Can Blockchain transform loyalty in the food service industry?

The food service industry has undergone significant changes over the past decade. Since the world has recovered from the global financial crisis of 2008, the food service industry has been growing steadily, even with expectations of the mature US market to see continued increases of more than 5% each year. In 2017, restaurant sales accounted for 48% of the dollars spent on food.

Developments in the sector have been driven primarily by social and technological changes. As the millennial generation has grown, so their tastes have been reflected in the culture of the restaurant. The rapidly growing appetite for smaller food service operators such as trucks selling more international cuisine reflects a more globalized mentality than previous generations.

In addition, millennials make use of online tools like Instagram or Snapchat to generate conversations about food and food. The growing popularity of technology-savvy customers has created new avenues for digital marketing for the catering industry.

The rise of smartphones has also given food service operators a new marketing medium for customers beyond just social media: the loyalty program.

While loyalty points were once reserved for airlines, they have expanded further into credit cards, supermarkets and now many restaurant operators are using them. This is a popular service: a report showed that 87% of consumers said they wanted loyalty offers from the brands they were involved with.

However, while brands strive to meet this demand, the growing popularity of loyalty programs comes with its problems. Now, blockchain could provide the solution for loyalty platforms that satisfy the appetites of food service operators and consumers.

Do today's loyalty programs work?

Brands such as Starbucks and Dominos have developed comprehensive digital reward programs in an effort to ensure repeat business by offering incentives and promotions to registered customers.

These programs also provide companies that manage them the opportunity to gather valuable data on their customers, helping them to develop more sophisticated marketing campaigns.

Small restaurants and food service operators, on the other hand, usually do not have access to large budgets to pay app developers and strategic marketing executives.

However, many still manage simple loyalty systems where customers receive physical cards, earning a stamp at each visit. Usually, customers can redeem them for a gift once their card is full.

Consumer headache

Although consumers may profess their desire for loyalty programs, there are challenges for brands to ensure that programs receive ongoing commitment.

Loyalty programs often offer promotions, but they are not always relevant. For example, a discounted meal for two in a restaurant can be a tempting offer for a couple without children. However, a family with children would lose the benefit of any discount after paying for a babysitter, and a single person might not get any benefit.

Situations like these lead to a gap in the perceived value of a loyalty program. A survey showed that 47% of restaurant operators said their loyalty programs offered significant promotions, while only 27% of consumers shared that view.

In addition, another study indicated that many customers prefer prizes that can be redeemed in cash, as opposed to one-time promotions. Keeping track of the various reward schemes is also a headache for consumers, with 75% of respondents in the same study stating that they would prefer an honored loyalty program in multiple restaurants.

After all, keeping track of a lot of apps, accesses and physical cards takes time, which decreases the value of any discount or other incentive.

Taking it along with Blockchain

Blockchain offers restaurants the opportunity to change this model and keep its customers with modern, user-friendly, accessible and modern incentive programs. A loyalty platform based on blockchain does not need to bind to one of the main brands, in the same way, that Bitcoin is not associated with any bank.

While blockchain-based services usually attempt to dis-intermediate a given process, the loyalty platform is an example of an area where blockchain can add value by becoming an intermediary between service providers and consumers. In this way, a blockchain loyalty platform can work for many more brands and consumers than existing loyalty platforms today.

This is the business model of Resto, which is developing a loyalty solution based on blockchain aimed at the food service sector. Once registered, a consumer is rewarded with Resto token, deposited in the app for smartphone digital wallet, each time they visit a participating restaurant.

In response to the desire for a more cash reward, consumers can redeem their Resto tokens at any participating catering service provider, at any time and anywhere in the world. If they wish, they can also exchange their tokens for fiat or cryptocurrency via an exchange.

From the operator's point of view, Resto offers a viable solution for a digitized loyalty program completely developed for small operators in the food sector. Once a supplier has registered, he only needs to determine the percentage of each sale he wishes to award as a reward and, in return, he gets access to the Resto customer database.

This puts them in a more solid position with brands like Starbucks, as they can issue targeted promotions to potential customers by filtering on factors such as culinary preferences, average spending and geo-location.

Final word

Loyalty programs have evolved rapidly to become overly complicated and cumbersome for consumers and brands. In this way, they have lost sight of the reason for their existence.

Blockchain offers the potential to change this by simplifying and streamlining reward programs into something that offers lasting benefits for the next generation of operators and consumers of restaurant services.

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