Customers expect high-quality experiences in every touchpoint they use with the companies they do business with. The restaurant guest experience is no exception.
As Deloitte points out in its ‘Restaurant of the Future’ report, winning restaurants will be those that invest wisely in digital, operations, marketing and technology and can harness the power of their employees to serve as ‘brand ambassadors’ in the moments that matter.
Customers are increasingly expecting restaurants to deliver on these capabilities. For instance, 31% of consumers surveyed by Deloitte want the ability to pay their restaurant check with their smartphones so they don’t have to wait for a server to deliver their bill and then process it.
Donagh Herlihy is tapped into delivering on these heightened customer expectations. As EVP & CTO at Bloomin’ Brands, which operates casual dining chains such as Outback Steakhouse, Bonefish Grill and Carrabba’s Italian Grill as well as the fine dining concept Fleming’s Prime Steakhouse & Wine Bar, Herlihy and his IT team are focused on and how they can help the company to reimagine and reinvent the guest experience at the company’s restaurants.
HMG Strategy recently spoke with Herlihy to get his thoughts about how he and the IT organization can help Bloomin’ Brands to be more attuned to its customers’ needs and preferences.
HMG Strategy: What are your focus areas right now?
Donagh Herlihy: With over 1,400 locations, the first area we focus on is in elevating the customer experience inside our restaurants. This means leveraging technology to delight our guests. As full-service restaurants we seek to do this unobtrusively. However, whether it is in enabling you to get seated quickly, ensuring that your food is prepared exactly as you requested, or enabling you to pay and go when you want to we are constantly seeking to remove any friction in the guest experience.
The second focus is on our transformation to an omnichannel business model. We are moving to a world where a significant part of our business will be in delivering meals to you, wherever you are. As consumers, we are accustomed to this level of convenience in categories like pizza with brands like Domino’s. This is a growth opportunity for casual dining brands and we want to lead the way.
We started our delivery business with our own driver fleet in 2016 and we have been progressively fine-tuning our capabilities and rolling it out across our stores. We anticipate this “off premise” dining opportunity growing in the relatively near term to about 30% of our business. To enable this, we have built out a platform of proprietary eCommerce and logistics technologies that enable easy online ordering and payment as well as rapid delivery.
The third focus area is in the realm of generating increased traffic through our loyalty program. Also launched in 2016, we now have over 7 million guests in the program and it is contributing a measurable lift in our sales. However, the real value in the program for us is in using the detailed data about our guests and their preferences to personalize our communications to them and their experiences with us. We are now using machine learning to customize our direct marketing and our digital campaigns. As part of this, we are using customer data to better understand our customers and their behaviors and preferences.
What are some other steps you’re taking to improve customer experience?
DH: Most of our brands are casual dining brands where you don’t make a reservation. Guests do not enjoy arriving at a restaurant and having to wait for a table. So, we expose in real-time on our websites and mobile apps the wait times for each of our locations so that a guest can put their name on the list and arrive as the table is ready. The technology creates transparency at scale and eliminates this point of friction.
Guests like the convenience of paying their restaurant bills by phone so they don’t have to wait for their servers to deliver and process their checks. So, our mobile apps provide for payment as well as for tracking and redeeming loyalty program rewards. Providing these capabilities reduces customer anxiety.
We’re also optimizing orders for food delivery so that an order reaches the customer within 10 minutes of leaving the kitchen. The logistics involves hitting a very precise window to have a driver available to take that order and deliver it quickly. We’re using cloud technologies to build, test and learn based on feedback from our customers and our operators. At the moment, we have 300 restaurants delivering orders and doing it well and we will soon offer this convenience in over 600 stores.
Looking ahead, we want to use technology to determine whether a customer entering one of our restaurants is a loyalty member, to give them an appropriate welcome and to identify their preferences proactively. That’s bringing personalization to life in the store.
These and other customer-facing solutions we work on are all derived by listening to our customers and by understanding the customer journey with each of our brands.
