
To Survive in Tough Times, Restaurants Turn to Data-Mining - mcone
https://www.nytimes.com/2017/08/25/dining/restaurant-software-analytics-data-mining.html
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walterbell
Cash is king, especially at local restaurants with humans who recognize their
human customers, know their preferences and can adjust on the fly to changing
needs.

If the siren call of data is followed, restaurant offerings will be influenced
by airline yield management techniques. That won't lead to happy customers.

~~~
dogruck
Great point. "Yes, I know you had a reservation, but we sold your table to
someone else. I can't do anything here, but if you call the 800 number a robot
will send you a $20 voucher for your next meal."

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kinkrtyavimoodh
The funny(?) part is that a lot of customers won't mind if they got a meal
voucher for the future. When they don't mind it for air travel they will
surely mind it even less for food where there are a ton of other options
available.

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walterbell
Could restaurants be successful by giving free food (vouchers) to people who
make reservations but have no peference for the restaurant, i.e. are happy to
go elsewhere? Sounds like Groupon, another bright idea pitched to small
restaurants.

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ebiester
I'd say it's closer to priceline.

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dogruck
Most of this article has nothing to do with real "data-mining." They're
discussing POS kit that identifies regular customers and what they typically
order. Top 10 list dashboard tech.

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crispyambulance
The "data-mining" is occurring on the POS-side (not the restaurant-side). I
suspect the idea is that an analytics firm will do the data work and convert
it into reports/products/services/api's that are sold to restaurateurs.

As far as whether or not this constitutes "big-data", it might if they can
hook into enough POS-systems.

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mipmap04
At one point I was working on a POS proof of concept that would offer the
software for free to restaurants to use with the caveat that we could sell
their anonymized patron data as reports to restaurateurs looking to gather
intel on viability of new restaurant locations. I got bored of it and stopped
before I validated the market for it, but I think there is space for this.
This was before vendors like square had their products for small businesses,
however. At the time, my potential competitors were the NCR Aloha's of the
world.

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crispyambulance
Yeah, wherever there's money, there's valuable information.

POS' are a goldmine if you can acquire data from huge numbers of them
(unfortunately that's hard).

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mipmap04
That's definitely true. I would have had to operate at a loss for a while
until I could enough data to sell. I never did the math to see how long that
period is, but I'm pretty sure it's worse than my back of the napkin
calculations.

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FussyZeus
So there has to be a saturation point, right? If every company you interact
with is data mining and every data miner sells information to other data
miners about you and there's now a couple terabytes of behavioral info on you,
when exactly is there so much data as to render it worthless? Supply/Demand
would seem to indicate that as more and more companies turn to data mining,
the mined data becomes less and less valuable. Or is this just a symptom of
everyone in the advertising business getting by, just by pretending that it's
still 1950 and they can target advertising perfectly?

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michrassena
I think you're onto something, and I've been surprised that the data mining
bubble hasn't burst yet. I do however, think that that comparison to 1950s
advertising is a bit off. Mass marketing in that era, and indeed, up until the
late mid-2000s was at best, a scattershot approach with the granularity of a
market segment. This promise of today's approach is to target the individual,
based on their past purchasing behavior, search history, email and
conversation history.

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bluGill
That only works after someone is identified. I started getting a lot of adds
for sheds when I did a search for them: I have no reason to think of any one
advertiser. Even if I buy a shed (which I might not) only one will win, and it
might not even be a company that has advertised. The smart money would have
been to advertise to me long before I was interested in a shed - the company
that advertises for years sticks in my mind as a company that might be worth
paying extra for because of their "reputation" (even though they built this
reputation in advertising)

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FussyZeus
This is the part that gets me (you beat me to the reply, heh): So you buy a
skateboard; then suddenly, your pages are full of skateboard ads. Then you buy
a new set of wheels; ok, now your pages would likely be full of parts for a
skateboard. Then you buy a ramp or something: Now you get all kinds of
skateboard paraphernalia, safety devices, hell maybe some scooters.

Given these generous assumptions: * That all these purchases are trackable, by
the same advertiser, with definite certainty * That you're even buying online
in the first place, so you can advertised to * That you'd respond to
advertising at all, because thus far their recommendations have been purely
reactive, not predictive of what you'd buy * That an eventual purchase could
be directly tied to the advertisers work

After all of that investment of time, money, and energy, if they somehow
managed to secure a sale of say, knee pads, how much do they actually make?
And how much did the knee pad company pay to acquire that lead which led to a
sale?

My basic question is: How is any of this profitable? It seems like an
absolutely massive ecosystem of enormous firms all trading money back and
forth and trading data back and forth, to at best, make marginal bumps in
otherwise happening sales.

This boggles my mind and I would love an enlightened HNer to weigh in if they
happen to read this.

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pdkl95
"Sell more skating stuff to skateboard buyers" isn't the point of targeted
advertising. A common misconception is that the targeting is related to what
the _customer_ wants, when it's really about creating ways _sellers_ can
target specific demographics. The goal isn't about selling some specific
_product_ ; it's about hitting people at the specific times/situations they
are likely to _change their buying preferences_.

