The foodservice industry has undergone significant changes over the last ten years. Since the world recovered from the global financial crisis of 2008, the foodservice sector has been in steady growth, with even the mature US market forecast to see continuing increases of over 5% each year. In 2017, restaurant sales accounted for 48% of the dollars spent on food.
Developments in the sector have been driven mainly by societal and technological changes. As the millennial generation has grown up, so their tastes have become reflected in restaurant culture. The rapidly growing appetite for smaller foodservice operators like food trucks selling more international cuisine reflects a more globalized mindset than previous generations.
Besides, millennials make use of online tools such as Instagram or Snapchat to generate conversations about food and eating. The increasing prevalence of tech-savvy customers has created a whole new avenues of digital marketing for the restaurant industry.
The rise of smartphones has also given foodservice operators a new means of marketing to customers beyond just social media — the loyalty program.
Whereas loyalty points at one time used to be the preserve of airlines, they have extended further into credit cards, supermarkets, and now many foodservice operators use them too. They are a popular service — one report showed that 87% of consumers said they wanted loyalty offerings from brands they engaged with.
However, as much as brands are striving to meet this demand, the increasing prevalence of loyalty programs comes with its problems. Now, blockchain could provide the solution for loyalty platforms that satisfy the appetites of foodservice operators and consumers alike.
Are Today’s Loyalty Programs Working?
Brands such as Starbucks and Dominos have developed comprehensive digital reward programs in an attempt to ensure repeat business by offering incentives and promotions to customers who register.
These programs also provide the companies that run them the opportunity to collect valuable data on their customers, helping them to develop more sophisticated marketing campaigns.
Smaller restaurants and foodservice operators, on the other hand, usually don’t have access to big budgets to pay for app developers and strategic marketing executives.
However, many still run simple loyalty systems in which customers get physical cards, earning a stamp with each visit. Usually, customers can redeem these for a freebie once their card is full.
As much as consumers may profess their desire for loyalty programs, there are challenges for brands in ensuring the programs receive continuing engagement.
Loyalty programs often provide promotions, but these are not always relevant. For example, a discounted meal for two in a restaurant may be a tempting offer for a childless couple. However, a family with children would lose the benefit of any discount once they’ve paid for a babysitter, and a single person may not get any benefit at all.
Situations like these lead to a gap in the perceived value of a loyalty program. One survey showed that 47% of foodservice operators said that their loyalty programs offered relevant promotions, while only 27% of consumers shared that view.
Furthermore, another study indicated that many customers prefer rewards that can be redeemed as cash, as opposed to one-time promotions. Keeping track of various reward schemes is also a consumer headache, with 75% of respondents in the same study saying they would prefer one loyalty program honored at multiple restaurants.
After all, keeping track of numerous apps, logins, and physical cards takes up time, which dilutes the value of any discount or another incentive.
Bringing it Together with Blockchain
Blockchain provides restaurants with an opportunity to change this pattern and keep hold of their clients with easy to use, accessible, and modern incentive programs. A blockchain-based loyalty platform doesn’t need to hitch itself to one of the major brands, in the same way, that Bitcoin is not associated with any banks.
While blockchain-based services usually attempt to dis-intermediate any given process, the loyalty platform is one example of an area where blockchain can add value by becoming an intermediary, between foodservice operators and consumers. By doing so, a blockchain loyalty platform can work for many more brands and consumers than the loyalty platforms that exist today.
This is the business model of Resto, who are in the process of developing a blockchain-based loyalty solution targeted to the foodservice industry. Once signed up, a consumer is rewarded with Resto tokens, deposited into their digital wallet smartphone app, each time they visit a participating restaurant.
In response to the wish for a more cash-based reward, consumers can redeem their Resto tokens at any participating foodservice operator, at any time, and anywhere in the world. If they wish, they can also exchange their tokens for fiat or cryptocurrencies via an exchange.
From the operator side, Resto brings a viable solution for a fully-developed digitized loyalty program to smaller foodservice operators. Once a vendor has signed up, they only need to stipulate the percentage of each sale that they want to allocate as rewards, and in return, they get access to the Resto customer database.
This puts them on a more level footing with brands like Starbucks, as they can issue targeted promotions to potential customers by filtering on factors such as cuisine preferences, average spend, and geo-location.
Loyalty programs have evolved quickly to become overly complicated and cumbersome for consumers and brands alike. In doing so, they have lost sight of the reason for their existence.
Blockchain brings the potential to change this, by simplifying and streamlining rewards programs into something that offers lasting benefits for the next generation of foodservice operators and consumers.