Innovation

How To ‘Moneyball’ Restaurants

National treasure Kim Kardashian has taught us all a series of invaluable lessons over the years: how to break the internet, that there is no such thing as too much eyeliner and that, if you are on the phone with Taylor Swift, the smart money is on hitting the record button.

But of all the lessons we have learned from Kim — and later, Kimye — the most crucial, deepest and most fundamental is that, if one can get themselves behind the velvet rope, one should do so because life in the VIP suite is … well, pretty sweet.

The world of the “very important person” is the wonderful world of tailored service, special seating, custom orders and comped drinks and desserts. Barring a small subset of the population who take pride in asceticism, the vast majority of us could very much enjoy being treated like a VIP.

The problem is that getting to that elite status is not all that easy. Now, one can argue that perhaps it shouldn’t be, since the ephemeral nature of “VIP status” is that it’s rare, but even accepting that as a premise, there is a pretty big gulf between rarity and outright impossibility.

And that gulf is pretty much what separates the rest of us from Kim Kardashian, who, quite literally, is a professional VIP. Attending restaurants and clubs is at least one-third of her job description. Her profession is creating relationships with venues who use her VIP status as a magnet for other customers.

Kim is a matchmaker.

But most of us don’t have the time, dedication or necessary set of connections to go pro, and even the dedicated amateur route to VIP status — where one dedicates a massive amount of free time developing a relationship with a place such that everybody knows your name and they’re always glad you came — is more work than the average consumer is going to do, even if the payoff is being dubbed a VIP.

And this was the problem Joel Montaniel, CEO of SevenRooms, observed about 10 years ago in a previous life when he was an investment banker on Wall Street.

Like most people working in investment banks in the early 2000s, Montaniel was working 100 hours a week and never knew more than a few hours in advance when he was going to have an evening off. Being in his early 20s, he might have liked to have gone to restaurants or clubs in the city, but as Montaniel explained to Karen Webster in a recent interview, that was a problem.

“The challenge with going out my cofounder and I ran into — as did our friends — was you had to have a relationship with a club or restaurant. There was no way I was getting in because they didn’t know me and because I am only able to get out once every three months. Racking up those 10 visits to get to that status didn’t work,” Montaniel noted.

But it wasn’t just Montaniel’s problem; it was a problem for all consumers. And the one Montaniel sought to solve when he started SevenRooms five-and-a-half years ago. But, in an interesting twist, SevenRooms didn’t look to build a consumer-facing solution because, though SevenRooms’ founders first noticed the issue at a consumer level, they quickly realized the problem needed to be addressed on the merchant side of the business.

“We realized the technology the operators were using was very good at being operational. It really helped restaurants, bars and clubs know how many people were coming in — and when.”

That, Montaniel noted, is very important information, but it is also fundamentally incomplete, because it leaves out an all-important detail — who exactly is coming in.

“The technology also didn’t tell the operators why a customer is important, why they should matter to them and what the operator could do to make them feel special.”

And that, Montaniel noted, is the critical information needed to unlock the VIP treatment for everyone.

 

Making The Back End Connect To The Front-End Experience

The essential problem is one of data, not desire, Montaniel said.

While other branches of hospitality — hotels and airlines in particular — have gotten particularly adept at building unique tracking profiles for their customers, restaurants have lagged behind. Restaurants, until quite recently, have no technologically streamlined way to easily track who their customers are or what they specifically like.

And that, in essence, is what SevenRooms does.

“It’s been a journey to create a vehicle that can provide that data to an operator,” Montaniel explained to Webster.

And that data, Montaniel noted, is what makes all the difference because it is what allows the operators to really run with and create the experience for their customers that they want to create.

“Our idea here is we aren’t a vendor. Our only goal is to empower the operator and their team and then let them do what they do best, which is creating the best experience for their best customers — however they chose to define that.”

Different restaurants, he noted, will define that differently. Some places will focus on their highest spenders with the biggest tabs, because that makes sense for their target market. Others are going to look for the hyper-regulars, who come in and consistently order a known tab over and over.

Plus, Montaniel noted, the granularity also helps to better run all of their operations.

“Let’s say a restaurant can look at their list of reservations for the next week, and they see that they have a bunch of customers who only ever eat fish. That restaurant can scale back on chicken and beef for that week. With this sort of information, operators have really rich information. And since we also plug into the point of sale, we can actually see what consumers are ordering. That’s important to cutting down on food waste and makes operations both run better and in a way that makes customers happier.”

 

The Customer Experience

SevenRooms is not a consumer-facing service. There is no place for a consumer to log into a site and start creating their profile. Instead, Montaniel said, consumer profiles are automatically created when customers make a reservation or walk in the front door of a restaurant.

“If a consumer has been there before, that profile will build naturally, and the data will become aggregated across all the properties that connect through the SevenRooms platform. We want to make this data easier for vendors to trap and capture, and then, we connect that data across properties.”

It is similar, he noted, to what the airline industry has been doing for years or what hotels have made a common part of the service package, with a concierge service that knows and keeps track of all the guests they are serving at any given moment.

“The operators know their business best. They know what they care about best and who they care about and how they want to operate. We deliver to them the information and data and let them decide how to run their business,” Montaniel noted.

 

What’s Next?

The goal now, Montaniel said, is not just to gather the data — and give merchants easy to access to it — but also to really look into what that data means and study the types of things that have just not, until recently, been possible to tack.

“There are case studies throughout hospitality that are all about hotels and airlines but not restaurants, because there was no data,” Montaniel noted. “We are now working on studies that have never existed before.”

“What is it worth to actually comp people dessert? How does ordering certain products affect the overall bills? Now that the data is there, these are the questions we are thinking about.”

The end goal, he said, is simple, if lofty. SevenRooms wants to make it possible to “Moneyball” restaurants by giving venue owners of all sizes — from big chains to small mom-and-pops — the ability to look at their data and use it as levers to move performance.

It’s a big goal but one with an outcome everyone can agree with.

Because, after all, everyone likes the idea of being a VIP, especially if all they have to do to get the treatment is show up.

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