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[Idea Feedback] – Restaurant Loyalty and Marketing Platform

By Aaron Dsouza on 18 Comments / 2537 views

Hi Rodinhooders,

I wanted to seek your inputs and feedback on an idea that we’re currently working on which is focused on the Restaurant Loyalty and Marketing space.

I wanted to breakdown the feedback process in two parts:

  1. At an idea level

  2. At an operational level

The focus of this post is just to seek feedback on the idea.

Overview of the platform:

  • A loyalty and marketing platform for restaurants to increase customer retention and spend.

  • For customers, it is a single platform to manage multiple restaurant loyalty programs, earn and redeem rewards.

  • Restaurants can create hyper-targeted marketing campaigns leveraging customer demographic and purchase data obtained via the loyalty program.

Based on this high level overview and without worrying too much about the operational details just yet, can you please provide your feedback on:

  1. What do you think about the idea?

  2. As a Consumer:

    1. Would you use a restaurant loyalty program? Yes / No – Please elaborate if possible.

    2. Have you in the past use similar programs? Yes / No – Please elaborate on your experience if possible

    3. Would you be interested in receiving offers specific to your restaurant visit history?

  3. As a Restaurant Owner:

    1. Loyalty programs have been around for a while, so why haven’t you implemented one?

    2. Assuming you have some customer data and trends, would you be interested in performing targeted marketing to your customers?

    3. Are existing marketing channels good enough for you (Zomato, Burrp etc) OR are you still willing to do more?

  4. As an angel / institutional investor, does it sound exciting or an idea which you think could scale nationally?

  5. Overall, what could be the key roadblocks?

PS: We know that it’s not an out of the box idea, and has already been done elsewhere. However, we’re intrigued by why no single product has been very successful in India and were wondering if there something that we can do differently? We have studied competition, market size, market needs, consumer preferences, etc. and are hoping that with your inputs, we can further validate / trash some of our key assumptions.

Looking forward to your inputs.

Thanks,

Aaron

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18 Comments

  1. Definitely would look forward to use this service. Because whenever I go to Domino’s they collect my mobile number but I don’t get any additonal benefits or discounts. In McDonald’s they give me some repeat coupons which I don’t carry the next time I go there 🙁  KFC & Tacobell – they ask me to take a survey in their website so that my next purchase gets 15% discount.

    I would definitely look for something like this where may be I can use my mobile number and get additional benefits and discounts as a customer.

    Cheers,

    Karthik

  2. Thanks for the feedback Kartik. We were thinking about mobile number registration too.

    Additionally, would you be likely to review the restaurant on other platforms and provide feedback to the owner if it incentivized you when you did. Thus, not building your loyalty only by making purchases but also by helping the restaurant build its brand.

  3. Hi Aaron,
    My inputs as a customer: i would like a program where I can accumulate loyalty points from different restaurants on one card/number and use it across restaurants.

    What comes closest to this a payback but its more popular in other retail formats and not food. Currently all QSRs run their offers and promo but nothing is like a loyalty program. Fine dining don’t even offer a promotion even if ur a regular. So yes for someone who eats out thrice a week , I would love a common loyalty platform across QSR and fine dining.

    As a restaurant business owner or an employee with them:
    Yes its a good idea, the trick lies in execution. As a QSR , I don’t have the bandwidth to collect and maintain data many times. Domino’s does collect data but I feel sends a generic offer to allcustomers and are not specific on demographics, purchase history etc.

    A loyalty platform which can sit on top of the existing systems and can be integrated into the current ERPs/POS systems would be great. With digital marketing bringing down marketing costs while increasing reach, targeted marketing becomes easy and also need of the hour.

    I hope I answered your questions and dint just leave tons of gyan 🙂 🙂

    A

  4. Hey Aaron,

    The thought of using data to bring out more customized offers is a great idea. However I have done a little study on this sector and would just share the details so you know what you are up against.

    My experience unfortunately; has been that restaurants and food based firms are not willing to pay for loyalty programs and do not believe in professional digital advertising. Digital advertising to restaurants is more of being on digital media with a facebook page and getting a few likes or a free issue on zomato and just dial! Not all restaurants offer a discount and this discount may change without any information to you (the service provider)!

    Negative reviews means they will stop paying you because they would expect your service to hide such negative reviews if they do not turn positive. Another issue is that a small geography may not be feasible in India to run such loyalty programs. Perhaps you should check with Netcarrot and Payback(earlier iMINT) on how loyalty is disloyal in the food industry. For further research check with KSA Technopak.

    As a consumer, the idea seems great but nobody is willing to pay for it unless it offers substantial discounts. As a restaurant owner; the idea is definitely a must have but the consumer must come to my restaurant in dull time and not peak time, and off course; I cannot give  more than a 5% discount besides the extra paper work (if any) should not be on my tab. As an investor, would love to see such an idea work in India (keyword: work). Well that in a nutshell is your roadblock!

