The restaurant business may seem glamorous, but it is a hard one for even the most seasoned entrepreneurs to crack.
Recently, blockchain-based incentive models are providing an opportunity to turn new profits.
If You Can't Take the Heat
Researchers at Ohio State University attribute the high rate of restaurant failure to a variety of factors, including poor location, mismanagement and lack of proper marketing. A more recent study by TSYS , which surveyed 1,010 consumers aged 18 to 65 across the U.S., identified restaurant payment technologies as another significant determinant of survival. According to the study, 72 percent of millennials prefer dining in hotels with modern payment methods.
Unsurprisingly, this generation is also the most receptive to tech-driven loyalty reward programs, with 80 percent already participating in such programs. Given that millennials make up a significant part of the market today, having an attractive loyalty reward program should be a goal for any business looking to expand its user base.
And many food service companies have jumped on the trend, with loyalty programs a recent staple of their offerings. But as these loyalty programs have started to emerge in a centralized way, problems have emerged with them.
A recent survey by the mobile marketing solutions provider CodeBroker found that at least 54 percent of U.S. consumers are frustrated when loyalty programs can't be accessed on smartphones, with many consumers not redeeming their points because they are not able to keep track of the sheer number of programs they've enrolled in.
According to a study by Colloquy Loyalty Census , the average U.S. household joins more than 18 customer loyalty programs but is active only in 8.4. A good number of these programs are for the food service industry, given how Americans love to eat out . It, therefore, goes without saying that businesses looking to make a significant impact through reward programs must find new ways to address the challenges and keep their customers interacting with their brands.
The Rewards of Distribution
Blockchain technology is offering an ideal solution by decentralizing loyalty reward programs ownership and enabling consumers to access their rewards on single platforms, with the option of redeeming points in many locations or establishments. In the food industry, big brands such as Burger King are already exploring blockchain use cases in their customer loyalty reward programs.
According to CNBC , in 2017, the multinational fast food chain introduced a cryptocurrency known as WhopperCoin in Russia for loyal customers to use as a reward. Just like other cryptos or fiat money, WhopperCoin can gain in value and trade on exchanges. Customers can use the coin to make purchases at Burger King restaurants or in other places where the currency is (probably only theoretically, at this point) accepted.
While large corporations such as Burger King have the resources to build blockchain solutions from scratch, small- and medium-sized businesses (SMBs) do not. Currently, there are projects being worked on to offer solutions to SMBs, giving them a chance to participate in the industry without going broke.
Perhaps the most promising solution currently being offered in the food industry is a blockchain platform known as Resto. At the heart of this project is a toolkit enabling food service operators to implement blockchain-powered loyalty programs without having to build them from scratch.
Food businesses can create a profile on the Resto Platform and get matched with potential clients. Resto transparently gathers and aggregates customers' information to understand their tastes and preferences, and makes recommendations to food service suppliers based on the data.
Every time a customer visits a food service establishment registered on Resto, they earn a token known as RestoToken, which can be used to claim cashback or bonuses in any establishment on the platform, or even trade them for other cryptocurrencies or fiat money.
Customers using the Foodchains app will earn FAN tokens each time they make a purchase at participating restaurants, write reviews about their dining experience or engage in other community-related actions. All purchases through the app are verified by scanning a QR code. The FAN token can be used to make purchases across all registered restaurants or exchanged for crypto or fiat currencies.
With the rate at which blockchain technology is gaining adoption in the loyalty reward industry, we will see new solutions allowing both customers and businesses alike to enjoy a better experience with loyalty programs. Businesses without the muscle to implement their own blockchain-powered reward programs will now have the opportunity to compete with the big dogs by embracing solutions such as Resto and qiibee to retain their customers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.