Branded Foodservice Locations Should use First Party Online Ordering Platforms

 

Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes that there are several reasons why branded food outlets should consider using first-party online ordering platforms over third-party services:

·         Higher Profit Margins: Third-party delivery platforms typically charge commissions on each order, which can eat into a restaurant's profits. With a first-party platform, the restaurant keeps all the revenue.

·         Customer Data Ownership: When customers order through a third-party app, the restaurant doesn't get access to their contact information. This makes it difficult to build relationships with customers and run targeted marketing campaigns. With a first-party platform, the restaurant collects customer data directly, which they can use to personalize the ordering experience and loyalty programs.

·         Control Over the Brand Experience: Third-party platforms have limited customization options, and the overall experience might not reflect the restaurant's brand identity. With a first-party platform, restaurants can design the ordering experience to match their brand and offer features that are specific to their business.

·         Building Direct Customer Relationships: By encouraging customers to order directly, restaurants can build stronger relationships with them. This can lead to increased customer loyalty and repeat business.

Of course, there are also some challenges associated with using first-party platforms. These include the cost of developing and maintaining the platform, as well as the need to market it to customers and encourage them to switch from third-party apps. However, for many branded food outlets, the potential benefits outweigh the drawbacks. Now consider this:

Paytronix, recently published the 2024 Paytronix Online Ordering Report which found that guests transacting directly with a brand order 35% more items per check compared to those who order via third-party marketplaces. Online ordering represented 27% of all orders for restaurants and convenience stores in 2023, and operators in the top 25% of online ordering volume saw online orders jump to 62% of all their orders last year.

“The biggest takeaway is that while third party marketplaces have their uses, a first-party online ordering platform is key to a brand’s online ordering success,” said Tim Ridgely, Vice President of online ordering at Paytronix. ”Moreover, those brands that build a robust digital guest engagement platform that includes loyalty and a mobile app are better equipped to leverage modern AI tools, get closer to their guests, and deliver a powerful omnichannel guest experience.”

The 2024 Paytronix Online Ordering Report outlines how to optimize all of the systems and operations integral to a fully integrated guest engagement platform, with clear steps on how to:

·         Convert guests from third-party marketplaces to a first-party online ordering system

·         Consolidate technology for efficiency and better guest engagement

·         Use artificial intelligence to increase guest engagement

·         Leverage customer data for a personalized experience

The Paytronix report also celebrates the introduction of artificial intelligence (AI) tools and their advanced personalization capabilities, which make off-premises experiences feel as engaging as in-person ones. The report outlines how successful brands are leveraging AI to segment guest data, create personalized marketing campaigns, build rewards, and optimize menus to the needs of their customers. Operators are using these platforms to boost order frequency, anticipate future needs, and increase customer lifetime value.

Additional findings from the Online Ordering Report include:

·         Guests who order both in-store and online have the highest order frequency, the best retention, and 35% more lifetime value than customers who only order in-store.

·         First-party ordering platforms are the preferred method for consumers during lunch and dinner, and they also spend 30% more per transaction. However late-night orders (any time after 8pm) are nearly one third more likely to be done using third party marketplace apps.

·         Mobile apps generate 34% of digital orders, and mobile app users have a 45% higher CLV than web users.

·         Quick Service Restaurant (QSR) loyalty members place 38.4% of their orders online, while Full-Service Restaurant (FSR) counterparts order online 30.2% of the time.

·         Loyalty program members also shine when it comes to frequency, visiting their favorite establishments over 40% more often than non-members.

The Paytronix Online Ordering Report provides trends and actionable insights from Paytronix online ordering experts. It’s designed so restaurant and convenience store marketers, as well as operations and technology leaders, can benchmark online ordering tools and strategies and devise improvements to deliver breakthrough performance.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Restaurants, C-Stores, Deli’s It’s Not too late to start with Online Ordering

 

When you think about selling a meal or meal component, have you continued to say no way, not at all, or I tried it and it did not work for me? Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® wants you to rethink your position. Ask yourself why us and why now?

Here are some insights and research excerpts from our friends at Paytronix. That will help you understand why many restaurants, c-stores, and delis utilize online ordering, and why it might be time for you to test the waters.

