Can a specific value be placed on personal privacy — say, the cost of a latte? A new coffee shop called Shiru Cafe is betting people will be willing to spill the beans on their personal data in exchange for a free cup of coffee, NPR reported last week. The cafe, an offshoot of a Japanese chain now open in Providence, Rhode Island, mainly serves students from nearby Brown University. For each transaction, a cashier asks for customers’ names, birthdays, phone numbers, email addresses, majors, and professional interests before serving them their caffeine fix — no U.S. currency accepted (professors are allowed to pay for their drinks with cold hard cash, however).
On Twitter, opinions on the cafe’s business model ranged from “terrifying” to “depressing,” with some pointing to the personal-data-for-goods exchange as evidence that a dystopian future is already here, comparing it to an episode of Black Mirror. But consumers should know that in 2018, basically every restaurant and business is trying to collect personal data — some are just more up front about it than others.
Data is now known as “the new gold,” and much ado has been made about how companies like Facebook, Google, and Amazon collect and utilize user data. The results range from simply creepy to, as in the case of Facebook, dangerous: The social media publisher is currently trying to explain a massive data breach. But it’s not just the world’s biggest tech corporations (and somewhat murkier “data brokers”) that are tracking our every move: In recent years, customer data has become increasingly valuable to restaurants. Hospitality businesses are eager to obtain everything from diners’ dates of birth and marital status to specific opinions on how they liked a particular appetizer. Here’s how it happens, why it’s only going to get more common, and what it all means.
Why are restaurants so hungry for customer data?
Restaurants, be they independent fine dining restaurants or quick-service chains, have long tracked customer preferences via various methods (think of a savvy maitre’d who remembers a VIP customer’s birthday, or a server who automatically brings a patron’s favorite cocktail). But as the restaurant industry grows more competitive and sales growth has slowed, restaurants are resorting to new ways to remain competitive, and obsessively tracking data to figure out what exactly their customers want is a big part of that.
It’s no longer enough to collect demographic information — these days, using apps, location tracking, and free wifi sign-ins, restaurants from Starbucks to Sweetgreen are creating individual customer profiles tracking everything from Frappuccino flavor preferences to what time of day someone typically comes into a store to their behavior, tracked as a pattern over time, once inside a business. Collecting and analyzing all this information helps restaurants figure out what exactly customers want and how they can create new dishes or tweak existing ones, and how to better tailor their marketing to individual customers, all with the ultimate goal of boosting sales.
“Gone are the days of trying to figure out what millennials want versus boomers,” Sherif Mityas, chief experience officer of TGI Fridays, said during a panel on restaurant data analytics during this week’s MUFSO conference in Dallas. “We want to know what Mary wants versus Susan, and we need an unprecedented amount of data, analytics, and machine-learning to utilize this data in the best possible way.” By focusing on customer data collection and analysis and combining those insights with artificial intelligence, Mityas says TGI Fridays has doubled its to-go business over the past 12 months — thanks to moves like sending “Mary” personalized push notifications from the restaurant’s app at precisely 6:30 p.m, just as she’s running out the door to get her kids to soccer practice.
How do restaurants collect data from diners?
While anyone who uses the internet has likely had the experience of being creeped out by targeted banner ads (sometimes even before they do), restaurants’ gathering of customer data differs from those stalker-y experiences in one major way: Diners are largely offering up their personal information and/or their opinions on a completely voluntary basis, either because they simply want to express their opinions on a restaurant’s food and service (hence the popularity of review platforms like Yelp and TripAdvisor), or they are getting a perk, discount, or freebie.
Restaurants have numerous ways of gathering data from their diners, including insights provided from third-party vendors like OpenTable or GrubHub; getting customers to sign up for emails on their websites; and surveys, like the offers printed on receipts from McDonald’s and Chick-fil-A, offering free food in exchange for diners rating their experience. Providing customers with free wifi is also a way for restaurants and coffee shops to get their customers’ personal data: Starbucks’ wifi is and always has been free, but as of April 2018, users must submit their full name, email address, and zip code before they’re allowed online — information that the company then uses to send promotional offers. Then there are loyalty programs, such as Starbucks’ popular rewards program and the new rewards program just launched by Chipotle.
