Creating the next-generation customer experience
For restaurants to evolve, understanding the next-generation customer is critical. And the next generation is already here. A frequent customer pulls her car into a restaurant’s parking lot—and before she has found a space, the location’s platform senses her arrival and sends the kitchen a ticket for the meal she pre-ordered online. Across town, a loyal but demanding customer has checked the menu, which offered a personal selection of preferred items based on analysis of past visits. He has reviewed the nutritional content of several dishes, ordered one, and checked in remotely to the host station’s wait list for a table. Meanwhile, a group of friends spread across town agree over social media to gather for a meal. Using the restaurant’s app, each diner adds his or her selection to a group order. Upon arrival they eat together, but the check is automatically split among the different couples. Finally, a restaurant ordering and delivery platform makes it possible for a customer to choose from a number of restaurants by type of food preference, build an order via smartphone, initiate a delivery, add an item to the order before it leaves the kitchen, and pay and tip all online – plus see real-time updates on delivery status as their food approaches. Digital technology can make advances like these, and many more, commonplace. People have come to expect certain conveniences when they shop, travel, and handle their finances—such as mobile access, personalization, loyalty tracking, and no-touch transactions. More and more, they want their dining experiences to feel the same way. Taken separately, each of these digital applications is impressive. But a restaurant brand that actually does treat them separately may end up managing a disjointed array of gimmicks instead of a comprehensive service model. On the other hand, if a restaurant offers digital enhancements that are tightly coordinated and work in concert, it can take advantage of the data that comes out of them and deliver efficient, personalized customer experiences. What is the common thread that can make sense of digital technology and put it to strategic use? The customer. Restaurant of the future, meet the next-generation customer: someone who is experiencing these technologies in other parts of life, and who expects them in a restaurant experience as well. The restaurant industry is transforming and competition is more intense than ever before. “Winning” restaurant brands will be those that best understand their customers, capitalize on digital technology options and analytics, and seize upon the opportunity to engage customers in a highly personalized way. Doing this well can have tremendous impacts in driving increased dining frequency, check size, and customer conversion and loyalty. That said, digital is not a panacea in and of itself. The fundamentals matter as they always have in the restaurant experience: menu, value, and location are still paramount in driving customer attraction and satisfaction. To understand the digital and customer trends of the future, Deloitte surveyed approximately 4,500 restaurant consumers, conducted interviews with more than twenty restaurant industry executives, and convened a roundtable forum of restaurant brand leaders. What emerged from this research was that the restaurant of the future should get to know who next-generation customers are, adapt to their patterns of interaction with the world, and build meaningful digital experiences for their customers. This is about more than designing and implementing technology systems. Using data to anticipate needs and inform decisions should be a mainstay of a restaurant chain’s culture—a “digital DNA” that doesn’t reside with a team of specialists but is instead a core competency for all decision makers. It should also be purpose-built. While retail and other sectors have paved the way with effective digital experiences, their solutions may not fit the unique needs of restaurants. Creating a restaurant’s “digital DNA” requires a broad view—and confining it to the four walls of the restaurant location would be a critical mistake. The next-generation customer relationship spans five stages of interaction—the “5Es” that begin and end far away from the restaurant itself. As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. ENTICE ENGAGE ENTER EXIT EXTEND The moment that follows a decision to eat out, but precedes the choice of a specific restaurant The phase that spans the period between selecting a restaurant and ordering food The period during ordering and payment The phase between payment for the meal and receiving it or picking it up The period after a customer has finished the meal, and continues to engage via social, loyalty, and other connections
By bringing responsive, integrated digital experiences to each of these phases of interaction, a restaurant can build deeper relationships with more customers. It’s the value and nature of these relationships, not just the applications driving them, which can help flip the switch that transforms a traditional restaurant into the restaurant of the future. THE RESTAURANT OF THE FUTURE IN ACTION Imagine you walk into your favorite burger chain. You have your go-to combo on the brain and you’re ready to devour it. Yesterday, that process might have devoured your lunch hour instead—as you stood on line with what seemed like everyone else in town. But this is today. You’ve selected which location to visit because the restaurant’s app gave you up-to-the-moment wait-time data. You pre-order your meal while you’re still in transit from the office, bypass the line with your pre-order, and save 10 percent because you’re a first-time app user. You know the standard burger comes with raw onions—which you don’t care for—and you’ve asked to leave them out. The restaurant’s system takes note that the next time you order, “No onions” should be a given. An employee hands you the meal—payment happened online before you even got there—and you’re off. You glance at your app again and see that you just earned three more points towards your next 10 percent discount. It’s a good day for you. It’s a good day for the restaurant as well: because your order was processed efficiently, the kitchen benefitted from welcome additional prep time. Because you spent less time standing at the point of sale, the front-of-house staff were able to spend more time interacting with guests to make sure you weren’t the only one having an incredible experience. This is today in some places. In many it’s tomorrow, or the day after. Across geographies, across restaurant types. This is the restaurant of the future. Getting from here to there will require many specific technical and operational steps. But it will also depend on a series of critical decisions, a focused approach, and a clear vision for the future state of customer experience.
