The restaurant space is intensely competitive today, with brands seeking differentiation on all fronts. Boosting the customer experience in a definitive fashion can drive customer loyalty efforts.
Loyalty360 talked to Jon Siegal, vice president and general manager at Stellar Loyalty, about the state of the restaurant industry as it related to customer loyalty.
Can you talk about the current state of customer loyalty in the restaurant space?
Siegal: There is no debate today. With the abundance of choice, competition in the restaurant industry is fierce. Consumer expectations are higher than they’ve ever been for food quality, convenience, and experience. As a result, it’s never been more challenging to cultivate and retain loyalty and grow share of wallet. The primary forces at work in today’s restaurant market directly affecting loyalty include:
Abundance of choice is everywhere
“The “fast-casual” industry is on a tear. According to Technavio, the market for fast-casual fare is expected to hit $66.87 billion by 2020, boosted by new fast-casual concepts popping up and competing for their share of the market (Source). The rise in third-party order and delivery services like Door Dash and GrubHub make proximity to restaurants a non-issue–you can order from pretty much anywhere.  Consumers also have new choices with the non-traditional DIY services like Blue Apron.
Customer expectations are concierge-level
Diners today represent a far more tech-savvy customer audience. They want instant gratification, and experiences which are personalized, convenient, and rewarding. Restaurant operators need to address these “concierge-level” service expectations with connected, intelligent (e.g. in terms of their preferences and even location), and “in the moment” interactions. 
Customer-centric digital transformation is a matter of survival
Restaurant operators must put themselves in their guests’ shoes to create a compelling experience that will build loyalty, frequency, and spend. They need to fully embody a digital DNA that taps into innovation at all levels of the experience. They need to out-innovate their competitors in terms of speed to market and quality of experience.
This means mapping the guest journey, creating a strategy that masters all channels and transforms guest data into a competitive advantage. Too often we’ve seen siloed solutions (email newsletters unrelated to the mobile app, disjointed channels for ordering not linked to loyalty and engagement, archaic cumbersome loyalty promos) that negatively impact the guest experience. 
What do you think is being done well in this space and where do the challenges lie?
Siegal: There are some areas where the industry, on the whole, is starting to get it right. Most have recognized that technology investment is an absolute must in the front of the house and that they need a customer experience (CX) strategy and adoption of CX technologies to become competitive.
The challenges, however, are threefold:
Bridging the gap between digital and physical is imperative and not always easy. Restaurants must capture all of their customers’ signals and use this complete customer profile to understand and motivate guest behaviors.
Shifting spend from maintaining old POS and back-office systems to next-generation omnichannel customer engagement, ordering, and loyalty systems. Today, actionable analytics and segmentation is a challenge for many operators. Restaurants need to invest in the expertise required to make the transition if they are going to keep pace.
Speed to market is a significant obstacle. Innovation, skill set, and a willingness to take risks have demonstrated success. Consider the recent market share gains and stronger customer loyalty and brand value for Dominos and Starbucks. On the other hand, since 2015 McDonalds has lost share “in lots of little pieces to a host of smaller chains” according to Nation’s Restaurant News (Source).” The fast food giant is now playing catch-up on mobile ordering, mobile pay, and curbside pickup, which won’t be rolled out until the end of 2017.
With all the disruption in the space, what are the “winning” brands doing well?
Siegal: The winning brands are all following this formula:
Listening to their guests and creating a next generation CX; capturing guest data across all signals and using this data to drive spend, frequency and brand loyalty. For example, by analyzing all orders – in-house and third-party data, restaurant operators can segment and market to their guests. They can personalize and upsell in real-time using location-based / check-in features. They can recognize and reward their loyal customers.
Taking risks and trying new things – from creative and fun campaigns (eg: design our next burger contest) to drive engagement, to the convenience of omnichannel ordering and mobile payment most notably demonstrated by Starbucks, to efforts like Little’s Caesar’s recent introduction of a self-service, mobile order pickup station called the Pizza Portal.
Out-pacing their rivals in embracing technology to help them raise the bar and meet or exceed customer expectations. Consider, for example, a guest walks into your quick service restaurant and you recognize your local diner when they check in using your app. Your guest easily customizes their burger, orders, and pays with a few taps AND receives an in-the-moment personalized offer for upsell or cross-sell. Use loyalty perks and promotions to further encouraging guests to check-in when they arrive and order and pay via the mobile app.
What would be your advice for brands in this space seeking to enhance their loyalty offerings?
Siegal: Start with a very clear strategy based on understanding and acting on guest data and interactions across all channels. Recognize and embrace the need to be nimble, fast to execute, and refine quickly. Do not fall into the trap of single, one-off siloed solutions because a compelling and rewarding guest experience must journey from enticing and engaging to transacting and rewarding.
In Deloitte’s latest “Restaurant of the Future” report, the firm maps the customer steps. We like to think of this in terms of pre, during, and after the guest’s visit.
In the “pre” visit stage, operators need to entice their guests. What reasons are you giving them to increase their frequency and purchase in a world filled with alternative choices? Are you making it a fun experience? How do you get the sports fan off their couch and into your location like the way Dunkin’ Donuts new “Sip. Peel. Win.” program is featuring football superstars Rob Gronkowski and Odell Beckham Jr. as a way to entice customers to participate.
The next phase: “During the visit,” must be convenient and frictionless. Can you recognize your guests when they enter?  How easy is it to reorder (e.g. a one-tap re-order on the app)? Does your app do it all, such as putting guests on the waitlist, letting them order, pay and receive rewards?
Finally, the “post visit” phase: once your guest leaves, your interactions should not stop. How about reaching out with a quick 1-question survey which you reward them for responding to? Show your guests you listen and appreciate their business, and reward their purchases in ways that mean something to them. The Deloitte research shows 51 percent of loyalty members want discounts via the app and 44 percent want engagement rewards.  How do you make the rewards new and different so you keep your guests entertained and coming back? Old Chicago Pizza is a terrific example of creative, engaging rewards with its unique World Beer Tour.
What innovations are currently directly impacting loyalty in the restaurant space?
Siegal: Research shows restaurants are increasing spend in data management and omnichannel loyalty significantly, which is a positive development. Five other technology areas positioned for big growth in the restaurant sector in 2018 are predictive analytics, personalization, localization, customer experience management, and mobile experiences.
Overall, what restaurant operators need most is a modern guest-facing end-to-end platform that can help them create the experience of the future, as McDonald’s calls it.  It must be flexible to enable them to test, try and change, with embedded analytics that are immediately accessible for continuous monitoring and adjusting on the fly. The platform has to be able to capture all guest touch points and be the “instrument” to segment, personalize and motivate behaviors. 
Technology innovation alone, however, is not enough. You need the corporate will to embrace a guest-centric strategy and take risks, and the skills necessary to embark on digital innovation with a culture of speed. Without a strategy that’s based on driving measurable business outcomes, and the team and executive support to execute that strategy, then no amount of innovation will suffice.

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