restaurants and big data

Photo by Vodafone Institut (Flickr)

On February 16, Apple CEO Tim Cook signed his name to an open letter from the company to its customers. The short version of the letter’s contents is this: the FBI—the U.S. government’s law enforcement agency—asked Apple to create a version of iOS that could bypass any of the the built-in security features. They would only like it on one phone and for one investigation, and they promise they won’t do anything fishy with that kind of power, no sir. Apple is refusing and going public with this request, so that people can fully understand the depth to which governing bodies disregard privacy. It’s downright Big Brother-ish, in a very literal way. Why am I bringing this up in a post about the ways restaurants can use data to better and more personally serve customers? Because there’s the inevitable cries of “Big Brother!” whenever the conversation goes to the topic of creating detailed customer profiles and tracking their buying habits using software. And if you feel compelled to make that comparison, just stop reading here. Because I’m going to talk about collecting data on your customers and using it to do better business with them. The ability of a business to target offers and discounts to its regular customers isn’t a slippery slope to government overreach. More likely, it’s a gateway to free pizza.

It’s also worth noting that this isn’t so-called Big Data we’re talking about. Big Data, even at a consumer level, is a little creepy even to those of us who don’t wear tinfoil hats. It’s gathers a large amount of data across huge swaths of the populace such that trends emerge which can actually predict or influence future behavior. This is not what’s happening in a restaurant that monitors its customers purchase history. With Big Data, your age, salary, neighborhood, ethnicity, real estate ownership status, outstanding debts, and educational background can all be used by data scientists—people who’ve trained to analyse data—to identify you as a potential homebuyer who starts receiving offers from shady banks for a loan. With your point of sale, you can look and see that your customer orders the same pizza every single time he comes in, and will be flattered that you know his “usual.” It’s  whole different ballgame we’re talking about here.

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Screen Grab of George Orwell’s Final Purchase

Sure, you can do some Big Data-like things, such as running reports drilled down to certain time periods to identify slow times where you can focus extra attention. Say you learn that Monday through Wednesday from 3-6 PM are your slowest times; a common remedy for this would be a happy hour offer of some kind—say, half-price Wings, or free soft drinks with purchase—valid only during those times. But you can also then parse through your data to find out which customers tend to come during those hours and send targeted promotions their way to really drive more business. Similarly, you can identify those people who gravitate towards your vegetarian entrees, either by purchases or their engagement with you on social media. If you’re adding a new veggie quesadilla to your menu, you’ll know who you should tell about it. If you were to integrate analytics software, like Swarm, with your POS, your data can get even bigger. This is because you can start compiling external information—like weather, foot traffic, peak shopping/tourist seasons for your area—and analyse it alongside your internal (POS) data to uncover trends you may never have noticed otherwise. And all of this adds up to running a much more efficient operation: your promotions go to the people who are likely to respond without annoying those who aren’t interested; inventory and management becomes much less of a guessing game when you know when to expect high and low periods; long term sales trends can reveal items that don’t sell well and may even cost you money just to have on the menu. This is the idea behind Big Data, compiling all the information people leave behind in the wake of their transactions to better operate your business and serve your customers. Compare that with Big Brother watching you in your home, forever monitoring your allegiance to The Party under threat of imprisonment and torture. It’s kind of a different story, so let’s all calm down.

Overall, the trend of how consumers feel about having personal data collected or tracked has been moving towards one where people are cautiously OK with it. At this point in the history of online shopping, we’ve all pretty much abandoned the collective 90’s freakout of OH MY GOD THEY’RE COMING FOR MY THOUGHTS and there’s a more general attitude of empowerment surrounding online security and data collection.

Photo by Sara Kelly

Photo by Sara Kelly

This doesn’t mean people are naive enough to think they’re always safe, only that they’re more well versed in privacy concerns and comfortable they’ve taken whatever measures they ought to. And when it comes to stores or restaurants collecting data to better serve them in the future, people tend to be fine with it—if you tell them what’s going on. Social media has definitely relaxed consumer attitudes about privacy. People willingly hand over personal data to apps that tell them which Smurf they would be, so to do so in order to get a coupon isn’t much of a behavioural stretch. There’s a distinct reason why a small business such as yours would want personal customer data, and that reason happens to coincide with what consumers want: targeted deals that benefit them. It’s when data is gleaned simply for the sake of getting it, with no particular win-win goal in mind, that consumers start to get antsy about what personal information they’re giving up. It’s the collect-it-all-up-front-and-ask-questions-later strategy that people have issues with, the kind of strategy that this article states is what got the “US government’s NSA in such hot water,” if hot water can be defined as saying “Oops” and then changing the subject.

Photo by Marcos Gasparutti (Flickr)

Photo by Marcos Gasparutti (Flickr)

There’s no law that says you have to inform customers that you’re saving the data that they already know you have access to. Data like what dishes they tend to order or how much they spend on average when they order them are examples of things customers tacitly allow you to know, simply by their showing up and ordering dishes and spending enough money over time to allow you to figure out what they average. It’s not a leap to assume that if someone didn’t want you to know what kind of things they like to eat or how much they tend to spend on a meal they wouldn’t go out and order something they like or spend an amount they could afford. It’s not such a fine line between Big Brother and Big Data, and these days most of your customers know that their choices are being recorded, analysed and used by retailers and hospitality owners to better cater to their preferences. It’s not the data you collect, but what you do with that data that has certain people worried. Repeatedly buying hummus should get a customer on the short list for discounted hummus in the future. If you have knowledge of someone’s proclivity for hummus, no one’s going to fault you for giving them a discount on an order of hummus. It’s when you decide that an affinity for hummus is politically suspicious that people start to take offense. So keep on gathering information on your customers. And then use it in a way that benefits the both of you.