Leveraging Loyalty Programs in the Virtual World
With the rise of digital ordering, many restaurant customers today no longer expect to have an in-person relationship with every brand they buy from.
On the one hand, this trend offers restaurants a valuable opportunity to reach new consumers through digital channels without having to invest the investments in new physical stores. On the other hand, it can be harder for brands to build the deep and lasting customer relationships they are used to building inside their dining rooms.
Geoff Alexander, president and CEO of Chicago-based Asian-style restaurant brand Wow Bao, which is available through hundreds of virtual locations in addition to a handful of physical stores, discussed in an interview with Karen Webster of PYMNTS the challenges of maintaining relationships in digital spaces.
“The biggest thing in the virtual restaurant space is trust, and now you don’t know where your food is coming from, so you’ve lost that connection or that trust,” Alexander said. “When you are in the dining room, you can… talk to your guest. You can meet their needs. You can build relationships. In the virtual restaurant segment, that doesn’t exist as much, and it’s up to us as operators to find ways to connect and make customers feel good eating at home. .
Hospitality in the virtual world
In an effort to build these relationships, Wow Bao announced Thursday, May 19, the launch of its new Bao Bucks rewards program, in partnership with customer experience management (CXM) solutions provider Software-as-a-Service. (SaaS) Paytronix. According to the press release, this is the first virtual kitchen rewards program.
Alexander hinted at “something pretty cool coming out” in the coming weeks that will allow the program to create exclusive access for loyal customers and “create and build a community”, adding that the loyalty program allows continuous communication with customers to build trust.
Just under a third of all consumers use loyalty programs each month, according to research in the March/April edition of PYMNTS’ Digital Divide series, “The Digital Divide: Regional Variations In US Food Ordering Trends And Digital Adoption”, created in collaboration with Paytronix. The study, which is based on a survey of more than 2,500 American adults in February, found that 30.2% of all consumers had used a loyalty program in the previous 30 days.
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Since restaurants are in the business of hospitality, Alexander argued that programs like these can bring that ethos to digital platforms.
“Everyone can define hospitality differently,” Alexander said. “For me, it makes people feel good and valued.”
The syndicated kitchen model that Wow Bao built allowed the brand to grow rapidly. When PYMNTS spoke with Alexander in February 2021, he shared that the company had opened 150 units between April 2020 and the end of this year. Since then, the number has quadrupled.
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Alexander attributes this rapid growth to the ease with which Wow Bao has made it possible for other restaurants to prepare the brand’s foods, with the only requirement being that they be able to steam the products to prepare them for serving.
“That ease of execution and that consistency factor is what keeps us going at the pace that we did,” Alexander said. “I don’t know anyone who can do 600 restaurants in two years, and we were able to do it very quickly.”
Additionally, rather than struggling to get the items to each of these operators, Wow Bao simply sells the products to food industry redistributor Dot Foods, who in turn sells them to distributors, from whom restaurants purchase the items. , Wow Bao offering suggested menu price guidelines.
Alexander said this model allows businesses such as cafes and ice cream parlors – which have already absorbed the cost of their kitchens, but typically experience long periods of downturn in business – to make incremental sales throughout the day. (and throughout the year).
The company is also applying this model to a new virtual brand of plant-based chicken with Skinny Butcher, an alternative poultry company, which Wow Bao’s majority owner, Valor Equity Partners, is funding. The chicken brand has a bit higher barrier to entry, given that it takes more to prepare the food.
Face the storm
Looking ahead, Alexander predicts that artificial intelligence (AI) and automation will transform the industry in the years to come. He cited voice control at the drive-thru, drone delivery and robotic kitchen assistants as examples of the kinds of innovations that will enable the industry to meet the labor challenges that are putting pressure on operators today.
“No matter what crisis happens, the hospitality industry feels it,” Alexander said. “But we’re the most resilient industry, and we’re coming back. We innovate, we evolve and we come back better after each crisis. »