“While restaurants, namely quick service (QSRs), have embraced digital ordering, not all convenience stores have taken the leap. Early adopters, such as United Dairy Farmers (UDF), are discovering that adding order and delivery to their digital guest engagement platform is a great way to increase sales on high-margin in-store merchandise, such as fresh-baked items and signature ice cream treats. 

But adding digital ordering doesn’t stand alone. It must be considered as part of a much larger digital guest engagement ecosystem. 

During the pandemic, digital orders emerged as a key part of the mix and are now expected by most customers. The nature of digital orders has changed as well. While delivery was king before and during the height of the pandemic, more recent data indicates that takeout orders now dominate this digital channel, with numbers even higher than they were pre-pandemic. Takeout jumped from approximately 35 percent of orders in January 2020 to nearly 64 percent now. 

What’s more, to meet customers where they are, brands must have a mobile app, and that app must work perfectly with loyalty rewards, your messaging platform and your CRM (customer relationship management). 

Sticking a Toe in the Water

As more and more c-stores expand their physical footprint to accommodate bakery and hot grill items, moving these fresh food items has become a big priority. Like QSRs, c-stores are gravitating toward a takeout model.

C-stores that facilitate this upswing in takeout orders through third-party services are finding a new, receptive client base waiting for them. Google Ordering is one example, with merchants who implement Google Ordering achieving a 0.08 percent lift in orders.

For UDF, which has 170 retail locations throughout the greater Cincinnati area as well as Dayton and Columbus, Ohio, online ordering was a natural extension of its existing U-Drive Plus loyalty program. With loyalty members driving 37 percent of overall sales, UDF welcomed online orders via its website or mobile app. Customers can now order ahead for a coffee and freshly baked doughnuts, and then pick up their breakfast on the way to work. 

Digital ordering also makes it easier for fuel buyers to get in and out of UDF stores and enjoy the brand’s growing assortment of “Oven Side” bakery products, hot food and ice cream treats. Customers are encouraged to shop in whatever way best meets their needs. Whether it’s supporting an in-store visit, an at-home delivery or a curbside pickup, the UDF guest engagement platform captures each transaction and builds a comprehensive view of guest preferences.

This further allows UDF to segment guests by fuel buyers vs. merchandise buyers, or even lapsed fuel buyers vs. those with high fuel buying frequency. Once UDF knows how frequently a guest visits and what they are purchasing, the retailer can create a personalized cadence. 

UDF can generate a 1-to-1 win back campaign or a 1-to-1 visit challenge for individuals. It can experiment with incentives — will a guest respond to Red Bull or Monster? — and continually finetune its loyalty campaigns so that they are always delivering value to customers.

Smart brands are aligning their guest engagement platform to bring online ordering together with loyalty, mobile apps, CRM and messaging. Many will face the temptation to go with a best-of-breed approach and find just the right point solution for each component. The challenge with that approach is that if the pieces aren’t perfectly aligned, it can create operational inefficiencies that will act as a barrier to achieving the most out of the solution. With today’s demanding guests, it is best to create the easiest path to the strongest level of guest engagement. “

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday than tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

Restaurant Food Sales Channels of Distribution Evolving

 

Where are you selling food?  That question and continued discovery around that question has been a key undercurrent driving success of restaurants that are trying to evolve with consumers. According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

When your customer moves all food retailers need to move with them.  Consumers are dynamic not static and restaurants, convenience stores, delis, and grocery store’s all risk capitulating year over year same store customer counts if they don’t evolve fast enough.

Restaurant gift cards are an avenue of fresh food distribution at reflect just how fast the consumers is evolving.  In a new report from Paytronix titled;  the Paytronix Restaurant Gift Card Report: 2023, which finds that restaurants have moved on from the pandemic, but face changes thanks to inflation. Those changes affect both how restaurants sell cards and how consumers purchase them. Here let’s take a look at some of the key findings in the report:

 

1.        Today $50 and $100 are the most common cards sold

2.        Restaurant gift card revenue is up 6% year over year; total cards sold is down 2%.

3.        Guests are spending more by purchasing higher value cards.

4.        Average dollars loaded per gift card increased 8% from 2021.

5.        Digital cards outperformed physical cards in terms of value, with the average digital card loaded $82 more at a fine-dining establishment than a comparable physical card.

