Follow the moneyball
As trading conditions get tougher, the winners are likely to be those who adapt fastest to a shifting environment. Harnessing the the Moneyball formula of using big data enables operators to to give themselves the edge.
There’s no doubt about it: the restaurant sector is experiencing some of the toughest trading conditions we have seen in years, forcing major restructurings and site closures among major brands and independents alike all across the UK. The perfect storm of stiff competition and escalating costs is sparking an urgent re-think among many in the business about how best to shore up performance and profitability. As specialist restaurant consultant Peter Backman puts it: “It’s a play-off between top line and bottom line. You can slash costs or you can focus on aligning with your customer base to generate more revenue.” It’s the latter that I’m going to focus on. For me, the call to action for restaurant businesses today brings to mind the Hollywood film “Moneyball”. For those of you who haven’t seen it, it tells the true story of Billy Beane, a budget-stretched baseball team manager (played by Brad Pitt) who realises that, with the odds stacked against him, if he is to win against better funded rivals he must look at the game in a whole new way. He uncovers the secret to success by re-inventing his strategy based on a new formula for analysing team data, turning the sport’s conventional wisdom on its head. The subtitle of the book on which the film is based – “The art of winning an unfair game” - sums up the challenge perfectly. The parallels with what’s happening in the restaurant industry are compelling. Many are realising that reputation and brand loyalty, as well as seamless and efficient operations, matter more than ever: that “better” not “bigger” is now the order of the day, and that optimising the offer in existing core sites is key. However, in order to do that, clear visibility is essential on both a macro and micro level. Businesses need real insight into what they are doing well and what could be better, what their customers really like and what they don’t, why guests return and recommend, and why they won’t. Many will say they already have this, that they do “know” their customers, via a combination of personal experience, market research, staff checking-in mid-meal, mystery diners and customer review platforms like TripAdvisor. However, all of these tried and tested methods have drawbacks. Gut-feel can be wrong, market research can be too generic, mystery diner reviews too infrequent and limited and feedback sites may not reflect the reality on the ground, with often only a tiny sample of the most satisfied or dissatisfied customers making their feelings known. There’s real gold to be mined from knowing what the rest – the vast “silent” majority – of real customers really think. This is “Big Data” territory. The concept that large volumes of information can be collated and analysed to deliver the kind of insights that have never before been available is revolutionising almost every industry sector, from financial services and insurance to retail and leisure. Restaurants are next. Of course, most restaurants do have large amounts of, largely sales, data, but that’s not enough. What we’ve found through our work with both major brands and independents is just how much food and ops teams, managers and marketing departments, board members and floor staff, front and back of house, can learn from having “Big Data” on customers on the same timely and granular scale. By this I’m talking about harvesting 4,000+ individual customer reviews per site per month, at dish and service level, and drawing actionable insights from it. That’s the only fail-safe way for businesses to find out what the customer actually wants, so that they can deliver it. This is vital when honing the offer – it’s even more critical when re-structuring a business, to ensure that the right steps are taken, and that investments in time and money are made with more certainty and less financial risk. As Peter Backman says, “Insight is everything. Not knowing the right steps to take is a problem. At best, the strategy will fail to deliver the necessary improvements; at worst there’s the risk of doing the wrong thing altogether.” When it comes to “optimising the offer”, there are four key operational elements of: food, service, consistency and customer engagement that can be honed over time to deliver the best possible guest experience, to keep people coming back time after time – improving those all-important Net Promoter Scores (NPS). Let’s look at what using data-driven intelligence means in practice for each of these areas. - Visibility over menu development Using this kind of data to give visibility and inform decision-making means businesses can introduce new menus that truly dovetail with demand. What’s more, knowing what large volumes of guests like or dislike about a particular dish means tweaks or radical changes can be more easily made. We’ve found that even minor alterations to ingredients or even seasoning can make a significant difference to dish ratings, as can improved presentation on the plate, more accurate menu descriptions or better portion sizes. Having this kind of visibility from guests choosing specific dishes that our customers have been able to improve has increased NPS by 54% and intention to revisit by 33%. - Enhancing service In-depth detail about service is clearly just as vital. Knowing which servers and services during the week have performed well, and which haven’t can help identify specific operational pressure points, or training and skills gaps among staff. If a customer is dissatisfied, it’s important to know the root cause so that whatever it is - slow service, inaccurate orders or lack of a warm welcome - can be addressed. Equally, it can show up what’s working well, such as how well staff are upselling items or if an “express lunch” promotion really delivers a rapid turnaround. Seemingly incremental improvements in all these areas can lead to significant uplift in customer satisfaction. - Improving consistency Consistency overarches both food and service, underpinning reputation. For big brands and smaller chains, data can show where there are inconsistencies in delivery across their entire estate, so they can pinpoint where more training and development might be needed, or whether dishes are too complex to be rolled out in busier sites. On individual site level and for independents, it’s also helpful to see whether particular times or days of the week outperform others, so weaknesses can be targeted.
- Engaging with customers Engaging in the right way with these customers builds brand loyalty, helps nip problems in the bud before they get aired and shared, and can ultimately help boost NPS. Over 40% of tables complete our 1 minute review and of these over 90% of our dish reviews are from happy guests, promoters who want to tell you and fellow diners what is great about each dish. This means future email and social conversations can be tailored to build local advocacy and online reputation. Spreading the love across your teams from this silent majority also does wonders for staff morale, from the Monday morning management board meeting through to kitchen brigades and front of house across every service.
It’s becoming ever clearer that the restaurant industry’s received wisdoms are ripe for re-evaluation. As Brad Pitt’s character might say, Big Data is a game-changer. It can boost innovation, enhance performance and win you fans. Those that embrace it will be able to adapt fastest, so they can stay ahead of the pack. And in today’s less-than- perfect conditions, that’s got to be a winning formula.
This article appeared in the February edition of MCA magazine and can be seen on their website here.