Restaurant Challenges with First Party Data: There’s an Easier Way

Eugene Varricchio, CEO, Franki Global Inc.

“All money is a matter of faith.” -Adam Smith

Trust has been the foundation of business for hundreds of years. No matter where or when we look, when someone thinks their deal has been broken, they stop doing business with them.

Psychologists tell us that confidence is the belief that a person will do what he says he will do. Economists have expanded on thatcalling trust a kind of lubricant, freeing up markets by lowering transaction costs and promoting better cooperation between buyers and sellers.

We’ve been hearing a lot lately about the ‘trust economy’, as if doing business based on trust is something new. For example, the World Economic Forum found that entrepreneurs’ priorities were shifting. The pandemic has reminded companies of that maintain trust of customers, employees, regulators and the community is essential for profitability.

Awareness of data privacy is growing.

Aside from Covid, the growing awareness of data privacy among the public is driving even deeper trust issues. More and more people are asking why they should entrust their personal data to organizations.

While personal information has always existed, it has never been more accessible than it is today. Not so long ago, a series of institutions kept documents about various aspects of our personal histories in a series of quirky, disconnected repositories.

As we have all experienced, those days are over. In this information economy, your restaurant’s access to first-party customer data and how you apply it to improve the dining experience is critical to your long-term success.

There are many positive examples of how connectivity increases confidence in the market. We find ourselves accepting rides from complete strangers using companies like Uber or staying at strangers’ homes through services like Airbnb. In this sense, reputation-based trust has never been more common than in today’s digital world.

Data leaks are persistent.

The dark side of the relationship between trust, reputation and first-party data arises when companies violate that trust. For example, my home country of Australia has been through more than 50 data breaches in 2022.

In a KPMG Poll 2021, 86% of Americans said data privacy was a growing concern. In fact, 30% of those surveyed were unwilling to share their personal information for any reason.

Even worse, from a trust standpoint, KPMG found that while only 17% of business leaders reported selling customer data, 51% of Americans say they are very concerned about this opportunity. This disconnect makes sense, as the poll found that 40% of Americans don’t trust companies to do the right thing in any context.

Clearly, collecting first-party information from your customers is a sensitive issue. At the same time, it offers the opportunity to enhance the dining experience.

For example, restaurant leaders can reference existing customer data and assess a diner’s personal preferences. They can use that information to remind guests of items they’ve enjoyed on previous visits and to tailor food and wine recommendations. This allows diners to feel appreciated and put at ease. It’s a case where you and your staff use first-hand data to better serve guests and meet their needs.

On the other hand, exploiting customer data to bombard patrons with generic emails can have the opposite effect. Now, instead of meeting customer needs, a restaurant is damaging their trust. At best, instead of feeling encouraged to come back and bring their friends, diners will opt out. They can even take their business elsewhere.

Even worse, if they suspect a restaurant has sold their data to other companies, their trust has been broken. Pointing out a data sharing policy that everyone clicks on but no one reads won’t win them back.

Customers are more open to peer recommendations.

There’s a better way to build your local restaurant’s reputation and build trust. Customers are far more open to recommendations of their peers than they are for promotions that come directly from you.

I believe there’s a reason we let complete strangers drive us around town or invite us to their homes. Those services have earned our trust by building a solid reputation based on objective customer reviews. Obtaining honest, unbiased reviews from regular customers is a crucial strategy for boosting your restaurant’s reputation. It is the natural transition of trust from traditional word of mouth to the digital age.

Seeing is believing.

Seeing is believing, and almost every customer in your restaurant has a camera in their pocket or bag. Build a positive reputation in your local community to encourage diners to share their experiences online.

Video reviews are ideal because they give viewers a sense of the look and feel of a restaurant for themselves. People also know that videos are much harder to fake than anonymous text-based reviews. (Full disclosure: I have a platform where consumers can share video restaurant reviews, but there are many other platforms to post these videos.)

Customers have always trusted companies that have built up a good reputation. In the online trust economy, successful restaurants are turning to online guest reviews to build that reputation. They are a proven way to build trust with potential customers in the digital marketplace.

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