    The information is only to help you anticipate better, do not intend for it to be de-motivating in any manner. Wishing you all the best.

  5. Hi Ankita,

    Thanks a lot for you inputs. They reinforce some of our thoughts. We really do feel that the big chains are not making enough use of the heaps of data that they have and the smaller restaurants don’t have the capability of running their own campaigns.

    Of the things you mentioned, there are 2 details that we would not be able to execute, atleast in the start. First, being ERP/POS integration. There are just too many and too varied of these systems out there to be able to develop upon and scale quickly. So right now it would need to be an independent system. We are thinking of a mobile phone/tablet based. Secondly, we spoke to some QSR owners and they are not too happy about the the ability to earn and redeem reward points across different restaurants. It seems more like a platform loyalty rather than loyalty towards the QSR. Perhaps, when the platform is as big as payback the opinion would change on account of the user base.

    Keeping this in mind. Would you still use the loyalty program as a customer if you could only collect rewards at the places you have made the original purchases? Would you be willing to make your staff take the additional effort (this would be kept to the bare minimum) to enter/verifi customer purchase data on a separate device?

    Thanks again for your time and feedback.

  6. Hi Pawan,

    Thanks for taking out the time to share you insights and I really appreciate you pointing out the hurdles we might face. Better to be aware about them now rather than months after we implement a flawed platform.

    • It’s might true that restaurants generally do not believe as much in professional digital advertising but they do spend a good amount of money flyers and paper ads. What do you think could be the reason? Perhaps the old fashioned mentality or the inability to access digital platforms at reasonable cost.

    • We are planning of implementing a platform independent from the discount offers where frequent customers could receive free items after a certain number of visits or amount spent. The restaurant would decide these offers and it would be his responsibility to update it on the platform when he wishes to change it. Do you think this may be too much of a hassle for the owner?

    • We are not planning on reviews on our platform as of now. Perhaps when there is a bigger user base it would make a bigger impact.

    • We were planning on keeping the platform free for the customers. It would be an added obstacle to get the cunstomers on the platform. 

    Will definitely try to get in touch with someone at Netcarrot, payback and Technopark and find out the issues with loyalty in the food sector. Payback has barely a handful in the space.

    Thanks again for providing us with more things to think about. I know a lot still needs to be done but I hope the some of the things I mentioned gives you a clearer idea of what we plan on doing.

  7. Hey Aaron,

    The restaurant owners do not believe in paying for digital, they believe it is available free and every kid around the block can freelance it for them. The cost of digital is anyway lower than paper ads, hence that is not an issue. They have not given digital a chance to prove that it can be ROI on the restaurant business! This is why they have not taken to it.

    The owner has very few intelligent resources and would rather outsource this job to the PR agency or yourselves. They would never be able to update on time as the dynamics of change are based on thought and do within the restaurant, a few may find it doable while others would never bother to update until it becomes a customer demand.

    Reviews on all platforms are flawed as they are pedestrian version of how the restaurant should operate and serve. Only a trained food reviewer or an experienced one with references may do justice to this job. Therefore you will find that the best restaurants are the ones run by chefs.

    I don’t think you have a choice but to keep it free initially unless there is some great value for little money. 🙂

    I am building a food platform as well, give me a shout sometime and we can exchange notes. You can go through my website http://www.coraldinner.com or http://www.i2cook.com (e-commerce) to see what we do in the food space.

    Best.

  8. Hi Pawan,

    It’s true that restaurants haven’t really given digital marketing a chance to show ROI benefits. I think the problem lies with the providers of these avenues as well. There should be a mechanism to calculate the ROI and show the value created by the marketing campaigns.

    Zomato seems to have done a good job by assigning top reviewers and the giving titles to persons who have reviewed a lot.

    I’ll definitely get in touch with you over the next few weeks once the product is a little more mature. 

  9. Hi Aaron,

    The major roadblock is in integrating with the system in use at restaurants. They won’t be happy about buying new software that makes them do extra stuff. If however you try to integrate into existing solutions that they have, then you will have troubles because of the limitlessness of options out there.

  10. Hi Aaron,

    How will this loyalty program work? Will it require some kind of digital / internet connectivity at the restaurant or will it be a completely offline model. Because in case it requires a digital platform, most of the small restaurants/fast food joints do not have computer / internet at their premises. In that case, the addressable market would be limited to the good fine dining restaurants which already have computer / internet. However, these good fine dining restaurants are generally a part of some kind of collaborative loyalty programs. How are you planning to address this problem?

    Puneet

  11. Hi Aaron,

    Great idea. I would surely want restaurants I visit often to take notice that I am a valued customer.

