The data is irrefutable. Retail is under pressure. As one of our company co-founders put it, “the front door has moved” and consumers are buying without ever crossing a store’s threshold. Everything they used to do in the physical world is made faster and easier in the virtual world, from discovery to recommendations, to purchase and delivery.
Today, like retail, the restaurant business is experiencing this digital transformation but at a much faster pace. The rise of online service providers for discovery, browsing and selection (e.g. OpenTable, Yelp and GrubHub) creates a frictionless and highly valuable experience for consumers and a means of visibility for restaurants. The catch: how do restaurants build one-on-one relationships with their now anonymous customers?
Consumers usually want to know more information before they try a new restaurant. Is the restaurant within walking distance? What are the reviews? Has anyone I know been there before? Is the food quality and preparation good or worth the price? Does the restaurant deliver?
The third-party service provider trend will continue because consumers want convenience, information, and choice. In one place, you can research restaurants quickly by variables such as the type of food, price, location, etc. You can read reviews, make a reservation or browse the menu, place an order and confirm pick-up or delivery entirely on your own timetable. Consumers no longer have to hunt for answers.
The third-party app trend will continue due to business potential; restaurant sales are projected to hit almost $800 billion this year, an increase of more than $200 billion since 2010. The land grab is on for a piece of the pie, as evidenced by investments made to gain share quickly.
In early 2015, Restaurant Business reported that Yelp acquired food service delivery provider Eat24 for $134 million and GrubHub purchased two meal-delivery providers (Dining In and Restaurants on the Run) for $80 million. The editors report, “The convergence of online reviews, ordering capabilities, and meal delivery has been accelerating in recent months.… The derby includes such big-name digital players as Uber and Amazon, both of which are testing restaurant meal delivery on a small scale.”
It’s a fascinating time for the food service business, and the speed of evolution is faster than it’s ever been. It’s also a wake-up call for restaurants. In this era of digital transformation, restaurants need to take a nuanced approach to customer engagement. They should view these third-party apps and services as an “It’s nice to meet you. Let’s chat some more…” introduction to diners, not a “Thank you and goodnight.”
In other words, they must let these services open multiple new front doors, and continue the conversation from there. There are a number of ways restaurants can pick up the ball from these various third-party channels to build better connections without diners ever walking through their doors. Actions like placing phone calls to confirm reservations, sending text messages to confirm that orders were correct and delivered in a timely fashion, and replying to customers on social media can all work to forge stronger relationships.
In the end the use of third-party apps and services and one-on-one customer engagement might feel mutually exclusive but are in fact actually quite complementary. The door may have moved, but it’s not closed. It’s open now more than ever.
A version of this blog originally appeared via Forbes.