Digital Business in the World of Foodies

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:

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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:

  1. 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.
  2. 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.pizza-phone-2
  3. 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.

Influencers

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. Screen Shot 2017-04-08 at 1.02.20 PM.pngAccounts 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.Screen Shot 2017-04-08 at 1.16.07 PM.png 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

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 easiestScreen Shot 2017-04-08 at 1.50.20 PM 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.

Other Innovations

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 Screen Shot 2017-04-08 at 2.00.27 PMmembership 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:

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MealPal is in eight markets, including its first international city, London.Screen Shot 2017-04-08 at 2.01.40 PM.png 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.

Future Thinking

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.

11 comments

  1. Wow, great post Gabby! It is incredible to see the prominent role that influencers (particularly Instagram) now play in food WOM. It makes a world of sense now why my friend who works for TripAdvisor often gets free meals whenever she travels (even internationally), so long as she flashes her business card at restaurants. Sounds like most restaurants (with an intimate understanding for the competitive landscape) are not ignorant to the fact that building a relationship with their audience based on trust and expertise is often best executed through social media. As was the case for me this summer, trust and intrigue developed on Instagram transformed me from a Black Tap NYC viewer into a customer — I waited in line for 1 hour and 10 minutes for the Sweet N Salty Shake. Definitely lived up to the Instagram-worthy hype!

  2. Awesome post! It’s crazy to see how much influencers really have taken over the “pre-consumption” phase of the consumption chain. Even in personal experience, I see myself relying on the suggestions of the internet as a whole for restaurant/dessert recommendations. Over the past 2-3 years, I’ve gone into NYC multiple times specifically seeking out some of those super popular/”viral” restaurants, whereas I previously would’ve just wandered around or taken a friend’s suggestion for a place to eat. Now, 99% of the places I choose to eat were inspired by social media or were checked out on Yelp/OpenTable/TripAdvisor. What I find especially interesting about this new trend is that restaurants really have to cater to it–having a product and/or atmosphere that allows you to go viral is now a real business strategy. And even those who aren’t looking to go viral have to pay attention to the reviews and exposure they’re getting online–to be successful, restaurants have to registered on sites like OpenTable and they should definitely be tracking their ratings/comments on Yelp/TripAdvisor. A ton of restaurants even advertise based upon their online ratings; it’s crazy to think that a good review on Yelp may now be more important than a good review in a restaurant magazine or ranking.

  3. Great post and I’m glad you took your own spin on a popular topic! I have definitely noticed the movement towards word of mouth kind of advertising and using famous accounts and reviews to sponsor restaurants and foods. There is definitely more exposure to restaurants now that social media boomed because it is such a trend to take pictures of your food and place you go to eat. I LOVE IT and it also makes finding a new place to eat is made easy in any city. I think it is great to new restaurants to get business just by publicizing online and if its actually good it’ll be successful.

  4. Interesting and easy-to-read post Gabby, I always enjoy reading any blog posts related to social media and food of course! In today’s digital age, users are looking more towards shared-review apps/platforms to determine what restaurants are worth trying and while I agree with you that this gives the food business immense opportunities, I also think it increases their risks dramatically for one extremely bad review can outweigh a slew of positive reviews (it’s can also be hard to differentiate if reviewers are actually authentic or paid by the restaurant). The trending idea of whether something can be “Instagrammable” makes me wonder if that brings down food quality overall since restaurants may make aesthetics a priority over quality ingredients. On a separate note, thank you for explaining MealPass to me in this post because I haven’t heard of it before but I will definitely check it out when I have time!

  5. Such a great post, I love this topic as well! I really liked how you put it all in perspective with the consumption chain. Thanks for linking Vocolife, I actually hadn’t heard of that, but I went and downloaded it! It’s interesting how once a trendy food goes viral, everyone tries to copy it. Boston Burger Company made the beantown version of those crazy milkshakes you mentioned, and now they’re becoming locally famous for it.

    MealPal also seems like a super interesting concept, I wonder if the advent of services like that will lead to people eating out more in general. Especially in conjunction with all the other apps–if you’re being rewarded, it becomes worth it to eat out!

  6. Great post! I’m definitely guilty of doing this and I was actually just talking to a friend earlier in the week about this. Before I go to a restaurant I have to look up not only the menu, but reviews and pictures of the food as well. Most of the time I even decide what I’m going to order before I even get into the restaurant and its based solely on pictures/reviews done by completely random strangers that probably have different tastebuds than I do. Maybe not my smartest idea but it’s always seemed to work out. Most of the time I just rely on sites like Yelp and occasionally Instagram to decide what to eat. That’s the extent of my social media use with respect to food.

    I never even knew about reward type programs for restaurants but like you, I have my hesitations about something like MealPal. I guess if you’re really dedicated to the app, you can make the monthly subscription worth it. I’m definitely going to look into Vocolife for future incentives to eat out! Thanks for sharing!

  7. Great post! Food has a pretty major presence on my Instagram feed, and I’ve often thought about the impact that these food-specific SM influencers have had on the modern restaurant industry. I thought the quote “influencers single-handedly build a relationship with their audience based on expertise, authenticity, and trust” and your comment re: turning viewers into consumers was very insightful. “Instagramability” has become an important consideration for both start-up and legacy restaurants alike- and the milkshake from Black Tap Craft Burgers and Beers is a great example of the value that can be created in the restaurant industry from the right “wave” of social media posts.

  8. Wow I had not heard of most of these applications before! I think a big part of this is that trust that has been created between users. For example yelp, we have no clue who is actually writing the post but yet we trust it for some reason. Most of these applications seem that way. It goes back to our conversation towards the beginning of this class on how some of our social media actions we would never do in real life. Would we trust the restaurant opinion of a random person we met on the street? Probably not. I will have to try out some of these apps I had never heard of!

  9. I only have one question, “so where should I go eat?” Great post! I’ve never heard of MealPal before but it seems like a simple, efficient way to eat lunch every day and try new things. Those milkshakes look insane! Insta and snapchat are clearly a great tool for restaurants to gain exposure to customers so it still surprises me when I see a restaurant failing to use these tools in such a competitive market.

  10. Nice post. It has been interesting to see how the food/restaurant industry has been able to leverage SM over the past several years. It’s definitely well-suited to non-chain restaurants.

  11. Really great post! I think you definitely are on to something with social media changing the way businesses look at the consumption chain. I know many people, myself included, who rely on social media so help guide them towards interesting and delicious food. Even searching for a place to eat could start on Instagram by looking at a foodie account for your city. One app that leverages people’s desire to see food before they go to a restaurant is Wine N Dine (https://www.winendine.com/). This app was created for users to share their favorite plates so that they always know the best (or worst) food on the menu. Users will rack up points to unlock rewards. It’s almost like an Instagram for food but with incentives. I think if they get enough people to join the platform they will be able to have the same reach and influence as Instagram. I’m sure there are many more apps like that trying to find their place in this new consumption chain!

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