Behind the scenes, we have done a lot to enable the business performance with technology. With roughly 90,000 employees it is critical that labor scheduling and utilization in each store and on each shift is optimized. This is also the case with food and ingredients. We are using cloud-based platforms to mine data and predict the best food and labor allocations to each and every shift and this is critical in maintaining our value proposition in a world where food costs and labor rates are inflationary. We want to use data and algorithms to avoid passing on cost increases to our guests.
What are some of the results so far?
DH: In terms of food and labor, we have taken tens of millions of dollars of cost out of the business.
In terms of guest traffic and sales, the loyalty program and the delivery program have been the two biggest growth levers we have enjoyed over the past couple of years. I cannot go into specific figures but both are meaningful in terms of profitable growth.
Inside IT, we have focused on strengthening our culture and our processes and have been moving progressively to a fully Agile development and deployment process. Our IT organization started with this two years ago and our CEO began promoting this challenge to the rest of the company in late 2017. This is enabling us to work with a different mindset, to be more open and collaborative, to take risks and to test and learn faster. We’re making good progress there.
What’s the size of your IT team?
DH: Our IT staff is relatively small, with about 160 people internally and 70-to-80 contractors and partners.
How would you characterize your role in redefining and redesigning the company?
DH: Speed of decision-making and a willingness to take measured risk are characteristics that I feel strongly about promoting. Many decisions involve multiple functions or brands and can get bogged down seeking consensus. In our Agile transformation within IT, we created the mantra: #SafeToTry. In those cases where we don’t all agree on a decision we reframe the question from “can we all agree?” to “is it safe to try?”. Many times, a decision or an idea is safe to try and it is better to try and learn and pivot than to engage in paralysis by analysis.
How would you characterize your leadership and collaboration style with fellow members of the C-suite?
DH: One thing that I’ve always done is seek to have empathy for my peers, their issues, their agenda, their world. I want to walk in their shoes to the greatest extent possible and then I can be a better partner to help them and the enterprise be successful.
An avenue into that is to spend time on the front lines. I spent my first month at Bloomin’ Brands training in the kitchens and in the restaurants to learn the operational day-to-day reality faced by chefs, kitchen staff, servers and managers. That sent a message to my people about where our focus needs to be. It also gave me some street cred with the senior leadership of each of the brands in that I was coming to them from a place of business operations and not from the point of view of the CTO. They appreciated that I cared about how the technology was being used in the operations and that I was willing to dig in with hourly staff to experience their world. This helped me to ask better questions: Why do we do certain things? Why are these processes priorities?
You led the creation of the company’s consumer digital roadmap. Tell us about that and how you partnered with the CMO and other members of the executive team in bringing this to fruition?
DH: When I got here in late 2014, we put together a small cross-functional digital innovation team. We had someone who had a digital consulting background, an ex-CMO for one of our brands and a couple of digital product managers. We worked with our consumer insight folks to stage a series of focus groups in our restaurants with a cross-section of our guests, with all relevant demographic and psychographic profiles to understand and map out their customer journeys.
Those focus groups began to align us on understanding the customer - When does she begin thinking about eating lunch or dinner? What tools and resources does she use to make her decision about what and where to eat? How do we engage with her in that journey? Then, we worked with those insights and validated it through broader online consumer research to help us to prioritize pain points and potential solutions. We isolated about a dozen pain points, such as customers feeling they were being held hostage waiting for the check, and then were able to work through the operational and technology changes that were needed.
We saw new opportunities, too, such as seeing the pent-up demand for delivery in casual dining, enabling us to address an unmet need. We were able to assess the size of the prize in early tests through third party delivery platforms such as Grubhub. Our CEO was out in front of this which enabled us to build out a small team with a lot of autonomy to test this delivery with our own staff at a few restaurants. First as a phone-ordering business only and then we fast-followed with our eCommerce platform. And it grew from there.
- Customer journey mapping, including the use of customer behavioral data and sentiment analysis, can provide deep insights into customer preferences and needs that project teams can act on to provide customers with richer experiences.
- Delivering on customer expectations also requires executives to understand customer-facing processes along with any challenges employees may face in their roles that may create friction for customers.
- It’s extremely valuable for CIOs and members of their IT teams to spend time on the front-lines of the business to better understand and respond to employee and customer needs.