How Restaurants Use Big Data To Learn More About Their Customers

Author

Neal Ungerleider

March 30, 2017

If you live in a big city and like to dine out, odds are you’ve used OpenTable lately. The reservations service makes it easy for millions of users who use its app or website to find places to eat and to secure tables at their favorite restaurants. Unbeknownst to most of their customers, those restaurants may have already anticipated their reservation—that’s because they use OpenTable, too, to learn more about their diners.

The company offers a product called GuestCenter, which is more or less a cloud dashboard for restaurants. It lets them keep track of table availability, which servers are working which parts of the restaurant–and, increasingly, offers plenty of insights into their customers’ eating habits and dining patterns. At OpenTable’s Innovation Summit in Los Angeles in late March, Fast Company got a sneak peak at how restaurants are using analytics . . . and what OpenTable data can tell us about the dining experience in Los Angeles.

What Restaurants Learn From OpenTable

There’s something interesting about OpenTable: All the loose pieces of information that diners leave when they browse online for restaurants–their zip code, other restaurants they book reservations at, whether they’re booking for a party of two or a party of six, how far in advance they make reservations–adds up to a massive database that OpenTable and restaurants can leverage to understand more about their customers.

As an example, Charlie Roberts, OpenTable’s data analytics manager, and Shane Call, a senior account manager, noted that most out-of-town diners making reservations in Los Angeles through their service come from the Portland, San Francisco, Chicago, and New York metro areas, according to OpenTable’s data.

Los Angeles Diners Are More Impulsive Than Other Diners

Scott Jampol, OpenTable’s senior vice president of marketing, told the audience at the event–largely made up of chefs and restaurateurs–that OpenTable is able to infer to a reasonable degree if a diner if planning a night out with friends, a date night, or a business meal. They also have more specific information when it comes to Los Angeles.

On average, the city’s diners make OpenTable reservations approximately four days in advance, compared to the national average of five days in advance. Saturday and Sunday have the longest lead times, and weeknights the shortest for reservations.

They also found that diners behave differently depending on what part of Los Angeles they live in. Diners going to restaurants on the city’s west side (which includes wealthy, restaurant-dense areas like Beverly Hills, Santa Monica, and Century City) are more likely to leave reviews with OpenTable. Restaurants in downtown Los Angeles, where restaurants are more likely to have recently opened and attract younger customers, tend to attract first-time OpenTable users. And the South Bay region, home to beach towns like Manhattan Beach and Hermosa Beach, disproportionately attract out-of-town visitors.

Interestingly, diners in Los Angeles tend to be repeat patrons at restaurants they book through OpenTable much more than in other cities. The repeat dining rate in Los Angeles is approximately 13%; OpenTable’s average rate across markets is approximately 5%.

The Future Of Restaurant Analytics

At the event, OpenTable senior vice president of restaurant product management Prasad Gune noted that–just like many other companies–OpenTable sees its future in cloud products. The restaurant industry, which has notoriously poor profit margins compared to other industries, often has businesses with limited budgets to buy products from vendors like OpenTable.

This sort of aggregate data is a selling point that OpenTable promotes to restaurants: Use a cloud service to gain insight into your diners as a mass audience, and you have information to offer promotions, advertise to customers, or adjust your menu in a way that you couldn’t do just based on one-on-one conversations in between servings.

On the restaurant side, OpenTable is introducing functionality that helps anticipate whether a guest would prefer bar or outdoor seating, keeps tabs on drink preferences (do they buy expensive wine or craft cocktails, or regularly order the house wine?), and–crucially–sends text messages to remind diners of their reservations instead of individually calling them.

OpenTable operates in more than 20 countries and says it serves 21 million diners per month making online bookings at more than 40,000 restaurants. The Priceline Group purchased OpenTable for $2.6 billion in 2014; however, Priceline took a $941 million write-down on OpenTable in late 2016. Despite that, the company remains the dominant player in the online restaurant reservations space.

 

This article was written by Neal Ungerleider from Fast Company and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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