The Consumption Chain
“When considering supplying a new product or service, one starting point is to think about the entire lifecycle of the way value is delivered to discover new points of differentiation” (Olaf Kowalik). Here is the summary of the lifecycle consumption chain:
Through the use of digital technology, the restaurant industry is significantly changing. Looking at the consumption chain helps to understand how companies have identified ways to create a better consumer experience. Unique ways to deliver value to consumers can be found all along the consumption chain:
- Before deciding on a place to eat, people are using various apps such as Vocolife, which gives you rewards for going to certain restaurants in your area.
- The sharing economy is also impacting food; people are now “social eating”. Taking pictures at the table and posting them online is becoming a very important part of the consumption chain. Pics or it didn’t happen.
- After eating out, people like to continue to share. With Yelp and other review sites, people are able to share their experience with others. Sometimes people even share to get a response from management and end up getting vouchers.
All of the examples listed are made possible using social media and digital business.
Stage 1: Pre-Consumption
I am particularly interested in the first stage of the consumption chain because of the huge opportunities available, so this is what I will be focusing on for the majority of the blog. Today, instead of putting all of your faith in critics and noteworthy magazines, people are turning to influencers when they are deciding where to eat out. Instead of deciding what you want to eat based on what delivery menus are left in the dorm lobby, you look on Grubhub to browse possible options. Consumer behavior in respect to the restaurant industry is changing and it is a really interesting time to look at what has changed and where the industry is headed.
Within the last decade, marketing has been shifting from the use blanket statements trying to reach as many people as possible to trying to reach individuals with custom messages. The shift towards trust in influencers goes right along with this trend. Influencers, in general, have really gained power within the last 2 years in the food industry. They have amassed huge followings with their mouth watering pictures. Accounts range from niche accounts featuring vegan food to bigger accounts such as new_fork_city which has over 800k followers. If there’s a market for a type of food, there’s an account for it.
“Restaurants and bars are increasingly giving influencers a seat at the industry table, reaching out to them alongside critics and traditional media, even hosting events especially for them,” according to Jetty-Jane Connor, VP at The Door, an NYC-based PR firm. Influencers typically do not get paid for posting about a restaurant, rather they get a free meal and content for their account. If they do get paid for posting, they legally need to make it clear that it is a sponsored post. Many use the hashtag #sp to indicate sponsorship.
So how much power do these influencers actually have? Arya Alatas, director at Nuffnang, an influencer agency said: “influencers single-handedly build a relationship with their audience based on expertise, authenticity, and trust.” This trust developed has the power to turn viewers into customers.
Take Black Tap Craft Burgers and Beers– the home of the milkshake that “broke the internet”– as an example of the importance of “instagrammability” and influencers. What started as an experiment quickly turned into an average of a four-hour-long wait to get to experience this social media sensation. This surge in popularity happened only because “a wave of Instagram posts about the milkshakes… led to a mouth-watering Buzzfeed story with more than 2 million views, hours-long lines, and a feature on ABC’s The Chew.” In an interview with owner Joe Isidori, he said that Instagram was the number one most important way to drive foot traffic. The foodie culture and following on Instagram was clearly a make or break for this restaurant.
The presentation is becoming more important to consumers and restaurant owners. “The impact of influencers only appears to go deeper: Instagrammability is now being considered from a new restaurant’s blueprint stage,” according to restaurant specialist.
Reservations are a huge part of the first stage of the consumption chain. Services such as OpenTable, are becoming essential for success because they clearly provide the easiest way to book a reservation. Online booking has been around for quite some time, with OpenTable claiming the majority of the market. Online reservations are important because it is not only a way to book a reservation, but it is also an important part of the awareness/ discovery step in the consumption chain lifecycle. OpenTable has reviews, tags associated with restaurants, photos, directions, price ranges, suggestions based on your account, and awards. I see OpenTable as a strong competitor to Yelp because of all it has to offer.
As more and more gaps in the consumption chain are being filled, the consumer dining experience becomes better in ways we did not know we needed. An interesting example of innovation in the first and second stages of consumption is the creation of MealPal. This service was created by the co-founder of popular fitness app, ClassPass, which is a membership that allows you access to “thousands of different classes at studios and gyms in your city and around the world.” MealPal was created with the same kind of no-strings convenience in mind. MealPal charges a monthly subscription fee in exchange for access to a number local restaurants in the area. Here’s how it works:
MealPal is in eight markets, including its first international city, London. At the moment, each market ranges in terms of how valuable this service is. In Boston, there are a considerable amount of participating restaurants, but I am not entirely convinced it is worth it.
The innovation of MealPal is noteworthy and important to recognize how the consumption chain will continue to evolve to try to meet the needs of the modern consumer.
As social media and digital business continue to be important in our lives, restaurants will need to adapt to innovations. I think there is still great potential for new ideas and ways to further integrate digital businesses into the first stage of the consumption chain. Instagram will continue to be an important player but should be cautious of maintaining its current value proposition and not get too involved with e-commerce.
In all, restaurant owners should look at influencers and services as valuable resources to gain awareness and increase foot traffic.