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Challenges Facing the Restaurant Industry

Changes in consumer preferences, the task of managing growing global brands, and the demand for better mobile experiences are all adding up to big challenges for the restaurant industry.

Restaurant brands like you must address numerous challenges in today's consumer environment. Customer expectations are changing, providing a consistent brand experience is growing more difficult, and enterprises are struggling to keep up with trends in mobile technology. Here are three of the biggest challenges facing those of you in the restaurant and food service industries today:

Shifting customer preferences and expectations

Today's restaurant customers, especially Millennials, have higher standards than ever -- even for quick service restaurants (QSRs). Concerns about diet and nutrition, food allergies/sensitivities, and sourcing of ingredients are all taking center stage in the minds of restaurant-goers. As a report from the National Restaurant Association explained, "The typical restaurant guest today is not the same as the typical restaurant guest 20 years ago. Having essentially grown up in restaurants, younger generations have a very sophisticated world-view when it comes to food." According to restaurant operators, there has been a major increase in customer expectations for restaurants in terms of nutrition, allergy issues, sourcing, and sustainability over the past two years alone.

"The typical restaurant guest today is not the same as the typical restaurant guest 20 years ago."

The report concluded that, "Operators will need to carefully balance how to cater to these precise tastes without becoming too niche or alienating more mature guests." Brands must also be equipped to accurately respond to customer questions about these issues; and as ingredients and sourcing both change over time, they must also be able to quickly update their answers while preserving an audit trail of past information.

A perfect storm for brand management

Let's talk about two major trends that are difficult enough on their own, but combined are creating headaches for brand managers. The first trend is that big brands are expanding globally because today's U.S. restaurant guests are less interested in chain restaurants. In the U.S., large franchises are finding it increasingly difficult "to maintain an engaged customer base," found a report by the Vucurevich Simons Advisory Group. As big brands lose steam in the U.S., there are rich opportunities to expand into other markets -- however, these new ventures bring with them new issues with localization, language, and reputation management. 

Speaking of, restaurants are struggling with the "reputation economy," where a brand can live or die based on what is being said about them online. The challenge for large brands is, reviews on sites such as Yelp, Google, and UrbanSpoon reflect customer experiences in individual locations, not with the brand as a whole. No amount of TV ads with catchy jingles can make up for a poor experience at a restaurant location, and online reviews carry a lot of weight. Studies show that eight out of 10 consumers trust online reviews about a business as much as a personal recommendation. A Harvard Business School researcher found that a one-star increase in a restaurant's Yelp rating correlated with a 5-9% increase in revenue. 

Eight out of 10 consumers trust online reviews about a business as much as a personal recommendation.

The more locations your restaurant brand or franchise has, the more difficult it becomes to maintain a consistent experience across all of them, and this is often reflected in online ratings and reviews. Brands must focus their energy on keeping the experience consistent among different franchises and operators. You must also ensure valuable customer information is captured across the board, from in-store surveys to the corporate call center. Lastly, you would do well to track what's being said about your brand on social media and review sites. All of these strategies allow you to identify issues, respond to trends, and head off future problems.

Mobile continues to change the game

For years, businesses have been hearing about how important it is to provide great mobile experiences. But new data make it clear that mobile experiences -- especially online ordering -- are even higher-stakes for restaurant brands. Studies are uncovering that there is a strong relationship between online ordering and brand loyalty. According to a National Restaurant Association/LevelUp whitepaper, consumers who have placed an order online visit the restaurant 67% more frequently than those who haven’t.

As mobile ordering reaches new heights -- Forrester research estimated mobile transactions will exceed $142 billion in 2016 -- you will be under pressure to provide frictionless experiences within your mobile apps. Customers have high standards for in-app experiences, and expect to be able to easily view menus, make a reservation or call-ahead seating arrangement, see wait times, and order pick-up or delivery. They want to be able to find their own answers, and when they're struggling, they want instant help from a human who already has all the context of what they were looking for. It's no longer enough to have these options on your website: your customers have gone mobile.

Mobile transactions are projected to exceed $142 billion in 2016.

A great app can boost revenue significantly: For example, orders through Taco Bell's mobile app are 20% higher than in-store because users are more likely to add extras and send group orders through the app. Make your app easy to use, and customers will use it again and again. Make it difficult, and they'll probably never come back.

The same standards for ease-of-use must also apply to the employee experience. As a report from NCR explained, "System integration is the key to delivering a seamless experience that doesn’t impact your employees’ productivity. Also, if you are considering developing a mobile app for your brand, it’s critical to make sure that you develop and execute staff training as part of your strategy. Your guests shouldn’t be the ones to train your staff on new technology." Mobile ordering, and the technology infrastructure that accompanies it, will continue to be a growing area of opportunity for restaurant brands like yours.

Addressing challenges in your industry

These challenges have some common themes, including the customer experience, brand consistency, and technology. When done right, all these elements combine to deliver better loyalty and higher revenue. Astute Solutions creates the customer engagement software that powers exceptional customer experiences for restaurant brands like yours. Here's how:

Helping customers help themselves. Customers care more about ingredient sourcing, allergens, and nutrition than they did even a couple of years ago. They're also accustomed to finding answers when and where they want them -- which is all the time and everywhere. Astute's software allows brands to provide the right answer every time through self-service on your website, in your mobile app, or via messaging apps. If they can't find what they're looking for, it's easy for them to seamlessly transition to talking with one of your live agents, who is already up to speed on what they're trying to do.  

The one right answer, always and everywhere. The same knowledgebase that can help customers answer their own questions (such as, "Is there gluten in this dish?" or "Where do you source your coffee beans?") also equips your store associates and contact center agents with reliable, accurate information that changes as your ingredients and policies change -- and even tracks past responses in an audit trail, reducing risk. Plus, our KMS can operate in dozens of different languages, easing the transition into new markets.

A consistent service experience. Franchising and expansion can cause fragmentation in the customer experience. But by using a unified system for customer engagement that includes CRM, social media, knowledge management, self-service, and smart escalation, you can bring more clarity and consistency to each customer interaction.

Harnessing big data. Astute's customer engagement software serves as a single source of customer truth, delivering voice of the customer (VOC) insights that you can use to adjust your menus, design new marketing strategies and promotions, and plan changes to your restaurant locations. Being tuned into what your customers are saying about you -- and your competitors -- through social listening and other VOC data can help you stay ahead of emerging trends.

Astute knows how to help restaurant brands win. Schedule a demo of our customer engagement software today.