    Incidentally, I was working on developing a similar platform for my organization but more related to customer feedback. And I spoke only to restaurants and not QSRs. The people who run these establishments simply do not have the time to think about customer loyalty. So once a customer is out of the premises, the focus shifts to the next person waiting at the table.They want to, but they can’t.

    Some restaurants did express a need to have an efficient way of managing their customer loyalty and retention programs where their involvement would be minimal. Most of them have customer data on a spreadsheet that is quite old and unreliable. 

    So in my opinion, your idea is a very good. There is a need, but the solution that you propose should not become an overhead for them. The main roadblock would be convince the restaurants to hand over their data to you and in a manner where you can use them without too much of data scrubbing and cleansing. 

    Cheers,

    Aswin

  12. Hi Amit,

    Thanks to the reply. Yea, what you are saying is absolutely true. We tried both options you mentioned. Restaurants are not comfortable switching POS systems and integrating with a majority of the systems would just take too much time and effort.

    Right now we are trying to figure an alternative. Some independent application on the store computer or an independent device set up in the store all together. Any thoughts on this?

  13. Hi Aaron,

    There is a company I know of that is trying to the exact same thing. They are called capillary or something like that. They have done something to the printer drivers, so when you print a bill, they kind of get the bill info and are able to then offer loyalty.

  14. Hi Puneet, 

    Thanks for the post. The loyalty platform we are planning would enable the user to view their points status and offers realtime. Hence, the application instore would require internet connectivity. We are planning on doing this by providing 3G connections in stores without internet connections. Cost per store per month is about Rs. 100 for this so it would be affordable.

    We are still contemplating about whether or not to include fine dine restaurants as part of the program right now as we aren’t sure about how much difference would a 10-20% discount make to a customer of such an establishment. I would appreciate it if anyone could share their thoughts on this.

    Would you be able to share the names of a few of the fine dine restaurants with collaborative loyalty programs? I should take a look into those as well.

    Thanks again!

  15. Hi Ashwin,

    Thanks for the support. Its nice to hear such validation from a customers point of view. 

    The points you mentioned are similar to the feedback we received from QSRs. Even though they appreciate a feedback/ CRM system, they haven’t really taken the trouble to implement one and the store staff mostly do not have the time to record such data. The system would need to be highly easy to use and quick.

    As far as existing customer data is concerned it would be a challenge to import it into our platform if it isn’t in the correct format so we might need to collect data ourself only via our platform.

    I would really appreciate it if we could have a chat offline sometime. 

    Thanks!

  16. Hi,

    I have always thought that most mediums should have some sort of loyalty program (I always wondered why flipkart never did that). It especially makes sense for places like Domino’s, CCDs and smaller restaurants that have a pretty regular clientele.

    1. I like the idea. As far as I know, a few restaurants do offer membership programs. I don’t know why the big chains don’t have this system yet.

    2. (1) As a consumer, I would use the loyalty program. I’m not sure how this would work for multiple restaurants on one single membership card though. Is there a limit to the no. of restaurants I can be a member of?

    (2) My parents were members of the ITC restaurants, but their system involved paying a pretty hefty membership fee and getting discounts on all meals for a year after that (with very significant discounts on birthdays and anniversaries). In the end, though, my parents felt that they always ended up going to the same place to justify the membership fee, and got bored of it.

    (3) Personally, I do not like the system of targeted ads (as a consumer). I find it annoying- as if someone is keeping an eye on me. (Maybe you can have an opt out feature)

    I know that a lot of fine dining places have memberships. One more reason that a lot of people I know might not need to use a loyalty program is because a lot of offices offer employee discounts at the most popular restaurants.

    I think this program could be popular among small restaurants as well as big chains. The biggest roadblock would be that most restaurants in India seem to be scared of embracing any sort of modern technology.

    Best of luck! If I ever opened a restaurant, I’d like to avail of your membership program.

  17. Thanks for the detailed post Neharika. 

    Yea you are right, a number of cafes/bakeries do have simple card based loyalty programs. That atleast validates that some restaurants understand its importance.

    As a consumer you would not have to pay for the program and you would be able to register with as many restaurants as you would like. The constraint being, the points you earn at restaurant A are not redeemable at restaurant B.

    The situation that happened to your parents is one of the major points against a restaurant loyalty program. Some people would prefer trying out new restaurants rather than going to the same place repeatedly.

    Although there would be an opt out feature, one of the main advantages to the restaurants would be the ability to send you offers of your liking. So we would really prefer the users did not do that.

    Good luck if you decide to open your restaurant. One more client added to the list 🙂

  18. hey aaron,

    was going through the archives and re-discovered your post!

    what happened since? have you taken this idea forward? would love to know!

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