Loyalty and Tech Helping Small Food Service Stores to Scale

| Publish date: 11/15/2018 (Last updated: January 15, 2019 10:24 AM)
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Technology has impacted the food sector in myriad ways. Less than a decade ago, it was possible for a brand to mislead consumers by fiddling with their product’s label or by obscuring information on proper serving sizes or nutritional value, for instance. Now, anyone with a smartphone is capable of scanning the same package’s barcode with their smartphone and determining its various contents down to the milligram.

From the way crops are grown to the way they’re processed into food products, technology touches every single point of the food production cycle as well. Food services—the sector that busies itself with selling and serving food to consumers—is also impacted by the technological progress. Advancements in technology in the last several years have created “the digital patron”, a key constituent of food service who prefers to interact with their favorite restaurants via virtual coupons, loyalty rewards, online ordering, and hands-free payment. Catering to these customers is a matter of merging the convenience they’ve come to expect online with the timeless business flows of a traditional eating establishment.

Franchises Find an Advantage in Tech

The food services industry constantly seeks developments that will reduce wait times, drive higher revenues, and improve customer service. A pertinent example is McDonald’s, which has not only made a move towards touchscreen ordering systems but has also heavily invested into its online delivery portal. The transition to self-serve kiosks in 2016 turned the franchise around from a consecutive two years of dismal sales and as a result, McDonald’s restaurants can accommodate higher foot traffic without increasing staff or overhead. Sales blossomed, proving that the decision to adapt its business to fit around customers was a savvy one. The shift towards online food loyalty programs has done more to help food service businesses, though typically only for those with the capital to build digital systems that enhance customer satisfaction, sales, and tracking.

Businesses like Starbucks exemplify the advantage that loyalty programs deliver to customers, but also to the business itself in the form of data insights and guest retention. Starbucks launched its loyalty program in 2010, dubbed the My Starbucks Rewards Loyalty Program, and it has since become one of the most successful such examples ever. With over 14 million members and $1.2 billion in digital cash held by Starbucks customers, My Starbucks’ outstanding mobile experience, expansion into their grocery product lines, and easy redemption is a winning formula.

In the most recent quarter of 2018, 13% of Starbucks orders in the US came through their mobile ordering tool. While it’s productive, that customers are using My Starbucks enough to help push sales, loyalty programs are also designed to glean data insights into customers, which are similarly valuable. With this priceless information, a business can offer promotions within their ecosystem that are individually relevant, collect data on how new products are performing, and see the social impact of their ads. These all have a positive influence on the bottom line.

Digital Customer Loyalty Used to Require Capital

The traditionally high costs associated with building an effective loyalty program have ensured that only the largest companies have them, however. This gives larger restaurant and fast-food chains an even sharper edge against smaller, local alternatives—but not for long. New ways of hosting these digital ecosystems are driving the cost of them down and defraying the advantage that big food franchises used to have.

Further advancements in blockchain tech specifically are now directly lowering the costs of establishing such loyalty programs. The decentralized network allows participants to transact with each other rather than middlemen and drastically reduces the cost of connecting peers thanks to its algorithmically reliant ledger. Accordingly, blockchain will be crucial in helping smaller businesses overcome the costs inherent in building a useful, scalable loyalty program for their own customers.

The various necessary components of a good loyalty rewards program illustrate how these programs are so expensive to build for small businesses. A restaurant needs its own application where customers can see their rewards balance, make hands-free payments, browse new promotions and share them with their friends. On the business side, the program also must make it easy to manage customer data and relationships, serve promotions, and track performance. Some innovators have realized that blockchain is a perfect environment to build such a program. A blockchain loyalty program might include all these components but be hosted using decentralized technology, and therefore able to cater to any restaurant that wants these capabilities.

Resto, for example, is a blockchain company that hosts an integrated, accessible platform for food service operators who wish to launch a customer loyalty program without the associated costs. Instead of being relegated to Facebook or Google ads exclusively (as they have been), small restaurants can use Resto’s toolkit to offer customers “cash back” in the form of Resto tokens, serve custom promotions via the Resto app, connect to a CRM platform for collected data analysis, and derive the important details restaurant owners need to manage and consistently improve their operations.

The Point of Loyalty

It’s important to give customers tools that make ordering and purchasing more convenient, plus incentives for using these tools, but inspiring loyalty isn’t their main purpose. Even more vital is the ability to learn about customer habits and preferences, which is easy for programs like that integrate social media, smartphones, and digital payments.

Blockchain, with its ability to host universally accessible applications, simply tears down the barriers a single company would have encountered when attempting to build a similar application for itself. As blockchain solutions proliferate, smaller businesses will become more integrated with technology, enjoy a place in the digital realm, and can compete more effectively with their largest competitors on the same playing field. Soon, the local coffee shop will be able to show its appreciation for customers with even the most hi-tech proclivities, and do so at a fraction of the cost of that new Starbucks on the corner.

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