The global economy has been hit hard by the COVID-19, and the U.S. restaurant industry continues to face a very difficult situation. UJ Thinktank held a seminar titled “Digital Strategy for Restaurant Management” in September 2020, with the hope of helping those restaurants. The seminar was attended by many people in the restaurant industry. In this blog, we would like to introduce “Digital Marketing for Restaurants Managed from the Perspective of Digital Assets” which was also discussed in the seminar.
Current Status of Restaurants and Delivery Services in the COVID-19
In the aftermath of the pandemic, many restaurants are facing the problem of creating new sales due to the decrease in customers caused by the state and city’s request to restrict activities and the inability to turn around stores due to the order to close.
To overcome this situation, many restaurants are using external delivery services such as UberEatsやDoordash、Grubhub. These delivery services have exploded in popularity in recent years because of their ease of use, the low risk and low cost of getting started, and the great advantage of having a driver who has been ordered and arranged on the respective company’s platform deliver the products to the customer. At the same time, however, restaurants have to pay a commission fee of 20-30% of total sales, which means that while sales are secured to some extent, operating profit margins are never increased. However, it is also true that under the restrictions imposed by the pandemic, it is impossible to secure sales without using such services. As a result, the decision to get out is not an easy one, and the reality seems to be that people continue to do so for the time being.
Before we fall into this “delivery service addiction” and become unable to get back on track, we must be skeptical about whether this business model will really lead to continuous business stability.
The biggest Disadvantage of Delivery Service: Losing Connection with Customers.
The biggest disadvantage of delivery service is that you lose your connection with your customers.
If you become dependent on delivery service, you will not only lose your operating margin, but you will also fatally lose your “customer connection. Delivery services do not disclose customer information (such as email addresses and phone numbers) to their partner restaurants. Therefore, no matter how much sales are made through delivery, the customer information is not stored in restaurants at all, so each restaurant cannot conduct its own promotional activities and cannot build relationships with its customers. In other words, they are being deprived of the foundation of “the ability to develop their own customers and increase the number of good customers through sales promotion = strong management power on the ground.
Symptoms of “delivery service dependency”:
- Can’t stop because sales increase easily
- Loss of profits to the service provider
- Loss of opportunities to interact with customers
→Weakened management structure with weak shoulders
The New Restaurant Digital Strategy: Building Own Online Connections with Customers.
By storing customer information from order histories on your own without using delivery services, you can create a “direct” connection with customers. This enables restaurants to implement sales promotion activities and customer communication as you see fit.
Prescription for “delivery service addiction”:
- Build your own platform
- Interact with customers based on accumulated customer information.
- Consider this information as a “digital asset” to generate profit.
One of the essential prescriptions for managing “borrowed digital assets” from external services is to interact on social media such as Instagram and Facebook. If you increase your followers and strengthen your own communication, you can use it as a platform for your own marketing channels and maintain your digital assets. Gaining followers on Instagram and Facebook means building a direct connection with customers, and these followers are also an important “digital asset” for restaurants.
Acquisition of digital assets and improvement of operating profit margin = > Owning own online ordering platform
Before you get caught up in the superficial pleasures of delivery services and develop an addiction to them, and lose your immediate operating profit and the strong management skills to continuously improve that operating profit, you need to acquire “digital assets” from a long-term perspective.
Furthermore, by building your own platform for the purpose of acquiring assets, you can free yourself from the curse of commission fees and, as a result, regain the “operating profit in front of you” that you have been losing.
UJ Thinktank provides strong support for restaurants’ digital marketing by building our own online platform and SNS marketing.
If you are interested in building your digital assets, please contact us for more information.
The seminar explaining this topic can be watched on Youtube below. Please check it out! (Sorry, spoken only in Japanese)