Restaurant Data Analytics: The Power of Data-Driven Insights

Over the past few years, the restaurant dining experience has changed by leaps and bounds. The pandemic has been a major contributing factor, with a need for a safe dining experience, leading to a preference for outdoor seating, delivery or takeaway, and digital menus among others. Among the first to be impacted by the pandemic, the restaurant industry has had to evolve rapidly to serve consumers. 

Consumer behaviour also evolved rapidly and even with things returning to normal, there is no telling if consumer behaviour will revert completely to pre-pandemic norms. Takeaway and delivery were lifelines for the restaurant industry during the pandemic and continue to be just as popular despite the removal of restrictions across the globe.

If businesses want to keep ahead of rapidly evolving trends and consumer preferences it is crucial that the restaurant industry turns to data for insights. In this blog, we will discuss what restaurant data analytics is, the benefits, and how to get started with using data insights to inform decision-making.

What is Restaurant Data Analytics?

Restaurant data analytics is the process of collecting and analyzing data to gain insight into various aspects of a restaurant’s operations, including customer behavior, sales, inventory management, and more. This data could be in-house first-party data or from other sources such as customer loyalty programs, third-party data vendors or partners, and more. 

By analyzing this data, operational and marketing teams can gain valuable insights.

Benefits of Restaurant Data Analytics

There are numerous benefits to implementing restaurant data analytics into your operations, including:

• Improved decision-making: Restaurant chains and owners can benefit from data-based decision-making, whether in terms of marketing or operations. Real-time data and insights can ensure they have the edge over competitors and stay ahead of rapidly evolving trends and consumer preferences.
• Increased revenue: Data insights can help businesses identify opportunities for cross-selling, upselling, and even customizations for specific locations like menu optimizations which can lead to increased revenue and profitability. 
• Better customer experiences: Understanding their customers better can help restaurants improve customer experience with tailored menus, marketing messaging, and loyalty programs. This can in turn drive loyalty and repeat visits.
• Effective marketing: Data insights can inform marketing strategy and decision making leading to better marketing campaigns in terms of both, audience targeting and messaging which are more likely to resonate with your ideal customer base, resulting in more effective marketing.
• Operational efficiency: Inventory management supported by data analysis can help businesses optimize their ordering process, reduce waste, and prevent out-of-stock situations, leading to improved operational efficiency and reduced costs.

Answer Key Questions with Restaurant Data Analytics

Here are a few samples of specific questions and insights you can obtain using restaurant data analytics:

• How far are customers willing to travel to your restaurant
• The true trade area for any location
• Foot traffic to any location by daypart
• Cannibalization potential and competitor draw by location
• Where target customers live and work
• Commute patterns and paths to purchase
• Which locations have the greatest ROI
• Market trends—like up-and-coming areas

Challenges to Using Restaurant Data Analytics

Setting up a data-based decision-making culture can be a difficult process and there might be a few initial challenges. The right data partner can help you overcome many of these problems including cleaning your in-house data to data enrichment to update or remove obsolete data or fill in any gaps. Some of the most common challenges include:

• Data quality: First-party or in-house data could be inaccurate, incomplete, or outdated. It is important to have clean and accurate data for accurate insights. To get accurate insights, it’s important to have clean, accurate data.
• Data privacy: It is important to ensure compliance with data privacy laws and ensure the data never contains personally identifiable information (PII). It is important to ensure data partners are also compliant and that the data being used is obtained with the consent of consumers.
• Training: Collecting and analyzing data in the right way is not easy and businesses will have to train staff members on how to do both effectively. To get the most out of data analytics, staff members may need to be trained on how to collect and analyze data effectively. This can be time-consuming but once a process is set up it can be easy to replicate. 
• Technical expertise: Implementing a data analytics program might also require tools or software and the technical expertise to use them effectively. 

How to Get Started with Restaurant Data Analytics

Setting up something new and taking the first few steps can be difficult but it gets easier, and the benefits make it worth it. So if you are ready to leverage the power of data analytics to attract more visitors, improve the customer experience and increase ROI, here are some steps to get started:

1. Identify your goals: Before you set out to collect, analyze and clean up your data, it will help to establish clear goals and objectives. Depending on your goals, the process could vary. So, understand what is the priority for your business: is it increasing sales, improving customer satisfaction, choosing the next site for expansion or something else? This will help you focus your efforts and ensure that you’re collecting the right data to achieve them.
2. Choose a data intelligence provider: There are multiple steps to the process and it might not be possible to do all of them in-house such as POS (Point-of-Sale) integration, customer data enrichment, identity resolution, and more. It can be helpful to partner with a data intelligence provider that specializes in restaurant data analytics. But first, read our essential checklist to ensure you select the right data partner.
3. Collect data: Once you have chosen a provider, begin collecting the data you need. If your first-party data is not sufficient, you can opt to enrich it with third-party data. The data sources can include POS data, customer data, online reviews, and more. Ensure you collect data in a structured manner to improve accuracy and ease of analysis.
4. Clean and normalize data: Data can be messy or inaccurate. If not updated regularly, your customer data might be outdated and do more harm than good when used. So it’s important to clean and normalize it before analyzing it. This will include removing duplicates, correcting errors, and updating and standardizing data formats.
5. Analyze data: Once you are sure the data is cleaned and can be used, you can begin analyzing it to gain insights into customer behaviour, sales trends, opportunities for optimization, and more. 

With these insights, you are now ready to take action. Use the data to back up your business decisions, marketing and operations strategy, and more. 

Data analytics for restaurants can provide powerful insights to help business owners improve their customer experience, attract more visitors and enable data-informed marketing and operational decisions. While there are challenges when you begin, the benefits make it a worthwhile investment for any business looking to gain a competitive edge.