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Here's How Data Analytics Is Improving Dining Experiences While Helping Increase Revenues for Restaurants At a restaurant, key data points are generated each time an order is placed and payment is made. These data points help restaurants craft the perfect consumer response.

By Peter Dougherty Edited by Micah Zimmerman

Opinions expressed by Entrepreneur contributors are their own.

Data has transformed virtually everything in our lives. That may seem obvious, but whether or not we are actively conscious of it, data informs nearly every decision we make.

At the individual level, this is often fairly unsophisticated. Your decision to take a specific route to work or my choice of order at my favorite restaurant is based on a set of evidence that informs us. Of course, these decisions are low in consequence. For more critical decisions, leveraging the existing information is paramount, and as data has become more easily stored, aggregated and analyzed, we have become better at using it.

For restaurants and other hospitality businesses, the ability to track information related to every touchpoint of your operation should be readily available to you through your POS system. Key data points are generated each time an order is placed and payment is made. While these individual metrics may be helpful on their own, they can effectively illuminate your business's strengths, weaknesses and opportunities when collected and analyzed.

But where do we go from here? The data exists, but how specifically can you use this data to help inform your operational decisions?

Related: How Entrepreneurs Are Capitalising on Digital Transformation in the Age of the 'New Normal'

Customer data

As a restaurateur, customers should always be your top priority. Again this seems like an obvious statement, but let's get into some details on this one. What is new is that every customer coming into your restaurant is providing a trail of data that you can use to improve their future visits and, in aggregate, improve your business's revenue. This can include tracking what menu items customers order, when in the day they visit the restaurant or what day of the week, how much they spend, and who they bring.

With this information, you can tailor your menus and marketing to appeal to your high-value target customers better. For example, if data shows that a particular type of offering is very popular among a specific demographic that you also know has a high likelihood of ordering high-profit items when they dine with you, you can highlight that item in your marketing efforts or with your staff in sales contests or on the printed menus themselves.

By offering dishes and promotions that are very specific to your customers' preferences, restaurants can 1) increase customer satisfaction and drive repeat visits and 2) help increase their revenues and, more importantly, profits by aligning customer wants with their high-profit items.

Related: Owning Your Customer Data Is the Key to Profitability. Here's Why.

Employee data

As the first point of contact with your customers, employees are one of the most important resources for identifying insights that can improve your business. And while feedback from your employees is the first step, the captured data related to your employees' work can be game-changing.

Restaurant owners can use employee data to help drive sales by analyzing employee focus and productivity. We're talking about more than just not tracking working hours or revenue. There is much further step based on the new data that great tools provide. For example, suppose data shows that employees who receive more comprehensive training on your restaurant's menu and specials tend to have higher sales numbers. In that case, you may choose to invest in more extensive training for all employees to boost overall sales.

A restaurateur can also start to think about the profile of the guests they host at different times of the day or week and tailor the work schedule to ensure you have the right staff working the right shifts.

Related: The Staff You Need to Hire to Run a Restaurant

Another example: Tony is great at selling guests high-quality bottles of wine but not as strong at upselling the special of the day. On the other hand, Susan is the opposite, great at selling the special and even ensuring the guests take a few extra sides. Let's use data and insights to match Susan's shifts to the lunch crowd to maximize food revenue and Tony in the evenings and weekends to maximize wine sales.

To summarize, Employee-specific sales data can help you determine how to maximize revenue from your key customers. Some servers might deliver a better customer experience to larger corporate groups or families than others. Objectively identifying these patterns allows you to organize your scheduling, table assignments, and restaurant more accurately.

Related: You've Been Tracking Employee Productivity All Wrong

Inventory data

Finally, let's talk about your product. Most restaurants have a system in place to manage their ordering, ensuring that there are roughly enough raw ingredients each week to meet demand. But actively monitoring your inventory data can ensure that you are making smart decisions about ordering, capitalizing on opportunities for promotion, reducing waste and ultimately saving your business money.

There are a few key ways that effectively using data insights to manage inventory can help you to drive revenue.

By analyzing inventory data, you can identify which items are most popular and ensure that you always have enough of those items in stock. This can eliminate shortages of popular items, leading to missed sales opportunities and disappointed customers.

This process can be tailored to fit the changing needs of your business, too. Your ordering habits may need to change based on fluctuating demand on certain days of the week or seasonal changes in customer preference that impacts your most popular menu items. With your inventory and sales data at your fingertips, these insights can become critical to your ordering strategy.

And as important as it is to know your most popular items and ingredients, knowing which are your stickiest can be just as informative. By identifying these slow-moving items, you can then promote or discount to move them more quickly and free up storage space.

Overall, effectively managing inventory can help restaurants to ensure that they always have the right mix of products available to meet customer demand, which can help to drive revenue and improve their bottom line.

By diving into the data from your POS, you can transform the way you make key decisions at your restaurant. Insights generated from customer orders, payments, employee performance and inventory management can help you tailor menus and marketing efforts to appeal to customers, improve employee training and productivity, and manage inventory to save money and reduce waste. Regularly analyzing and utilizing these data insights can give yourself the best chance of increasing customer satisfaction and ultimately driving sales.

Peter Dougherty

Entrepreneur Leadership Network® Contributor

General Manager, Hospitality

As GM of Hospitality, Mr. Dougherty has helped grow Lightspeed from Startup to Scale and has played a key role in launching Lightspeed Restaurant in the Americas, rebuilding core components of the GTM teams and turning Partnerships into one of the fastest growing groups in the business.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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