THE catering industry does not, at first sight, seem like a natural target for big data. Decisions are traditionally made by experienced chefs and restaurant owners.
But the fact that everyone consumes food means the industry generates a huge amount of data. And because of this, Wu Daxing saw an opportunity.
Wu oversees Wufangzhai, an upscale enterprise with 97 years of history making zongzi – a traditional festival cuisine of glutinous rice dumplings wrapped in bamboo leaves.
Over two years, the acclaimed food chain faced mounting pressure due to ebbing customer traffic, off set by an e-commerce frenzy, as well as a changing demographic that the traditional brand was failing to impress.
“Who are our top and bottom servers and why do food costs go up?” Wu asked. When he got blank stares and wrong answers from store chiefs, he realised data was urgently needed to enable precise management.
Wu’s situation was typical in the country’s 4 trillion yuan (US$580bil) catering market in 2017, according to a report by consultancy iResearch. Surging rents, personnel and supply chain issues led to one out of every 10 restaurants shutting down last year in China’s top-tier cities such as Beijing, Shanghai, Shenzhen and Guangzhou.
By teaming up with Koubei, a local services platform that has access to troves of consumer data, Wufangzhai is now riding the digitalisation wave. As a result of information received, it has introduced electronic billboards, new payment options and virtual coupons to send to customers’ phones, based on their likes and locations.
The opening of an unmanned outlet in Hangzhou, the capital of East China’s Zhejiang province, marks Wufangzhai’s latest venture into technology-powered retail. Customers can order meals through self-service machines or by scanning in-store QR codes via their smartphones, and then take their food from cupboards at the restaurant.
Buoyed by customised dish recommendations using Koubei’s data analytics, the store reported a 40% increase in turnover just one month after it debuted in January, Wu said.
Encouraged by its success, Koubei announced plans at its annual catering summit in July to digitally transform a million restaurants by introducing pre-order services, self-help ordering kiosks and a number of data analytics capabilities that track customer preferences.
Data has a lot to offer when it comes to revamping old-school catering services. China has nearly 750 million mobile internet users who now see paying by phone as a way of life, according to the China Internet Network Information Center.
Mobile payment providers such as Alipay and WeChat Pay handled 775 billion transactions last year, according to data from market researcher Ipsos. That sheer volume indicates the catering industry is in a good position to take advantage of the same big data services used by financial companies and marketing departments to better understand consumers, increase efficiency and even create new recipes.
Internet companies have found themselves in a good position to upend the traditional dining business, as they are well-stocked with information about consumers’ browsing histories, purchasing preferences and credit records.
Therefore, China’s tech giants Alibaba and Tencent have wasted little time in harnessing data analysis, with Alibaba incubating Koubei and Tencent backing Meituan-Dianping in their fight for supremacy on the catering front.
“Today, online consumption only makes up 15% of total dining expenses. The majority of food consumption still happens in actual restaurants,” said Zhang Chuan, senior deputy president of
Meituan-Dianping, an on-demand service provider that encompasses food delivery and restaurant review functions.
Recognising such demands, Meituan-Dianping is leveraging its ecosystem both online – where customers can search nearby restaurants, order food delivery or book a restaurant – and offline, where users line up, order food and pay through the company’s cashier system.
“The systems generate a data pool, gathering information on customer behaviour that covers dining in, dining out, group buying, booking and payment, which in turn helps restaurants better understand what customers need so as to improve sales,” Zhang said.
“We cannot succeed by running a business on intuition alone. It will be more valuable if the data is massive in scale and delivered in real time,” said Zhao Xiaowei, a management official of Songzi, a chain restaurant specialising in Japanese cuisine, which has a wide presence on Meituan-Dianping’s platforms.
For instance, the likes of Zhao now see in real time the consuming habits of customers in different areas from Meituan-Dianping’s data pool.
Such statistics help business owners choose restaurant locations and adjust the categorisation and pricing of dishes.
How to pinpoint, attract and retain picky diners amid a variety of choices has been a longtime challenge for the catering industry. Now data analysis can satisfy each customer’s appetite and quench their thirst through tailor-made meals.
According to Koubei chief executive officer Fan Chi, the platform enables its merchants to provide consumers with customised deals based on their purchasing preferences and average spending. For example, as an incentive, the system halves the price of a dish that a customer frequently orders.
“By providing the most relevant discounts, it helps to draw more recurring customers and get them ‘hooked’,” Fan said.
“QR code ordering and payment is the real game-changer, as it generates enormous amounts of data for us to assess and record customer behaviour,” said Wang Wei, chief marketing officer of United States fast food chain Burger King in China.
“It is cost- and time-saving, freeing up service attendants from receiving payment and giving change...so that they can focus on in-store service.”
Personalised marketing also helps restaurants surmount geographical constraints, said Huang Chao, sales director of Xiaolongkan, a Beijing-based hotpot chain.
“A traditional restaurant or grocery store typically draws in customers within a radius of 3 to 5 kilometres, but with the aid of data analytics, prospective diners might drive through the city to try out a novel dish just because they have received a red packet with a coupon,” he said.
Another reason for deploying data in China has roots in the evolving habits of young consumers, according to a report released by Boston Consulting Group.
Research has shown that, unlike their Western counterparts who have a more straightforward search-and-buy approach, Chinese consumers have a penchant for exploring during the shopping process and value online peer reviews.
Lu Chuanxi, the marketing director of Dairy Queen in China, a US ice cream brand, said that through Meituan-Dianping’s integrated platform, customers can give feedback online after dining, which has helped the company improve its products and services.
Benefiting from such advantages, Dairy Queen is sharing its member system with Meituan. Members who consume through Meituan’s platform can also enjoy the same discounts and coupons as members of Dairy Queen. — China Daily/Asia News Network