Retail

Rescuing The Restaurant Business From App Decline

restaurant app

Any element of American life is tempered by the coronavirus these days. But before it took hold of the psyche and wallet, more than half of the American population spent money dining out on a weekly basis. In fact, 56 percent of them dined out more than three times a week. And before they did so they checked an app to either plan, review or order food from their eatery of choice.

All good developments if you’re a restaurant or even a quick-service restaurant (QSR). But the reviews for dining apps aren’t so clean. A new report shows that 70 percent of Americans use their mobile devices and restaurant apps at some point during the dining journey. Restaurant owners see it as a necessary evil; consumers see it as a necessary tool. And a new startup called DineVite sees a way to connect apps to restaurants and their constituents without potential cannibalization.

“Apps like Seamless, Delivery, Caviar, and Grubhub have taken the process of ordering and made it easy. Using a laptop or mobile phone, anyone, anywhere, is just a few clicks away from having their favorite meal delivered to wherever they happen to be. Then add in services like Group, LivingSocial, and Restaurant.com, which provide deep discount offers at restaurants throughout the city and suburbs,” said Eddie Fahmy, long-time restaurateur and president at A2Z Restaurant Consulting. “Everyone wins, right? Well, not really. [Few] would argue that these services make life easy for the consumer. And though they do help restaurants maintain a steady flow of diners, they’re slowly but surely killing the restaurant business overall.”

Currently exiting beta in New York City, Fahmy’s new company, DineVite, claims to put the discounts back where they belong — with the restaurant owners. They decide how to extend selected discounts, when to offer them and who to offer them to. The model for the DineVite online and mobile app is actually similar to social media. Restaurants create offers and promotions for profitable or loyal customers. On the flip side diners can request private VIP offers.

Restaurants that are signed up to DineVite can use the app to interact directly with diners in three ways: standing promotional offers, one-off discounted offers or one-to-one VIP offers. The process is behind an app subscription wall so restaurants don’t have to worry about tarnishing an upscale reputation and diners don’t to present a coupon at checkout. Consumers can inquire directly with restaurants about existing promotions. Restaurants can add incentive to a slow night, or pull back on promotions during full bookings. The operative word is control.

“I do believe there is a need for other options out there because many third-party apps are taking advantages of the restaurant/consumer relationship,” Fahmy says. “Some dining apps take up to a 50 percent cut from restaurants, but with DineVite we are not charging restaurants a percentage of the sale. With DineVite, consumers and restaurants get a better deal, since the restaurants can offer a deal to customers that they are comfortable with and consumers capitalize on it. It’s a new concept that means both parties win.”

According to industry research, 70 percent of consumers use their mobile devices on their QSR/FCR food purchasing journey. They use these apps to look for coupons/deals (42 percent) look up menu items (38 percent) search for the nearest location (37 percent) place a food order (32 percent) or pay for a food order (28 percent). While the apps are bringing overall volume up, they are hitting margins. Many in the business see apps as a disruptive factor that has not yet been reckoned with.

The internet “and its many apps, online reviews, and socially viral communication speeds will continue to disrupt restaurant industry traffic, revenues, brands, and survivability even more over the next decade,” Christopher Baron of RedBaron Consulting, told Modern Restaurant Management. “What will factor into any restaurant or restaurant group’s success in tomorrow’s online world are the numbers and demographics of just how tourist-traveled your city, town, or region is going forward. Huge cities like New York and Miami and even smaller culinary Meccas like Charleston, South Carolina and Austin, Texas will experience more visitors and growing residents from around the world using the Internet to find, try, judge, and comment online for the rest of the world to see — even more so than they do today, or ten years ago.”

Like Baron and other industry influencers, Fahmy is playing for the long term. “DineVite is an app made by restaurateurs for restaurants, so our focus to ensure restaurants are happy and see value in using the app itself,” he said. “The DineVite dashboard gives restaurants who have signed up to the platform insight to data that allows them to manage and coordinate the dining offers based on their own individual businesses. For example, they can advertise as they see fit and offer as soon as they see a dip in foot traffic. We have a robust system that provides deep date customer a behavior and offer stats and many other management tools, and we will be rolling out new features throughout 2020.”

Fahmy doesn’t see DineVite competing with other apps. He sees it as disrupting the current app picture in the favor of restauranteurs. As the year rolls on he expects to launch in Seattle, Los Angeles, San Francisco, Austin, Dallas, Houston, Chicago, Boston and Miami.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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