How Restaurants Can Adapt to the Digital Economy by@e.p.m.vermeulen
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How Restaurants Can Adapt to the Digital Economy

by Erik P.M. VermeulenFebruary 16th, 2020
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Business & finance professor, digital lawyer, restaurant owner, board member & traveler. Author: "Restaurant owners don’t pay too much attention to digital talk, which, according to the questioner, is only relevant to tech companies. Restaurant owner: "I don't say that restaurants that don't "go digital" will be gone tomorrow. Yet, I dare to predict that growth will mainly come from digital measures" Author: When your wife is a restaurateur, the restaurant becomes part of your life, whether you like it or not.

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People are always amazed when they hear that I am also a restaurant owner. 

The reactions are always very positive. This is no surprise. Everyone loves to talk about restaurants and food. Wherever I give presentations, the conversation quickly turns to dishes, courses, and recipes as soon as the word "restaurant" comes out.

Owning and running a restaurant appears to be very appealing. Yes, people acknowledge that it's not for everyone. And they are right. It can be exhausting and nerve-racking. But owning a restaurant can also be extremely satisfying and rewarding. The ever-increasing popularity of cooking shows and TV programs about restaurants helps feed people's imagination and dreams, as well as their stomachs.

So last week, I gave a dinner presentation about the future of banks and fintech. 

I was explaining the digitization of everything and the importance of platforms, data, and algorithms. I emphasized the need to respond to fast-changing customer demands. Banks better be ready for the digital economy. It was a serious conversation.

You can perhaps guess what happened next. Some participants – the audience were mostly financial advisors – challenged the urgency of going digital and one of them referred to the restaurant-business. 

Restaurant owners don’t  pay too much attention to digital talk, which, according to the questioner, is only relevant to tech companies. In his view, we shouldn't exaggerate the scale and urgency of change. More mature industries will not be significantly affected, he claimed. And the restaurant industry is proof of this.

I was thrilled with this remark. Because nothing could be further from the truth.

Believe me when I say that restaurants cannot ignore the digital economy: technological developments, stakeholder engagement, and online communication have become extremely important.

I don't say that restaurants that don't "go digital" will be gone tomorrow. Yet, I dare to predict that growth will mainly come from digital measures (similar to what we see in other more tech-oriented industries).

Let me prove this with my story.

My Restaurant Story

I didn't grow up in the restaurant business. My wife did. Being a restaurateur is in her DNA. She took over the management of the family restaurant more than fifteen years ago. At that time, her parents, who started the culinary journey, remained the owners.

When your wife is a restaurateur, the restaurant becomes part of your life, whether you like it or not (luckily, I like it). There is no way to separate business from family when your spouse works in hospitality and works extremely long and inconvenient hours.

When I met my wife, the restaurant focused primarily on the business market. It was closed on Sundays, for example. Everything went well, but then the Financial Crisis hit. Businesses had to save costs. Fancy lunches and dinners were the first "victims" of this cost-saving exercise.

The restaurant has one Michelin star, which is great when times are good, but it doesn't help attract companies that are dealing with a severe economic downturn.

So, this was our problem: How do you reverse a declining guest count when your main source of customers has suddenly disappeared?

We weren’t alone. Our friends, colleagues, and competitors faced similar issues.

One option would have been to give up the Michelin star status and go more mainstream. There was something to this option. After all, the Michelin Guide is clearly something from the past. 

The origin of the guide dates back more than a hundred years ago. The French tire company started to promote hotels and restaurants in the countryside with the idea to encourage car users to drive there and, of course, use "Michelin" tires. Gary Vaynerchuk has a fun facts video on TikTok about this.

We also questioned the relevancy of the Michelin Guide but decided not to give up on it just yet. We didn't think it was worthwhile to throw away all the years of history and culinary heritage.

The restaurant was awarded a star again this January and is now the proud owner of the Michelin star status for 41 consecutive years. 

But we also understood that things had to change. We were leaking guests. And we realized that nothing is so sad as being in an empty restaurant where you still have to whisper, and waiters are prowling around watching every "bite" you take.

