.5 per cent over the decade to 2026 — these changes look to last.
A once-minor revenue stream has become a major revenue stream. And, when you consider the sizeable merchant fees that major food delivery platforms charge and the fact that these restaurants are operating far under their usual profits, it’s clear that only restaurants with higher margins can sustain these operations.
So what can dine-in restaurants do?
It’s a misconception that data is only effective for big tech platforms. As I mentioned earlier, even your favourite local restaurant can benefit from an understanding of data — be it from their physical or online sales. Knowledge of your customers’ preferences and habits, your inventory and wastage, are crucial for any restaurant owner to optimise their operations and increase sales.
At Innergia Labs, we helped a local restaurant chain use data to increase their annual revenue by 8 per cent. Based on the data they collected via our Sycarda platform, their sales and marketing team analysed their store’s off-peak hours, taking note of average wallet spend, as well as the most popular à la carte items that customers tended to bundle together in their purchase.
Using these insights, the company then designed a set meal promotion to bring in more customers during off-peak hours. Over the subsequent three month campaign, they brought in MYR500,000 a month. Data is not just for the big guys.
Moreover: Competition in the online food delivery industry rising. There are new delivery platforms coming into the market everyday, and their competitive rates bode better for restaurant owners. It would be in their best interests for business owners to keep up with these alternatives, and work towards creating a more competitive climate for food delivery.
And, beyond the pandemic, the creation of omni-channel experience will be crucial. Ordering food online may be a sticky habit, but there’s occasions when we would prefer to dress up and dine out. A restaurant could use their online presence to build awareness, to pique their customer’s interest in dining in-person — and offer a unique in-person dining experience that keeps customers coming back for more.
All-in-all, the F&B industry must embrace digital transformation. It’s not just a stopgap measure amidst the pandemic — and there’s no going back to the way things used to be.
Still, if you’re a customer? Preemptively walk off your calories and dabao some food from your favourite restaurants. You’re helping them more than you think.
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