I highly recommend reading this[1] article for a very good explanation about
how this works.

[1] [http://www.nytimes.com/2012/02/19/magazine/shopping-
habits.h...](http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html)

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coldcode
I knew a location where in the 15 years I lived in the area 10 restaurants
remodeled the building and then failed. Apparently no one data mined the
history of the building. There are lots of reasons why a restaurant go out of
business; often decisions made before the first customer even shows up will
kill it.

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conductr
I recollect reading somewhere that opening a restaurant in a location where
another restaurant has failed puts your failure chance at 90+%.

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dsfyu404ed
That doesn't mean you can't suitably insulate yourself from the failure and
make a lot of money running the place into the ground in the meantime.

It's like a college bar that serves to underage people. It closes amid
controversy, changes ownership and reopens with a different visual theme and
the same business practices every few years.

You can do this with all sorts of businesses. It's more common in places where
people have a lot of disposable income and you can run a bad business for a
few years before people smarten up, word gets around and the place folds.
Tourist areas, college towns, whichever town is seeing an influx of tech
industry money or an oil boom, etc are the places where you can run a bad
business the longest before folding.

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Overtonwindow
As a diner, I don't want to be tracked, catalogued, or profiled. Leave me to
eat in peace with good customer service, and a healthy attention to detail.
This system could just as easily be used to decide who gets good service, and
the best food, and those the restaurant doesn't see as profitable.

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drdeadringer
While we may desire to escape The Village, where are you drawing a line on
"healthy attention to detail"?

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anigbrowl
_The early diners are dawdling, so your 7:30 p.m. reservation looks more like
8. While you wait, the last order of the duck you wanted passes by. Tonight,
you’ll be eating something else — without a second bottle of wine, because you
can’t find your server in the busy dining room._

I love to eat out and this isn't a common enough problem for me to think
automation is the answer. Times are tough for restaurants because competition
is intense, rents are high in desirable locations, margins are thin, and the
industry is labor-intensive.

Franchise restaurants like Applebees have already industrialized the
production and delivery of hot food, and nobody with a choice likes restaurant
franchises - hence all the articles for investors about millennials killing
things off.

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notyourday
Just another tool in a kit of a mediocre restaurant on its way out of
business. What works for a place that flips $10 tables is not what works
for/at Jean George.

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kinkrtyavimoodh
That's like saying what works for a motel does not work for the Presidential
suite at The Ritz-Carlton. True but not insightful and not relevant. There are
far more motels serving far more people than presidential suites, so if
anything, things they do affect a much wider swath of the population.

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notyourday
The article lumps together $190/head tasting menu places with chipotle-like
restaurants in photos.

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CyberDildonics
No they don't, but this advertisement needed a headline.

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qualitytime
...and start selling everything at mediocre quality.

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Animats
The big fast food chains have been doing that for 10-20 years. This is just
moving the technology down to the small shops.

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PeachPlum
If you only do Continuous Improvement when times are bad, you will die.

"Tough Times" is what Lean Manufacturing calls just Draining the Lake - when
the lake is drained you can see the rocks on which your business will scrape.
The skill is to examine the lake before it gets drained.

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hathym
do you really need data-mining to tell you that your food sucks?

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yardie
But how do you know the food sucks? It wasn't until I travelled and tasted
food in other places that I figured out when food sucks. Up to then I assumed
it was mediocre. Now, I'm more likely to leave feedback with the waiter. I've
had bad service and I've had good service and I know which is which.

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idoh
There are any number of objective and subjective ways to know, the restaurant
just needs to care about it. Off the top of my head:

\- actually eating the food from time to time

\- checking orders before they go out

\- checking orders after they are done, to see if food remains

\- checking yelp and other reviews

\- being a chef and doing chef-like things

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tabeth
I thought to survive in tough times a restaurant just needed to provide great
food at a reasonable price. In fact, I've never heard of a restaurant have
great (not good) food at a reasonable price die.

It's tough if your food is just average or merely good, as there are plenty of
places with good food at more or less the same price. I suppose the tough
thing is understanding the threshold to "great" food and what constitutes a
"reasonable" price.

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dogruck
It's always tough times in the restaurant business. The margins are razor
thin. Many operate more out of passion than profit.

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macintux
Local restaurants that have been open for decades have been struggling over
the past few years in my area (east side of Indianapolis). From talking to one
owner, meat prices in particular took a dramatic jump ~5 years ago, but I
don't know how accurate/relevant that is.

One was bought, moved, and closed a few months later. Another eliminated
dinner. A third, open 24x7 for 40+ years, reduced their hours and then closed
entirely, although that appears to be as much poor management as anything.

Quite depressing. I like supporting local restaurants, but painful to get
attached to something that's likely going to die.

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dawnerd
One thing I've noticed is the old places that start going out of style all
start to become run down and less focus is on cleaning the place. If a place
looks dirty people won't trust the food - especially if you're charging enough
to actually make a profit.

