Restaurant Data: The Role of Big Data in the Hospitality Industry

By: Valeriy Kolyadych

6 Minute Read

Nov 15, 2017

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big data in the hospitality industry

The humble restaurant is a treasure trove of data. It comes at you from all sides! Not only are you thinking about food costs, but you're also thinking about projected revenue, labor, turnaround, and so on - ad infitum.

So how can you leverage this data to help your restaurant become more profitable?

As a restaurant owner, these varied restaurant data points may seem daunting. After all, data means nothing until you can extrapolate information. However, if you've got access to that data, using it to your advantage will translate into more efficient business. Big data in the hospitality industry is an emerging trend, and making proper use of it is critical!

Let's go over 5 ways that restaurant data and technology can improve your insight into your restaurant's performance.

1) Restaurant Labor Scheduling

Consider the potential of reducing labor without sacrificing service.

It's easy to schedule too many or too few employees, especially if you're unsure when your restaurant's busiest hours are. In this case, you can't really go with your gut. Instead, opt for a restaurant POS system that can track your sales. By tracking your sales, you can make notes of busy hours and slow hours in your restaurant.

In any case, knowing how your business operates can help you decide when it's best to schedule employees. In addition, you can use that data to make other decisions. For example, if you know that lunch is usually slow, you can gear your promotions and rewards towards spurring lunch sales.

2) Menu Maintenance

For some restaurants, the menu is a constantly changing list. Other restaurants may have a static menu that hasn't changed in years. Both are fine, but every restaurant would benefit by using big data to shape their menu. CTAIf, for example, you notice that one item is barely selling, you could ask your employees to upsell that particular item to avoid having to throw out produce. You could also take it off the menu entirely, freeing up valuable walk-in space for more popular dishes.

Some POS systems also have inventory management functionality. In this case, it's a triple threat. If you notice that you always seem to have too much of one ingredient, you could order less or put a special on the menu that highlights that ingredient. Either way, the effect is the same: you free up money and streamline your restaurant.

3) Identify and Promote Regulars

Regular customers are integral to a restaurant's success. Not only do they let you know that the food is so good that they're coming back from more, but they contribute a fair bit of revenue as well.

A study by the National Restaurant Association found that repeat customers make up

  • 71% of sales at QSRs
  • 68% of sales at fast-casual restaurants
  • 64% of sales at casual dining establishments
  • 63% percent at family-dining eateries
  • 51% at fine-dining restaurants

This finding confirms the need for big data in the hospitality industry.

In restaurants, it used to be that regulars were just those people who you noticed time and time again. Now, you can visualize and identify repeat customers. This allows you to review their previous orders, suggest new items that they may like, or send them coupons or other promotions.

Ultimately, what you're trying to build is customer loyalty, and the best way to do that is to treat the customer as a friend. Thanking them for their continued business goes a long way towards ensuring that they continue to enjoy positive experiences at your restaurant. And that, in turn, results in profit and good publicity.

4) Identifying Issues in Your Restaurant

It's easy for a restaurant to miss out on the nuances of service. If you're working hard, turning over tables, and keeping everyone happy, a void here and there may not pop up on your radar. But every void or discount is money lost, and having the power to identify issues within your restaurant can greatly improve your revenue.

Imagine that you pull up a report at the end of the night and see that a particular item on the menu seems to have been voided multiple times. At that point, you could go to your back of house staff and ask some questions:

  • “Is it being prepared correctly?”
  • “Are the ingredients fresh?”

Amidst the hustle, missing this kind of information is to be expected, but by being able to spend energy on the right issues, you can know exactly what it is you have to work on.

Using data can also help you with front of house operations. If you notice that a server has been slacking off recently, you could utilize labor data functionality and look at how specific servers are translating labor into sales. Maybe you learn that the server continues to provide excellent sales and continuously gets great tips, or you could learn that their labor-sales margin has gone down. Armed with this new and concrete information, you can then proceed accordingly.CTA

5) Evaluating Loyalty Programs

More and more restaurants notice that loyalty programs are a popular way to engage customers. Such programs help build that crucial customer relationship by offering repeat customers exclusive deals and promotions. This system builds its own set of data that can help you evaluate its effectiveness.

For example, if you run a loyalty promotion, you can see how that then translates into sales. If you notice that your loyalty program seems stagnant or app orders are down, you can take a look at the numbers in order to determine what the culprit could be.

You could even implement gift cards and then track their popularity. If you see that gift card payments are low, you could have some kind of promotion to spur gift card purchases.

The opportunities for improving your business don't end!

Big Data in Restaurants

Ultimately, the power of big data in the hospitality industry is limitless. When you approach the day-to-day operations of your restaurant armed with information, you can save money and make your business run smoother.

On the other hand, making decisions without being able to weigh them against a robust set of data can hurt your business even if you can't see it upfront and personal. Though the term can sound daunting, using big data to guide business decisions is actually quite easy! Try integrating these tips with your current business - you'll notice a more refined operation, happier employees, and satisfied customers that keep coming back.

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