How data analytics can help restaurants generate higher revenue
Technology has brought in tremendous transformations within the restaurant industry, including its lexicon. Not so long ago terms like data analysis, real-time data, data mining, and metrics were alien to the sector. But today, not only are these used prolifically but more importantly, they’re even considered indispensable in the day-to-day operations of any restaurant, as well as augmenting its overall success.
80% of restaurants are now utilizing technological solutions to help them run various aspects of their business like payments, ordering, reservation, customer analysis, etc. and the general feedback is that these restaurants are continuing to observe an increase in business efficiency. Among these technological solutions, data analysis offered by systems like POS integration is one of the most in-demand.
What is restaurant data analysis?
Restaurant data analysis can, in the simplest of terms, be defined as the process of collecting raw data related to your daily operations and breaking them down into purposeful and actionable insights, which will, in turn, help you make well-informed business decisions.
Industry experts have all hinted at a future that will be data-driven. Data based decisions will dictate everything from a restaurant’s marketing activities to operational choices.
Not surprisingly because by using restaurant data analytics to your advantage, you can generate much higher revenue for your restaurants. Here’s how:
With data analysis, you can not only evaluate which dishes are the best and worst selling, but also the ‘why’ behind this.
It’s not always true that the dish that sells best is also your most profitable. There can be instances when a lot of customers order a certain item on your menu, but none of these customers return to you for repeat business.
Once you have such information in hand, you can improve your menu, by highlighting the most profitable dishes, removing the defunct ones, giving an extra push to some though special promotions, etc. This menu optimization will also help restaurants to manage their inventory better and curtail food waste.
There are more than one way in which data analysis can help build a loyal customer base for a restaurant. From sending out wishes and gift coupons on customers’ birthdays and anniversaries to being mindful of their favorite dishes, food allergies, etc. and rewarding your most loyal customers you can treat your diners with some truly personalized services.
Today’s technology allows you to gather more than just basic contact details. With precise information like demographics, purchase history and preference, data analysis allows you to build a strong relationship with your customers and today’s customers don’t shy away from providing these details, in fact, they encourage.
90% of consumers say they’re willing to share their behavioral data if they can receive additional benefits from brands.
For a restaurant, labor cost forms one of the biggest expenses, taking anywhere between 25 to 40% of a restaurant's gross revenue and therefore it would do well to optimize this aspect of the business.
With data analysis, you can figure out which time of the day and week requires more staff and who are your best and worst-performing employees. This information can help you optimize productivity by creating a strategic floor layout, where you place servers based on their strengths.
You can also combine labor and customer data by pairing your top servers with high spending and regular customers.
Marketing activities make up a large chunk of a restaurant’s total expenditure. According to a study, companies that grew 31 to 100% or more, year on year, spent an average of 50.2% of their revenue on marketing, while those that spent an average of 16.5% of their revenue on marketing grew one to 15% year over year.
However, many restaurant owners aren’t professional marketers, and oftentimes end up making erratic decisions that not only lead to financial losses but also harm the brand. With data analysis, you can be assured that you have all the necessary facts and figures required to reach out to the right audience and customize your communication to appeal to individual preferences.
Data collected over time can also be useful in predicting trends to help you strategize better for the future. Backed by credible data, you’ll be in a position to take the best course of action in any given situation. In an industry that’s as unpredictable as any, it can be quite challenging for restaurant owners and managers to forecast future sales but with historical data and predictive data analytics, you can organize profitability for the time ahead.
As a final note, restaurant owners can collect, organize, interpret and apply data to provide the best dining experiences. However, while data gathering and analysis can provide a huge boost to your restaurant business, it is also key to remember that it’s not going to provide a full-proof triumph on its own. Interpreting those data effectively and implementing actionable strategies based on that interpretation is what’s going to bring in the ultimate success.