Upselling and Cross Selling in a Digitized Food Industry
04.04.2016 by Ken Claflin
As the food industry continues to evolve towards becoming a digitalized environment, the way food service providers upsell and cross sell is evolving too. Whether it’s at the table or in the drive-thru, food service providers are implementing technologies that improve upsell and cross sell opportunities, increase revenues, and enhance upsell and cross sell promotion effectiveness.
The Psychology of Digital Ordering
The Fast Company published an interesting article about the psychology of ordering food online and how customers subconsciously order more when digitally presented with menu options. This is a result of the digital environment’s ability to present customers with an entire menu featuring options bigger and better than what they initially had in mind. And with the option to customize orders, customers add on toppings or ingredients that increase their order total—essentially upselling themselves.
Considering over half of consumers consider online ordering one of a restaurant’s most important technological offerings, it’s important to cater to this. Over half of today’s QSR and fast-casual restaurants have done so, successfully integrating digital ordering into their business models. Many brands are also creating mobile apps, as nearly 34% of consumers made a restaurant-related purchase on their phone last year and restaurant reservations made on mobile increased 48% from 2015. Companies that allow customers to order online or via mobile apps are seeing larger average order sizes (from increased upsells and cross sells), improved order accuracy, reduced food waste, higher visit frequency, and ultimately, increased revenues.
Tabletop Tech Increases Revenues
In the North American Restaurant and Food Service 2016 Outlook, survey results indicated that 58% of customers still prefer to be greeted by and order from a server but think technology at the table is beneficial when it comes to paying for the meal, alerting their server, and reviewing the menu. Despite the fact that 48% of consumers claim tabletop technology does not impact their decision on where to eat out, restaurants are seeing increased revenues from implementing such technology.
In 2014, Chili’s installed over 45,000 tabletop tablets at more than 800 locations across the U.S. The company found that, while customers are still greeted by a server, they prefer the convenience of using the tablets to order drinks and desserts, pay their bill, and entertain their children with 99 cent games—a small price they’re more than willing to pay. Applebee’s also announced its plan to install 100,000 tabletop tablets in U.S. locations.
Food service providers are finding that self-ordering tablets lead to increased upsells and cross sells, and thus higher overall sales. Many restaurants see (thanks to the tablet’s advertising capabilities) an increase in appetizer and dessert orders as well as higher server tips. The tablets default at 20% tip and, although customers have the option to go lower or higher, they typically choose not to actively change the tip percentage. Customers are also more pleased with the speed of service tabletop tablets provide, with the ability to alert a server and order and pay when they please, and are therefore more inclined to leave a higher tip.
Analytics Improve Upsell/Cross Sell Effectiveness
In a world where every decision needs to be backed up by data, food service analytics are becoming a necessity. Prescriptive analytics provide specific action items to improve your operations and increase gross margins. When it comes to upselling and cross selling, this means understanding customer purchasing behavior and tailoring sales techniques to maximize profits. Prescriptive analytics will tell you which items customers most often order together or which items might complement each other well, and provide employees or locations with action items to push that particular upsell or cross sell.
Analytics are especially helpful in rolling out new upsell or cross sell promotions. You’ll not only know how effective certain promotion techniques are, but how you can improve your strategies—regardless of whether order sales come from tablet technology or server interaction. Prescriptive analytics will help you find the right mix of digital and human interaction with customers, allowing you to understand overall upsell and cross sell effectiveness and their impact on your bottom line.
The Road Ahead
As consumers’ technological expectations evolve, new technologies will continue to change the face of the food industry. Upselling and cross selling will cater to those evolutions as food service professionals discover new ways to better the customer experience.