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Can big data be the secret sauce for the food industry?

Big data can help identify customer preferences, but big data cannot resolve age-old factors like rent, inventory and customer interaction for restaurant operations

Merely 1 year since its opening, Seafood Room, 10,000 square metre restaurant & bar in Causeway Bay, closed down in mid-July[i]. HK is home to food delivery apps, grocery delivery to dining experience providers. Can their big data change the food industry, for instance, rescue Seafood room? Our correspondent attended the event A DATA DIET on 11th July: The Future of Cooking and Eating in a Connected World” to find out more.

Big data is the centre of Deliveroo’s business decisions — from selecting restaurants to predicting customer’s preference. Their data showed which dishes are most browsed, which ones offer the most potential, and actions the platform can take to capture this business. Josh Nedeljkovic, Head of Strategic Projects, Deliveroo Hong Kong cited the example of Deliveroo Edition launched in the UK, which selects restaurants from downtown, provide a temporary kitchen for them in new locations to help them deliver to under-penetrated areas within the 30-minute delivery window.

Big data may also satisfy the needs of millennials for food, from sustainable sourcing to better servicing their orders. For example, HarvestMark, adopts a traceable solution that links the first and last mile of the supply chain, allowing customers to check the origins of foods from field to their plates. KFC in China has also adopted facial recognition technology to offer meals suggestions to customers based on their age group and gender etc. Whilst experts welcomed food companies’ willingness to experiment with technology, Karthik Chandrasekar, Strategic Advisor from BiteUnite reminded that “customer feedback needs to be considered in any part of a business decision.”

If big data is so helpful, why are restaurants still closing down all the time? Bastien Douglas from Open Data Hong Kong argued that this is because big data does not always translate into information or actions. Conversion of data to insights is a 3-step process, from an accurate collection of data (e.g. number of burgers sold per month), followed by information (comparison against number sold last year, and against other food items) to inspire actions (e.g. decide to keep burger on the recipe or not). For this reason, data alone only indicates market interest, but requires actions and industry experience from restaurants to build the next food trend.

Besides, big data still does not address the age-old challenges of food industry — rent, inventory management and customer interaction. “7–11 keeps its stock very low to save rent, however, not many restaurants can do that,” said Bastien. To cover for rent, their largest cost item, most restaurants enter into real estate industry, like selling off their shops to large chains. Another reason for Amazon’s USD 14 billion[ii] acquisition of Whole Foods in June 2017 is to manage customer impressions, “Customers visit Whole Foods up to 5 visits per month, allowing a lot of opportunities for Amazon to create impression on them,” observed Bastien.

Big Data helps to improve visibility on customer preferences and purchase habits, but converting data to action is not always straightforward. Besides, big data cannot address operational pressure. In short, Big data is an enabler but not a substitute. So.. could Seafood Room be saved by Big Data? Hm…probably not.