How to Survive Disruption in Restaurant Industry

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Views of the restaurant industry were at their highest in 2017, according to Gallup analytics, with 72% of respondents to the survey rating the industry overall positively.

While these highly optimistic opinions represent great news for anyone associated with the restaurant industry, restaurants continue to face many challenges, including disruption of their traditional service model.

In the past, people defined “restaurant” by their experience. Next came takeout. Then some restaurants started selling prepackaged meals at grocery stores. Some have moved into the catering business.

And now, many are partnering with third-party delivery services. In the past, most restaurants had one or two delivery channels, but now, some have as many as five.

Other industries have experienced similar changes and disruption and survived.

For example, the primary method of interacting with a bank was once in-person transactions.

Next came the availability of 24/7 ATM machines and call center interactions that could do more than simply fix a problem — they could serve, and in some cases sell, to customers.

Banking has since moved online, and for many customers, transactions with their bank now occur in the palm of their hand with a smartphone and mobile banking apps.

Social media sites such as a bank’s Facebook page or Twitter account have become new approaches to solving customer problems or marketing new products.

The number of banking touchpoints continues to increase as banks find additional ways to provide services to customers.

Balancing all touchpoints, however, is essential to survival.

Restaurants Should Engage Their Customers

What Gallup has learned from studies of its banking customers is that a bad experience in even one channel can negatively influence the overall customer relationship.

Gallup’s research has revealed that customers value another aspect of service almost as much as they value convenience: consistency.

They have service expectations for a brand and expect banks to meet those needs regardless of delivery method.

Our banking studies have revealed that when banks do not meet those expectations — when customers do not get the experience they desire — their engagement suffers.

In a study of 3,100 banking customers, Gallup found engagement dropped by 30 percentage points when these customers gave anything less than a 5 rating (on a 5-point scale with 5 being the highest) to any specific delivery channel, even if they gave every other channel a perfect score.

The problem escalated when banks viewed the customer experience through various channels in isolation without connecting customers’ actual experiences to each channel in the bank’s ecosystem.

When faced with similar disruption, Gallup analytics reveals that the restaurant industry can learn an important lesson from the banking industry: Engagement and consistency are important to restaurant customers.

A study Gallup conducted of casual dining customers found that those who are fully engaged make 56% more visits per month to that restaurant than actively disengaged customers.

Fast food customers who are fully engaged make 28% more visits per month to that restaurant than actively disengaged customers.

 

Similar to retail banking, it might be more valuable to examine optichannel rather than omnichannel experiences.

If restaurants solely focus on adding more channels, they risk not understanding their customers and hurting their overall brand by not ensuring they are delivering consistent experiences across all channels.

Through research and our work with restaurant clients, we advise restaurants to:

  1. Understand the revamped customer experience in the restaurant industry.
  2. Prioritize logistics and organization.
  3. Segment your marketing and feedback.
  4. Enhance customer engagement experiences in traditional channels before expanding.

1. Understand the revamped customer experience in the restaurant industry.

To adapt to customers interacting with different channels, restaurants need to ensure that they manage customer experiences using consistent brand standards — not isolating delivery methods.

Creating a valuable customer experience system in any industry is difficult, and ensuring that system covers many different ways of delivery presents an even greater challenge.

Organizations tend to look at their customers through one lens of the customer experience platform because of the tools and materials they have in front of them.

A multifaceted approach is necessary when there are two or more channels.

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