Restaurant Marketing: Using the Internet to Create Customer Value
By Rohit Verma Executive Director, Cornell Center for Hospitality Research | August 12, 2012
Co-authored by Glenn Withiam, Executive Editor, Cornell Hospitality Quarterly
Customer value extends far beyond the table or the restaurant itself. Restaurateurs have the opportunity to create customer value from the first contact, whether that means a telephone reservation or an electronic order or reservation. The restaurant operator's decision of whether to permit electronic ordering or to accept reservations via the web depends on numerous factors, including balancing guest preferences against the cost of participating in third-party reservation sites. Studies of consumers who have made electronic reservations find that those who prefer the web tend to be younger customers who dine out more frequently than others.
The age-old principle of customer value for the restaurant industry is to put the value where the customer can see it. Putting the value on the plate, is essential and that concept hasn't changed in many years. But the customer value chain for restaurants starts long before the guest is seated. Given heavy competition and ever-expanding marketing channels, a restaurateur may never get the chance to demonstrate the value of the plate on the table-if guests book a different restaurant. The battle begins in just getting the guest to the table in the first place. In this article, we offer a roadmap to electronic reservations and distribution, based on several studies of guests' use of electronic food ordering, flash deal couponing, and third-party reservation applications. We frame this discussion in terms of customer value for the simple reason that guests seek value throughout the experience, and they will not become involved where they do not see value. This is particularly true in terms of flash deals. While guests may try a restaurant once using a daily deal coupon, they will not do so twice if value has not been received.
The presence of social media and web commentaries seems to have altered customers' decision process as they decide which restaurant to book. In the usual process, guests have in mind a set of potential restaurants, and then they apply their own criteria to choose one of those restaurants. The way social media affect this process is that would-be customers who read online reviews may add new restaurants to their choice set during the decision process. Thus, the "winning" restaurant might well be one that was suggested by the review of a perfect stranger, rather than one that was originally under consideration.
Daily deal offers also exert considerable influence on the process. A study by Cornell Professor Chekitan Dev found that an astonishing 70 percent of purchases for travel experiences were made within 15 minutes of receiving an offer from the group coupon firm LivingSocial. In this instance, the decision appears to be a function of price, rather than one of brand. As we've discussed previously, daily deals must be carefully crafted to ensure that the offer is successful for both the restaurant and the purchasers.
If you are reading this in a location where social media have not yet penetrated, you may have the luxury of preparing for a time when the internet gains increasing power in your distribution process. While some of our discussion here focuses on restaurants that use reservations, it's also true that social media influence the decision process for restaurants that take only walk-ins and use a queue to control table occupancy, rather than reservations. Beyond that, there may come a day when guests will expect to be able to view your queue on the web, and thus determine whether they want to wait in that queue or choose another restaurant. It's easy to foresee a possible marketing approach of letting guests know that your queue is only 15 minutes long if they come immediately to the restaurant.