What should diners keep in mind when signing up for a loyalty program or app?
Loyalty programs give restaurants the chance to collect an immense amount of information on a customer’s specific preferences and purchasing activity — and the customer is happy to voluntarily share that information because they’re getting discounts or free food.
“The huge thing here is permission to contact and permission to interact, whether you [as a customer] are providing your email address or your cell number to accept [text messages],” says Kate Hogenson, a loyalty programs consultant at Kobie Marketing. “Doing that within a loyalty program satisfies and gives you compensation for having given that permission. There will be people who won’t sign up for emails, but will sign up for loyalty programs because of the expectation they’ll get rewards.”
Starbucks’ loyalty program has been particularly successful. When the coffee giant launched its revamped rewards program back in early 2016 (much to the chagrin of many members), “they were at the same time really upping their game on what we call CRM [customer relationship management] — the behind-the-scenes data collection and targeting,” says Hogenson. The new Starbucks app targeted customers with hyper-personalized offers: Tea drinkers got offers related to tea, while habitual hot chocolate drinkers would see offers tailored to their usual order. Shortly thereafter, Starbucks reported that even though overall traffic was a little down, the year-over-year spend from members increased 20 percent. “That’s the value of getting and using customer information appropriately,” Hogenson says.
Should diners be worried about the collection of their personal data?
Yes and no.
“Where’s the line between treating customers like VIPs and stalking them?” wondered Nancy Luna, senior editor at Nation’s Restaurant News, during a panel at MUFSO. According to a recent consumer trends report by data collection company InMoment, 75 percent of consumers find most marketing personalization at least somewhat creepy (and 40 percent of brands admit to being creepy).
Creepy doesn’t necessarily translate to dangerous, though, and while the internet is rife with articles about how users can minimize the amount of data companies like Google and Facebook amass on them, at this point anyone who uses the internet regularly can fully expect that there’s already a thorough dossier of information assembled on them. But according to data privacy expert Jessica Ortega, a website security analyst at SiteLock, “Consumers do not need to worry about eateries having their personally identifiable information any more than they would for businesses in other industries, such as social media or retail stores.”
While the FTC has warned that simply Googling information on certain medical conditions can lead to people being classified as higher-risk by insurance companies thanks to the shady business of so-called data brokers, diners shouldn’t worry just yet about a dystopian future in which frequently ordering steak for dinner will hike their health insurance rates. Ortega notes that many countries have introduced legislation that limits the ways companies can share consumer data, and requires them to obtain consumers’ explicit consent before doing so. “This would stop insurance agencies from gathering diner data like eating habits in order to weaponize it against consumers and decline coverage or increase rates,” she says.
Diners should also be aware that some companies may share or sell their personal data to other organizations — which is the information that’s hidden deep within those pages-long user agreements that no one ever reads. On a panel at MUFSO, Scott Absher, CEO of ShiftPixy, a restaurant scheduling and consulting platform, warned restaurateurs about using third-party delivery apps. “The most dangerous thing you can do is surrender your customer data,” Absher says. “That is very powerful data about where people live and what they like to eat [and] they may sell it to your competitors.” Reached for comment, a GrubHub spokesperson says the company does not sell customer data, but that they may at times share “non-personally identifiable information with contracted partners in order to provide targeted, relevant marketing and gain insights to improve our products.”
Additionally, “Consumers should be wary of vendors collecting unnecessary data on eatery or other retail apps because there is still the potential of hacks and data breaches like the Panera bread breach from earlier this year,” Ortega cautions. “Data breaches could potentially leak information like names, birthdates, and email addresses online for cybercriminals to use for identity theft or fraud.” Whether half-price Frappuccinos or a free chicken sandwich are worth letting a company assemble a large amount of personal data on them is a decision that every diner will have to make for themselves.
Whitney Filloon is Eater’s senior associate editor.
Editor: Daniela Galarza