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How Small Restaurants Tackle the Big Challenge of Building Mobile Apps

As diners increasingly demand digital rewards, mom-and-pops are trying to keep up

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Photos: farland80, Stationidea/Shutterstock

Building standalone mobile apps is easy for big national chains like Chick-fil-A, whose app hit No. 1 on the iTunes app store last month, with over a million downloads within three days of its June 1 launch. But it’s tougher for independent restaurants: What’s the best way to reward dedicated diners for their loyalty — without tapping into Groupon fatigue?

That’s the goal of Portland-based Chew Dining Club, a rewards app for 15 restaurants within the varied ChefStable group — which includes a beer hall, a craft-cocktail lounge, a burger joint, and fine-dining restaurants. ChefStable founder Kurt Huffman wants Chew to function as a loyalty app in the true sense of the word: a community builder, not a coupon generator. One that, yes, may score its users a free order of fries from time to time — but does it in a way that feels like the restaurant is saying, "this one’s on the house, friend; good to see you again," versus a cheapo discount experience.

"How do we thank loyal customers in a way that doesn’t feel nosy or cheap?"

"For us, the question comes down to: How do we provide great service even after our guests have left the restaurants in a way that feels welcome, and not cheesy?" Huffman says.

Chew is trying to answer that question as one of the first major efforts from independent restaurants, which face a tougher app-development challenge compared with famous national brands. Chains like Chick-fil-A, Taco Bell, and Burger King have the capital and, in some cases, the dedicated staff that can spend months developing their apps. (According to a Chick-fil-A press release, a "core team of more than 30 developers, designers, web architects, and others" were responsible for developing its app, in a space on the Chick-fil-A campus specifically dedicated to the project.) And once completed, those apps appeal to a massive existing customer base with features like order-ahead capability, coupons, and app-exclusive offers. At Chew, the scale is smaller but the stakes are just as high.

More than 5,000 Portlanders have downloaded the app, which was designed by local community-software firm Boulevard, since it launched six months ago. Huffman and the Chew team plan an expansion to non-ChefStable Portland restaurants by the fall. After that, the goal is to build similar dining-club mobile platforms for other independents and smaller regional concepts with a few locations.

Before getting to that point, Huffman and the team have more potential to tap and big problems to solve. They're working on using diners’ transaction data to tailor personalized rewards experiences, and are still figuring out how to make the mobile experience "feel classy" at sit-down restaurants. "We’re about 60 percent of the way there in figuring all of this out," Huffman says. If all goes according to plan, Chew could serve as a model for the future of independent restaurants’ mobile apps.

On the face of its first iteration, Chew appears to work like a slicker version of the standard rewards system: Download the app, redeem a welcome gift (like free fries at sandwich shop Lardo or a gratis appetizer at upscale pizza joint PREAM), and work toward higher rewards tiers by dining at the group’s restaurants.

Diners confirm their visits by plugging into the app four-digit codes printed at the bottom of their checks. ("This can be clunky," Huffman admits, but he didn’t want to force extra steps like social-media linking a la the Taco Bell app.) Ten to 29 visits across the ChefStable family of restaurants scores a birthday gift, while those with 30 or more check-ins also receive an invitation to an annual Chew party. ChefStable devotees who check in at all of the group’s 15 participating restaurants receive the "bucket list" reward of a $100 gift card plus the annual party invitation.

"To create something that users don’t want to look away from, you have to do that through data."

But Huffman has plans for Chew "to be far more than the punch card system of ‘just go nine times and get a free X,’ and that’s it," he says. "We’re trying to build a community, not a rewards system. How do we thank them for being loyal customers in a way that doesn’t feel nosy or cheap?"

The short answer: data. The Chew app links to restaurants’ point-of-sale systems, which lets operators see exactly what customers ordered and how much they spent — creating the opportunity for future personalized, tailored rewards. "Based on your order history, we’ll set aside something special for you: When you walk in, the bartender comes over with your favorite ale," Huffman says. "Or the sommelier has a special bottle to share with our 20 best wine-drinking clients. If you’ve spent thousands with us, I want to know that."

The individualized diner data gives Chew a lot to play with on the back end, which is key to the main goal of a "classy, non-Groupon-like" experience, says Zach Hull, Boulevard’s vice president of business development. "[Before Chew] we had been experimenting with the core problem of how you can get consumers to tell you what they want so you can offer it in a way that isn’t disruptive," he adds. "It’s sort of the opposite of the dogma of TV, which is advertising by getting in people’s faces. To create something they don’t want to look away from, you have to do that through data."

