I would open a restaurant now…right now…and I wouldn’t look back.
While the COVID-19 shutdown has taken away so much from our industry, it’s also revealed three key learnings that should inspire us to embrace opportunities to survive and thrive on the other side of this massive industry reset.
First, the COVID-19 shutdown exposed — and is forcing us to deal with — systematic pre-existing problems that proved how vulnerable this industry is to macroeconomic disruptions.
Customer-driven digital disruption, volatile supply chains and dated franchise structures were already killing the 20th-century restaurant model before COVID-19. A booming economy, historically low unemployment rates and robust consumer-confidence levels did nothing to spike success metrics and we continued to lean on price increases to offset dismal traffic numbers. Third-party-delivery aggregators — and the on-demand digital marketplace that birthed them — continued to gut in-store visits and margins, while seemingly converting traditional restaurant customers to one-off incremental purchases driven, primarily, by cost and convenience.
Second, we now have a much more detailed understanding of the real value we can bring to our customers, what they want from us and how to best engage them through and beyond the shutdown.
In a recent study, titled What will get restaurant customers to return after the pandemic?, I was asked to summarize the data and curate a few key insights to help the industry into and through recovery. Here’s what the numbers told us:
• Brands without formal tracking of customer motivations, intent and behaviours prior to the COVID-19 crisis will have the most difficult path to recovery
• Restaurant brands must plan for a long-term focus on food experience, customer experience and restaurant/service environment as they re-build and re-invent their brand
• Restaurant brands will be better prepared for, and insulated against, severe socio-economic crises with digital-transformation strategies to increase engagement, purchase intent and affinity through the customer journey
Finally, we already have information and tools to re-invent a restaurant blueprint for the future and the path forward from here will net out into three core recovery actionables: resuming business inside of the new normal; recouping lost customers; and re-inventing brands to better differentiate and survive in an uncertain marketplace.
Many restaurant brands have already started some planning around resume and recoup objectives. The true challenge, however, will be fully embracing the re-invention opportunity in front of us and not revisiting yesterday’s business-as-usual routines.
With all this in mind, I’ve outlined my three-step restaurant blueprint for the “new normal” age.
THE BRAND
Any business of any size emerging from this crisis with the goal of re-building, growing and winning in a competitive marketplace must ask themselves what problem they’re solving; are they exceeding customer expectations at every touchpoint; and are they engaging and connecting with their customers on an emotional level?
Each of these answers are building blocks of a clear brand promise. Winning brands have shown us how leading with a well-defined brand promise can establish long-term customer affinity, increase cultural relevance and ignite permanent brand differentiation.
True brand re-invention means we’re thinking less about serving food and more about the bigger relationship between food, our customers and our responsibility to influence and inspire change. True brand re-invention for the restaurant industry means leading with a clear brand promise.
This leads us to step one — identify, address and own one of the real problems plaguing our industry and surround it with a culture of customer engagement and emotional connection. Some examples include:
• innovating around health-and-safety regulations to create a 360-degree food-transparency customer champion
• Owning localization and reconnecting with our communities
• Fighting supply-chain complexity and volatility and taking a stand against food waste
• Make food healthier, more natural, more affordable and more accessible.
THE NEW ROLE OF THE CUSTOMER
It is time to start thinking about how your relationship with customers will change post-shutdown. Data-driven customer insights will be vital to recovery, while engagement and loyalty metrics matter more to the long-term success of your business than ever before. Customers will choose brands that engage them regularly and transparently.
THE METRICS
The regular collection, curation and communication of real-time customer data and growth metrics can be overwhelming for restaurant brands. There’s ample innovation and value in the customer-experience (CX) space with cutting-edge platforms and great providers, but these can add complexity and cost beyond what many restaurant models can afford.
So, step two involves focusing on the only metrics I need — starting with customer-conversion (acquisition and retention) costs. Comparing the initial and ongoing costs of converting customers will enhance planning and profitability.
Next, lifetime customer value measures and informs how loyal customers are, what this means in terms of purchase behaviours and how to incentivize layers of “hyper loyalty.”
Brand-engagement metrics and sentiments allow you to get to know your best customers; understand their motivations for choosing you; find the best moments to engage and convert customers through their respective journeys; and influence new customers to engage with you.
Finally, average-unit volume (AUV) is a longer-term indicator of systematic brand health and encourages a long-term focus on solving business problems rather than short-term sales corrections.
THE MARKETING
Step three involves digital transformation; seamless customer experience and always-on engagement; and optimized conversion opportunities at every customer touchpoint.
Always-on marketing drives engagement throughout the customer journey. Forget about the short-term pitfalls of “driving sales” and focus on maximizing purchase intent, long-term brand relevance and customer affinity. Digital transformation is key because it delivers to the on-demand economy and creates a perpetual cycle of dynamic conversion targets in the customer journey.
With COVID-19 not yet in our rear-view, marketing plays an important role through recovery, powering a 360-degree business model that better prepares us for future sales fluctuations and disruptions.
We can’t ignore a once-in-a-generation opportunity to inspire and expedite recovery through re-invention. The most fearless brands will reap the benefits by pivoting not just towards new and different business models, but to the core of who they are and what they want to be. FH
Brandon Poole is managing director and Restaurant/Foodservice lead with Cult Collective Toronto. You can reach him at [email protected]