So, we decided to "go digital."

A Restaurant Going Digital. 

When we decided to go digital, we first bought out the "parents' shares." My wife and I are now 50/50 shareholders of the company that hosts the restaurant business. My wife is taking care of the day-to-day business, but we both set the strategy, monitor progress, and drive change.

So, here is our “digital” strategy.

Digital Platforms

The first thing we did was entering into a partnership with e-commerce platforms. Groupon was the most obvious partner back in the days. The platform allowed us to connect with new guests. It was a bold step and considered dangerous for a high-end restaurant. Notably, the lower profit-margin made this approach vulnerable.

But the downsides didn't outweigh the benefits. Immediately after we started to use the platforms, the number of guests began to increase significantly. Our restaurant got busier and busier. When I invited my friends to the restaurant, they all acted surprised: "Wow, it's jam-packed. Where is the financial crisis?"

The buzz in the restaurant worked like a magnet. More and more people decided to visit us and check it out.

And it doesn't stop there. The financial crisis is gone, but we still use different platforms to offer deals. It has become a crucial part of our co-creation strategy.

We use these deals to innovate and differentiate. The next step is to engage with delivery service platforms. More and more people are looking for a "non-fast food" options at home. We can serve tasty and healthy dishes right at your doorstep without going through the hustle of setting up a delivery unit. The traditional distinction between high end restaurant and catering service becomes blurred.

Social Media

We also started to become active on social media fast. Facebook. Instagram. Twitter.

After a slow start, we quickly built a community. Such an online community has several benefits. More food critics decided to follow us. Most importantly, we could test and experiment with our dishes and see/analyze the crowd's response. It was just another form of co-creation.

Unsurprisingly, this further increased interest in our restaurant. But it didn't only increase the number of guests. We were able to establish and promote collaborations. We came up with the idea of inviting guest chefs who "took over" our kitchen for a week.

Our first guest chef was Paula DaSilva. She was a runner-up on Season 5 of Gordon Ramsey's Hell's Kitchen. It was great to have her in our restaurant. The kitchen-staff learned so much. It was a priceless experience and it led to enormous traditional and social media attention. 

We later invited chefs from Mexico, Colombia, Japan, and the Philippines. Through our online presence, we were able to attract new guests. Many of them had connections with the respective countries and were longing for an authentic lunch or dinner.

And it didn't stop here. Social media helped us collaborate with non-obvious partners, such as designers, artists, and university researchers/scientists. We had robots as waiters. 

An online presence is crucial now and in the future. Think about it. We more and more rely on platforms with reviews and user-generated content. Soon, Alexa, Siri, and Google Assistant will make our restaurant reservations. And the online reviews are a blessing. Technology has given meaning to terms like “instant gratification” and “immediate action.” The dialogue is priceless and only helps you to improve and innovate. 

I often discuss this with my wife and we both agree. Technology has added a new dimension to preparing and serving high quality food.

Emerging Technologies

We also started to work together with technology partners. A noteworthy example is our collaboration with a 3D-printing start-up company.

3D food printing allows us to customize dishes. It also enables us to get smarter with food and ingredients, offering better a much more personalized customer experience. Preparing meals with a 3D food printer can also be more environmental-friendly because it can lead to less waste.

It is the environmental/sustainability component that attracted interest from Singapore and South Korea.

And, There is One More Thing

The digital economy isn't only about platforms, social media, and emerging technologies. It allows us to transform our business from a restaurant to an ecosystem.

As an ecosystem, we can give our guests an unforgettable experience. People don't go to restaurants to just get something to eat anymore. Of course, the food and dishes remain essential, but the total experience, the stories behind the recipes, have become so much more critical in the last couple of years.

And this makes the restaurant business a great experience for me.

It heard it so many times. Every company must be transforming into a tech company. Every company is, in fact, a media company. The story is no different for the restaurant and catering business.

These statements are also valid for restaurants. I can vouch for them myself. Nobody can ignore the digital revolution.