KNOW YOUR CUSTOMERS
Transforming your customer experience means transforming your understanding of the people you serve. So who are they? Everyone talks about “Millennials.” But that’s a moniker that goes beyond pure demographics. For our purposes, it’s a mindset. Next-generation customers are values-driven, hyper connected, health conscious, tech-savvy, social, collaborative—and time-starved. They don’t like waiting, and they’re likely to value and come back to places that don’t make them wait. They’re hyper connected, and if a location lets them use technology to place an order, they’ll come back 6 percent more often and spend 20 percent more each time, according to our survey results. They value connections, and 70 percent of survey respondents look for apps that deliver personalized offers and convey the sense that a restaurant “knows them.” Paying attention to macro trends is only one part of knowing a customer base. Historically, restaurant companies had little to go on unless they paid for expensive research services. Today, however, loyalty programs and other touch points are aggregating customer data all the time, and sophisticated analytics techniques can turn that data into powerful insights. How do you translate your knowledge of your customers into doing more business with them? It doesn’t have to involve a teardown of your previous assumptions or practices. Often, just knowing their characteristics, wants, and needs can help you formulate a strategy and set targets for your offers to them. Labs, surveys, and focus groups can help you sharpen this knowledge. Listening can help too— to social media, to the lessons in your sales data, and even when you’re face-to-face across the counter.
THE "5ES" IN PRACTICE
Some organizations have already launched digital customer experiences that approach next-generation customers on their preferred terms and enhance the various phases of the customer journey.
People like being creative in the kitchen. A ”build-your-own” fast-casual restaurant that gives customers that same opportunity by letting them key in their customized order at the ingredient level for the kitchen to prepare on-demand, can enhance their enjoyment.
A third-party food delivery service remembers your previous order and automatically suggests it when you log in. For another dimension of convenience, the app then shows you the nearest restaurants and wait times.
What do you do when you have more than six cars in the drive-through? Send servers outside to take customers' orders directly on tablets. Then, do one better by using location awareness technology to sense a regular customer’s arrival—instead of “what would you like to order,” the greeting is “would you like your usual order?” A customer who has switched from burgers to salads may hear updated options. A customer on a faraway vacation may receive the same personalized greeting she’s used to at home.
When is robotics friendly? When it makes things speedy and personalized. A new restaurant chain offers tablets where customers can quickly customize their orders. Behind the scenes, robots place the orders into individual containers whose digital screens display the customers’ names. It’s not hard to imagine a system like this adding value by remembering customers’ previous orders and dietary restrictions and suggesting new options and “upsell” options based upon them.
Customer feedback is important. How can you make it easier for them to give it? Text three short survey questions as an automatic follow-up to each order. Quick, multiple-choice queries about speed, quality, freshness, and the ever-popular “would you recommend us to your friends” are easy to answer and show your customers you’re listening.
Your understanding of the next-generation customer may be a critical guide to the transformation that lies ahead, but it’s just as important to keep an eye on what your organization sees in the mirror. Who are you—as a brand, as a host, as an employer? And what experience are you delivering? To induce the next-generation customer to try your location, order more, and come back later, determine which aspects of the digital experience you offer that are most important to that customer at each step of the process. Then you can match those experiences to capabilities you either have now or plan to implement. This is where it is important to choose your own path. Just because your competitors install interactive digital menus, for example, that doesn’t mean your customers will respond in the same way. The investments you make should reflect your unique customer base and your unique identity, not just trends you have seen in other places. It’s also important to be comfortable with change and become agile in execution. In a person, this is an emotional state, but in an organization, it’s a matter of readiness and relationships. How much technology you can integrate, and how quickly or effectively, may depend on how well your leadership and your business unit leads understand one another—or on how well your parent organization keeps in touch with franchisees. Customers expect high-quality experiences consistently. If your future brand will offer certain experiences one day, or in one location, you should aim to deliver those experiences consistently, every time.
STRIVE TO STAND OUT
Because the “5Es” of customer interaction start before and end after the location-specific and delivery experience, restaurants should approach that interaction on an Omni channel basis. Using a variety of channels to reach customers when they aren’t at the restaurant works in two directions, and offers benefits for both sender and recipient. For the restaurant, it could mean a broader range of opportunities to make an impression and collect useful data. For the customer, it could mean the restaurant experience (dining, drive-thru, or delivery) spans other locations and occasions. To make this all work effectively, analytics, marketing, and IT functions need to be in sync. Restaurants can use these tools to interact with customers in ways they are likely to appreciate, and can choose. Unique features can include secret menus, next-generation group ordering, opportunities to skip the line, or social media based promotions. These special touches can become part of the brand and help distinguish a restaurant brand from its competition. To bring these ideas into practice, consider each of the channel opportunities at each stage on the “5Es” path. One way to reach out to customers might be most effective before a visit; another might have the greatest impact as a post-visit follow-up. Each of the five stages represents a different opportunity to satisfy customer demand and build affinity.
THINK PAST SPOT TECHNOLOGY SOLUTIONS
“We have an app!” “You can reserve through the website!” “Pay with your phone!” All powerful innovations. But no single spot solution tells the whole story, or solves the whole problem. Each is a building block in a comprehensive strategy a restaurant can build to secure the next generation customer. For example, Deloitte’s survey found that 85 percent of responding customers use a restaurant’s official website to gather information on location, menu, and pricing, and use that information to determine where to visit. At the same time, 64 percent say they prefer to receive opt-in emails from a restaurant more than once a month. These two means of outreach—one that relies on the customer to take the initiative, one that pushes a message out—tend to work better together, as part of a plan, than either of them would as a one-off. Remember that channels aren’t only about information. They carry value as well. Some restaurants have boosted both customer affinity and revenue by offering “touchfree” in-restaurant pick-up. Some channels aren’t even informational at all: the coin of a restaurant’s realm is food, and free samples can help appease customers during nonfavorite moments such as waiting for a table or waiting for a take-out order to become ready. As one of the executives we interviewed said, “Customers want all the options all the time. They want the ability to order across all channels when they like. Restaurants have to figure out how to engage customers across channels.”