ChefStable and Boulevard have jointly run Chew since its December 2015 launch, and six months on, they have a decent amount of data to consider, including what percentage of ChefStable transactions were linked to the loyalty app. Hull wouldn’t specify the restaurants, but he revealed, "for some it’s as low as two percent and others are as high as eight percent." Hull is pleased with the high end of the range, he says, drawing comparisons to Starbucks’ loyalty app, considered the industry’s best. (According to a Starbucks rep, 10 percent of all transactions in the 300 busiest urban stories involve loyalty members using mobile order and pay; but mobile payments as a whole, whether at the register or using the order ahead feature, now account for 24 percent of all U.S. transactions. The Chew app does not incorporate payment.)

One hurdle to larger engagement numbers: Diners are less willing to use the app at more upscale locations, the team learned. "One of the challenges that I didn’t expect was it’s harder to get [people to use Chew in] the sit-downs," Hull says. "There’s sensitivity about pulling out your phone in a dining room and being perceived as cheap." Hull suspects that at upscale restaurants, "there’s a perception that people don’t care about ‘loyalty’ because it’s higher end. But industries like airlines are figuring out that people who spend a lot of money want to be recognized for buying that $1,500 ticket — maybe even more than people who spend less."

Building a proprietary loyalty app isn’t an option for everyone. When Huffman first began talking to firms, he was quoted more than $250,000. He instead linked up with Hull, an old buddy from local Reed College, and cut a deal for Boulevard and ChefStable to run Chew jointly.

"Apps are hard to market. It has to include some pretty amazing features for consumers to give up real estate on their phones."

"If you can get your college buddy to help out, that’s fantastic, but most independent operators aren’t going to be able to spend money on their own app," says Anna Tauzin, the National Restaurant Association’s senior marketing manager for innovation and entrepreneurial services. "We don’t advise for or against apps in general, but they’re hard to market. It has to include some pretty amazing features for consumers to give up real estate on their phones."

That high barrier to entry for independent restaurateurs leaves a window for Chew and Chew-like platforms to enter the space. The team’s big goal: Attract clients with a Big Data approach. "The Holy Grail on the back end is being able to use this data and improve ROI [return on investment] for businesses," Hull says. "If you can give [diners] a more robust experience without them having to tell you explicitly what they want, they’ll be happier and they’ll bring you more business. It’s better for everyone."

While standard features like order-ahead and social-media tie-ins have worked for apps from the big chains, Tauzin thinks "they’re becoming a bit stale" and might not be as compelling for independents’ diners. "[Chew] is the first app I’ve heard of where independent restaurants are working together to build brand affinity," Tauzin says. "I really love the idea of creating an experience for diners, a special club that makes them feel included and set apart from the rest."

In the future, those experience-focused features could include no-touch mobile payments, Huffman says. He imagines possibly outfitting restaurants with "beacons," low-energy Bluetooth devices that can send signals to nearby phones and make them perform simple actions. "How cool would it be to walk in the door and your app automatically wakes up, telling me you’re a loyal customer and letting you pay without you touching your phone?" Huffman says. "We don’t want to freak people out, though. The question is, ‘How does that line evolve over time?’"

Photo: Stationidea/Shutterstock

Diners would likely welcome a pain-free way to pay at the end of their meal, whether it’s through beacons or another type of "seamless" technology. "Improving on payments at the table is very challenging, because you don’t want a disruptive experience," Tauzin says. "Right now your credit card disappears off the table and it comes right back. If [Chew] can figure out something easier than that, they’d be golden. There’s nothing better than having everything already taken care of."

According to Huffman, the "Holy Grail" is the ability to take reservations. Reservation experimentation is an active market: Chicago restaurateur Nick Kokonas’ Tock pre-pay "ticketing system," launched last year, successfully swiped big names like the French Laundry from OpenTable (and allowed wd~50 to sell $41,000 worth of tickets for its final dinners in 2014). OpenTable still has a lock on the reservation space, Huffman says, but he suspects owners would love to avoid paying that fee every month while focusing on loyal clients who are less likely to no-show. For Chew reservations, Huffman imagines a tiered reservation system in which the best tables are offered to the most loyal customers. "If you’ve been to a place 25 times, why shouldn’t you have more table availability than someone who’s never been there before?" Huffman says. "There’s a lot of opportunity still to come."

The execution of that opportunity will look different across counter-service joints and white-tablecloth gems. But in a world of increasingly high-quality dining options, Huffman and Hull believe that for independent restaurants, community building is key to longevity. "There’s this arc where you open the restaurant and it does well and it has its heyday," Hull says. "What happens after that is up to the restaurant. The ones that survive develop long-term relationships — and you have to work to earn them."

Julianne Pepitone is a freelance writer (and former consumer tech/cybersecurity reporter) living in the greater New York City area.
Editor: Erin DeJesus