UK restaurants are facing increasing competition, not just from competitors that provide takeaway and delivery services, but from home meal kit providers too. Growth in the UK eating out market is slowing. It grew by 1.7% in 2017 and is expected to grow by 1.5% in 2018 (although it’s still predicted to grow by £5bn in the next three years).
Restauranteurs are having to ask themselves, why should people go out to eat at a more expensive restaurant, when they can have a tasty meal at their favourite mid-range restaurant? Why should they leave the comfort of their home when they can order in, or whip up a quick, tasty and nutritious meal from a recipe and a meal kit?
Increased competition
Restaurants’ selling points have traditionally been that they provide an enjoyable experience, a high-quality service and are convenient. But they’re now competing with a market beyond home cooking and takeaways.
Consumers now have a variety of new choices: meal kits (like Hello Fresh); subscriptions services for high-quality local food (Abel & Cole); going to Grocerants where they can eat high-quality food and buy the ingredients (Eataly); street food from trucks and stalls; and they can order takeaways via apps (like deliveroo).
High Streets are also full of well-known chains – like Byron Burger, Wahaca and COTE – which people may feel more comfortable visiting because they know what to expect.
How can independent restaurants remain competitive?
1. Use personalisation to address consumer demands
Consumer demand is fragmented and constantly changing. When people go to restaurants these days, they want locally sourced, ethical and healthy food that tastes amazing – and they want to eat it somewhere that has an interesting story to tell. Eating there needs to be a shareable experience.
They expect a higher level of service than they get at a mid-range establishment, but they still want good value for money. Many people are also much more invested in ethical business practices, like fair pay, than they were in the past. But how can restaurants provide all of this when overheads are getting higher?
Some restaurants are using mobile payment and loyalty and engagement platforms like Yoyo Wallet to reward loyalty and make payment quick and simple (and also keep in touch with people while they’re out of the restaurant). Mobile technology offers restaurants a way to personalise the service they provide to a much greater extent than before.
A regular patron can easily go unrecognised depending on who is staffing the restaurant when they come in, but by using mobile technology to provide extra personalisation and rewards, the restaurant can make sure people feel recognised and appreciated.
Restaurants can also learn from coffee shops, like Harris and Hoole. Some coffee shops use apps to let their customers collect virtual stamps (to earn a free drink) and for customers to pre-order their coffee so that it’s ready for them to pick up when they arrive. Perhaps there’s an opportunity for restaurants to create their own app that would offer patrons ways to tailor their experience?
New fast-casual restaurant, Vita Mojo, lets people use an app to create personalised meals – there are around nine billion combinations of ingredients for people to create their meals from. It also makes it easier to eat at the restaurant as people don’t need to negotiate with waiting staff for changes they would like to make to their meal.
We know that personalisation is a key driver of loyalty in retail (our survey found that 45% of respondents in the UK wanted personalised offers), and we know that people expect the same kind of attention to detail from the food service industry. Personalisation will help restaurants increase loyalty and stay ahead of the competition.
2. Be transparent about your vision and let people see it in action
You often hear of people setting up restaurants because they have a vision, and while an origins story is vital, other people have to buy into that vision, or the business won’t succeed. People want to know what happens to scraps and how the business supports animal welfare. They want to know what the policy is on diversity, fair trade and employment rights.
Restaurants that pride themselves on being a great place to work should showcase that. There are often stories in the news of wait staff not getting to keep tips, or being forced to work when sick, but you don’t often hear of the good news stories.
Open kitchens are being used as one way to be more transparent about how the restaurant operates. But what else can restaurants do?
There’s been a rise in zero waste restaurants (and in those aiming to minimise waste). Those restaurants that have started to make changes have found that it can increase revenue and lower running costs. Restaurants are also using new technology and data analytics to keep food fresher for longer.
Brands, causes and campaigns often inspire loyalty in people, but restaurants need to back up their ethical messaging with action if they want people to feel a deeper affinity to the business.
3. Use data analytics for market research, ordering food and menu planning
Data analytics helps cut food waste, by giving restaurants a better guide to popular foods and portion sizes. Restaurants can use data to identify their target markets, then use geo-targeting to serve mobile ads to the relevant audiences – for example, a restaurant could create a geo-fenced campaign around a local business park to attract lunch-time visitors.
With the person’s permission, the restaurant could have its branded app send an alert and a discount code to a customer of its London restaurant when they’re near its Manchester branch around lunch or dinner time. It may not sound like much, but these simple reminders show customers that the business remembers them and wants to see how it can be of service.
4. Use location technology to help create a memorable brand
Brand differentiation is becoming more important. Why should people go to your restaurant and not a competitor, or stay at home? Restaurants need to focus on creating an experience worth talking about if they want customers to return, and spread the word to friends, family and beyond.
In America, AMI Entertainment rolled out 25,000 beacons across its venues, bars and restaurants in 2017. This system of beacons is tied to a platform that enables second screen experiences like such as smart jukebox interactions, context-based safe ride deals (e.g. targeted to people who have been in the bar for more than three hours) and fast food offers after 2am. This helps to provide people with a memorable, fun, experience that can’t easily be replicated at home.
When people go out to eat, they aren’t just looking for a decent plate of food; they want an experience tailored to their tastes. They want to know where their food comes from, and what goes into their meal. They want something that they can’t get at home. Thanks to new technology, restaurants that want to build a loyal customer base have more ways than ever to create a unique experience that keeps people loyal.
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