Store Location & In-Store Operations
Measuring Day-to-Day Operations
Menus, Customers and Fulfillment Efficiency
Digital is also changing how restaurants think about their menus, customers and fulfillment efficiency. A view of repeat purchases from customers can sometimes tell a different story than the daily sales view of the store POS. For instance, perceived top sellers can sometimes be the “top churners,” making repeat visits less likely from new customers, changing what restaurants may choose to feature prominently at the top of their menu boards.
Digital can also provide insight into customer frequency and lifetime value, enabling restaurants to optimize marketing spend for acquisition to maximize store revenue. Some digital platforms are even able to provide daily demand forecasts that can help reduce fulfillment capacity dramatically, while taking in food-wastage into account. For example, with order ahead data from the Ritual platform, a popular fast casual salad concept in NYC was able to cut fulfillment time by 50 percent by pre-chopping the most popular salad bases ahead of the lunch rush, and do this with enough accuracy so as not to increase food wastage.
One of the other fundamental things digital will change for the restaurant industry is enabling dynamic pricing. Restaurants have one of the worst supply/demand mismatches of any local business. Because of biology, people generally eat at specific times of the day. This leaves restaurants to have to pay for rent and salaries for 12+ hours of a day, with very few customers coming in during the majority of this period. The opposite problem occurs during lunch and dinner rushes, where restaurants can’t fulfill their demand, turning customers away because of long lineups or slow fulfillment.
The concept of dynamic pricing already exists today with concepts like “happy hour,” used to have differential pricing at different times of a day, but digital will allow for much more sophisticated pricing schemes across many different types of restaurants including quick service and fast casuals. At Ritual, we are already experimenting with dynamic pricing to encourage ordering just before and after peak times helping to flatten the demand curve and ultimately allow restaurants to fulfill more demand during their peaks.
The restaurant industry is one of the last segments in local commerce to undergo digital transformation. Much like retail has in the previous decade, digital technology is changing the fundamentals of operating a restaurant, and enabling restaurants to finally take advantage of the accompanying availability of high-quality data and consumer insights that retails has been leveraging of for years. And just like retail, there will be big winners and losers – businesses that can adapt and leverage digital and those that cannot.