The Role Of Predictive Analytics In Restaurants
Studies from The Perry Group and The Restaurant Brokers suggest that 90% of restaurants that are independently owned close within one year of opening. Moreover, 70% of restaurants that manage to survive for 12 months close their doors within the next three to five years. So, it’s no exaggeration to state that the vast majority of restaurants that open in this world don’t succeed. But that doesn’t mean yours can’t.
We’ve explored what restaurant analytics is and how data analytics for restaurants can help you understand your business on a deeper level. But before we drill down into the specific ways in which restaurant data analytics can enhance your empire, it’s important to grasp the general role of predictive data in the service industry.
While predictive analytics isn’t some form of magic digital psychic, this branch of forward-thinking data and insight can help your restaurant make invaluable changes based on trends that suggest how particular elements of your business are likely to unfold.
Here are the primary roles of predictive analytics in restaurants:
1. Forecasting trends
Restaurant predictive analytics use historical as well as real-time data to forecast future strengths, weaknesses, and trends. By gaining access to this information, usually with the help of a live dashboard, you’ll be able to formulate strategies and create initiatives that will help enhance the future success of your business.
2. Panoramic vision
By working with predictive analytics, you’ll gain the ability to drill down into past and present trends, insights and visualizations and thus, create a narrative with your data. In doing so, you’ll enjoy a panoramic vision of your venture, gaining the perspective you need to really get to know your restaurant which, in turn, will give you the inspiration you need to develop innovative business-boosting strategies.
3. Operational efficiency
From the reduction of food waste to seasonal menu optimization and future staff performance levels, restaurant predictive analytics can assist in the daily, weekly, and long-term operations of your business — benefits that we will look at in due course.
But I Know My Business So Well…
At this point, you might be thinking, “Well, data is all well and good, but I’ve worked in the restaurant industry for a long time. I trust my gut — and I don’t think data is going to be more knowledgeable than me”. Let’s investigate that further.
Let’s assume that you’ve been in the restaurant industry for decades. Maybe you’ve worked your way all the way up from a dishwasher to the owner or manager position. Or maybe your family has had a restaurant for as long as you can remember and you’ve been involved since you were young. Either way, you’ve developed a finely tuned sense of “what works” in your restaurant and geographical location and what doesn’t. You’ve tried specials, tried promotions, and switched the menu around.
You feel just you’ve done just about everything. After all of these experiments, you know what your customers like, dislike, and what they might be interested in the future. Nobody is disputing that. Data can’t run a restaurant for you, and data can’t replace in-the-trenches experience. Data also can’t replace your creativity, your style, and your passion for your business.
Here’s the thing: data isn’t meant to “replace” anything. Instead, restaurant analytics are an addition to your already capable business intelligence. And let’s be honest for a moment: it’s possible that some of your intuitions aren’t perfect. Let’s say you feel that you know:
- What types of dishes your customers like best
- Which servers are bringing in the biggest orders consistently
- What new promotions are likely to sell
You know these things based on past experience, and so you developed beliefs for each of these areas. The problem is our modern world is changing at an accelerating rate. Your beliefs and intuitions can quickly become inaccurate.
Data can serve as a way to “check yourself” and get to the bottom of what truly makes your business tick. As data science guru Peter Chen wrote in an article, “analytics can’t come up with ideas, but it can help you improve on good ones, avoid trying bad ones, and uncover flaws that can be fixed”.