6.        Third-party retail sales grew, while in-store sales dropped, indicating a channel shift.

 

In 2022, dollars spent on gift cards rose 6% over 2021, a high-water mark for gift card value, yet the overall number of gift cards sold fell. That meant people loaded on more value, choosing more cards of over $25 and fewer that are under $10. Consumers also showed a preference for digital gift cards, not only by purchasing more, but loading them with higher values than on their physical counterparts.

Paytronix Strategy & Analytics Director Kirstin Lynch, stated, “Gift card purchasing appears to mirror that of loyalty guests. Our research shows that loyalty guests’ checks match inflation. From the beginning of 2020 to the present day, restaurant loyalty guest check size grew in tandem with menu prices.”

While some of this change can also be attributed to customer preference and an overall shift in consumer behavior from quick-service restaurants (QSRs) to full-service restaurants (FSRs), some is driven by restaurant marketers.

Card sales also showed a shift toward FSRs, with that segment showing significant growth, even as QSRs, the segment that best weathered the pandemic, showed a 5% drop in revenue. This trend was particularly apparent for fine-dining restaurants.

“Fine-dining gift card sales have not only recovered completely from the pandemic they’ve also been the only concept to see an increase over 2019 numbers. This indicates a channel shift in consumer preferences – as guests emerge from the pandemic, they prefer to gift experiences at fine-dining establishments,” said Lynch.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information. 

Digital Food Sales Drive Grocerant Growth

 

Gen Z and Millennials are digital natives and have never had to wait for much of anything.  Today it is at the intersection of technology, lunch, dinner, and snacking that digital ordering has become second nature for the two top demographic cohorts drive success with retail foodservice according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Consumer are dynamic not static, they more forward at times they look back but rarely do they move backward and if they do it’s not for long according to Johnson. There is no doubt that the adoption of digital menus, digital ordering, and digital marketing have become the mainstay driving growth within the Grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food.

In a new report by released at the Food on Demand Conference in Las Vegas, NV by Paytronix Systems, titled; Paytronix Order & Delivery Report 2022: Navigating the Digital New Normal, found that digital orders have risen to one-third of total restaurant and convenience store food orders, up from just 12% pre-pandemic. While in-store sales remain down by nearly half, digital orders have remained elevated at 113% of pre-pandemic levels.

Andrew Robbins, CEO of Paytronix, stated, “Our ‘New Normal’ means the digital guest experience is no longer secondary to the physical experience, it’s front and center and marks one of the biggest changes I’ve seen in 20 years working with brands,” … “The opportunity for brands to use artificial intelligence to make experiences more personalized is huge. Learning directly from guests, presenting them with recommendations that resonate and instantly responding to their feedback with a personalized message from the store manager, is elevating brands that rely on their ability to connect with their guests.”

 Let’s look and more of the report findings:

·         Rise in Takeout Orders – While delivery was king before and during the height of the pandemic, more recent data indicates that takeout orders now dominate digital orders, with numbers even higher than they were pre-pandemic. Takeout jumped from approximately 35% of orders in January 2020 to a majority in March of 2022, a trend that appears to be increasing.

·         Third-Party Delivery Is Here to Stay – Third-party services will continue to play an important role in a customer acquisition strategy. To achieve success in today’s New Normal, restaurants and c-stores need to embrace new technology and third-party options and explore how to successfully integrate them into existing operations.

·         Delivery Customers are Different – For much of 2021, the average delivery tip was 12.5% of the subtotal, more than double takeout order tips. And 2021 takeout orders included a tip just 37% of the time compared to nearly 73% of delivery orders. Delivery customers are also more loyal, with 31% of orders coming from repeat customers.

·         Customer Feedback – Saving a guest relationship pays off. Paytronix data shows that issuing a coupon costs a restaurant $2.30 on average, but results in a $9.20 lift in that customer's lifetime value. That 4x ROI means a timely guest recovery strategy is a must-have.

·         AI Is Key to Gauging Customer Sentiment – Fifteen percent of reviews with a rating of 4.5 or better actually have a negative sentiment and could benefit from action, while 3-star reviews most frequently contain negative sentiment.

Consumers are dynamic not static. Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

Starbucks Stumbles Understanding the Lifetime Value of Employees and Customers

 

It is at the intersection of brand development and brand growth the food industry leaders need to pay attention to the blance of employees and customers.  Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®, stated, “Starbucks once a leader in employees and customer messaging now looks more like a company wanting to go backward rather than forward.”

