Restaurants' use of location-based marketing to promote to and drive consumers to a particular restaurant while they are mobile will "explode" in 2011, predicts research provider Packaged Facts.
As consumers' uptake of location-based services continues to mushroom, with check-in services such as Foursquare, Gowalla, Facebook Places, Twitter geolocation and competitors "not only becoming ubiquitous, but also more sophisticated," context-aware restaurant advertising will take off "sharply" this year, the report notes.
Indeed, to date, Starbucks routinely shows by far the largest volumes of Foursquare check-ins among major retailers, with McDonald's generally in second place and Chipotle and Burger King within the top 10, show the weekly Foursquare check-in stats published by Advertising Age.
Not only are smartphone as well as overall cell phone penetration levels skyrocketing, one in five (21%) consumers who consider going out to restaurants "part of their lifestyles" already uses cell phones or other portable devices to place orders, and nearly four in 10 adult consumers use social media platforms to learn about restaurants, according to a PF consumer survey conducted last October. (This is complemented by data from Nielsen showing that 25% of smartphone users and 14% of feature phone owners report using a dining/restaurant app during the past 30 days.)
And in case there was any doubt as to why restaurant brands are so eager to harness social media, PF points out that the scale of Facebook interaction -- including via its own Places location-based app -- not only enables restaurant brands to imprint themselves on consumers and make relevant, well-timed offers, it is a critical means of building a pool of consumers for purposes of ramping up location-based advertising and promotions.
Notable restaurant chains with more than 1,500 friends per unit include:
- Starbucks - 1,700 Facebook friends, and Facebook users are over 70% more likely than average to visit Starbucks.
- Buffalo Wild Wings
- The Cheesecake Factory
- Chick-fil-A.
- Chipotle Mexican Grill has nearly 1,200 Facebook friends per unit.
Engaged Facebook users are nearly 70% more likely than average to patronize this chain, and "hyper-engaged" users are more than 85% more likely.
Meanwhile, Twitter and its geolocation service are offering restaurants a significant opportunity to reach a younger, more urban, multicultural audience, because of its particular popularity among Hispanic, African-American and Asian populations, PF's analysts point out. Twitter has also proven a critical tool for attracting patrons for urban food trucks and mobile foodservice units -- which are increasingly common among big brands, as well as independents.
Mobile devices and technology are also driving rapid restaurant adoption of in-restaurant, point-of-sale promotions and auto payment systems. PF predicts that a growing number of large QSRs will be testing phone-based payment systems by year's end, and will also increasingly tie mobile payments to loyalty programs (which in turn enhance ability to make future, transaction-informed mobile offers).
"The restaurant industry is in the midst of being shaped by the convergence of the mobile, always connected, consumer; location-based and context-aware technological innovation; and mobile payments -- all of which are already demonstrating the potential to redefine how to cultivate restaurant guest loyalty, incentivize dining occasions and better tailor marketing messages," sums up Packaged Facts publisher Don Montuori.
According to several notable consumer survey's, restaurant offers ranked highest amount offers that mobile phone users would like to receive on their devices.
COMMENTARY: I definitely agree that the foodservice industry is undergoing tremendous changes in the adoption of technology designed to drive traffic to their stores. The mobile phone and apps using geopositioning capabilities, are driving these changes. What seems to be lost in this article is that location-based social networks like Foursquare, Facebook Places and Gowalla maybe gaining members, but this does not translate into real usage or revenues for those sites. In fact, the opposite is true.
In prvious blog posts, I have pointed out the failure of location-based check-in services to gain in adoption and usage. I highly recommend you read the following blog posts:
- October 29, 2010, "How Location-Based Check-In Services Should Treat Users, but First More People Need to Use The Service".
- November 4, 2010, "11 Reasons Why Only 4% Of Consumers Are Using Location-Based Check-In Services".
- December 14, 2010, "Location-Based Social Networks Face A Huge Gender Gap, Women Are Still Too Scared To Use Them".
- January 20, 2011, "Restaurants Reach Out To Consumers Using Location-Based Check-In Services, But Adoption, Privacy And Usage Are Big Issues".
I have also been very critical of how some notable venture capital firms have invested quite heavily in location-based social networks, in spite of the fact that they have very few revenues to show for their efforts. The valuations for location-based social networks are based on future potential, and no attempt is made to discount their earnings (if any) for the risk and uncertainty. Instead, my location-based social networks are all riding on the coat tails of social leaders like Facebook and Twitter, who have raised huge sums in the secondary markets for private company stock.
Courtesy of an article dated February 14, 2011 appearing in MediaPost Publications Marketing Daily
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