Starbucks once read the pulse of its employees better than any company within the retail food space. Longing for a bygone era, the new Interim CEO of Starbucks, new tone is to punish, punitive, and pushing employees backward, reinforcing all the foodservice employer / employees stereotypes he spent decades bemoaning.    

The team at Foodservice Solutions® recommends that the Interim Starbucks CEO leave the office, spend 6 weeks in Buffalo, NY paying rent, power & water, phone, cable on 36 hours a week at any Coffee shop.  After 6 weeks with no extra money to spend he just might have some valued insights to share with the leadership of his company. 

Hiring lawyers, sending out PR that is example of what at one time he had distain for does not reflect the actions of a leader for today, rather it reflects what once was bad, and continues to be a bad example, bad for the industry, and bad for the future of Starbucks.  Has your company lost touch with its employees and customers?

All grocerant niche Ready-2-Eat and Heat-N-Eat fresh food retailers should strive to know their customer lifetime value (CLV), a metric that is immensely useful as it can help businesses predict how much customers are likely to spend in the future, and can help them make informed decisions regarding customer acquisition and retention. The same holds true for employee lifetime value (ELV).

It is at the intersection of ELV and CLV that success begins.  It’s that intersection enables businesses to understand customers as individuals, and employees as assets, not just as a broad group. The difference may seem small, but is significant. A customer who buys coffee twice a week is "fundamentally different" than an every-two-weeks coffee buyer, an employee that services that customer twice a week is "fundamentally different".    

In a new report Jessica Shelcusky, a marketing specialist with Paytronix Systems Inc., The old-school, basic CLV calculation is average spend per customer per year multiplied by the number of years before the customer churns. However, this is a very general method that is not totally accurate and can't be used for everyone.

"We know not all customers are created equal," Sheculsky said, noting that one customer may visit once a week, while another will only come in when they are lured by a coupon.

Artificial intelligence (AI) can be used to calculate CLV and understand a customer's habits much more accurately, particularly as part of a loyalty program.

The use of "AI to IA" predictive insights — artificial intelligence to individual actions — can estimate an individual customer's likelihood to interact with a brand, when they make a store visit, when they don't, what day of the week is better for them to receive a loyalty program message, and much more. Building out such profiles is part of understanding their lifetime value, Sheculsky said. 

AI can also calculate specific, important aspects of someone's CLV, including:

·         Recency: How long has the person been in the loyalty program?

·         Frequency: What does the average visit cadence look like?

·         Latency: When was the most recent visit?

·         Spend: How much do they spend, on average, per visit?

·         Predicted future value: How long is this person likely to remain active?

After building a customer's profile using these factors, retailers can plan for how best to communicate with them and motivate them to come back for another visit.

In a Battle for Share of Stomach

Do you look more like

Yesterday or Tomorrow 

"The more data we have on a consumer, the more accurate we can be when calculating their lifetime value," said Shelcusky.

In general, the ratio of CLV to the cost to acquire that customer should be around 3:1. But even if a business sets a different target, the ratio is a good way of understanding their marketing spend. Once a baseline is established, there are a number of ways to use CLV to achieve better programs. Retailers can identify their most valuable customers, see what it takes to increase the CLV of lower-value customers, effectively segment customers into groups for future campaigns, optimize acquisitions, and realize lift.

Another potential benefit of CLV is reducing the cost to acquire a customer. According to Sheculsky, there are three key ways to achieve this: 

1.       Retaining customers longer: Customers can be retained longer and turned from lapsed customers into current ones through targeted 1:1 win-back campaigns based on their profiles. For example, AI can calculate three dates for the base time to reach out to them based on their demographics and specific past behavior.

2.       Reducing media/advertising expenses: Media/advertising spend can be reduced by using loyalty intelligence to inform media buys and identify those customers who are most likely to make a store visit.

3.       Reduce fees associated with third-party marketplaces: Retailers that know more about their customers and have the right data can push first-party ordering, especially if they offer a smooth online ordering experience.

The same hold true for employees.  Think about looking forward, don’t hold onto yesterday to long.

Foodservice Solutions® team is here to help you drive top line sales and bottom-line profits. Are you looking a customer ahead? Does your messaging look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.