QSRs Are Thriving With Location-Based Data, But There’s a Caveat
The quick-serve restaurant industry was quick to jump on location-based marketing, and wisely so. There are few industries that are so inherently local and resilient to the forces of e-commerce. Consumers have increasingly responded positively: back in 2010, when location-based mobile ads were just beginning to become “a thing,” a report by MMA Global showed that second only to ads for fuel, mobile users most preferred advertising was restaurants, and coffee shops.
QSRs have successfully forged ahead with location-based ad strategies. Not only have we seen an influx of case studies asserting as much, but also a recent report from xAD inferring that foot traffic has spiked for QSRs thanks to location-based marketing, and, perhaps more importantly, the data mined from those efforts.
Quick Service Restaurants Foot Traffic Trends Q3 2016 asserts that what appears to be working for brands like McDonald’s, which the report found gained a 3% foot traffic share versus other QSR brands, is building consumer profiles and tracking what other establishments eaters on the go visit.
In other words, QSR brands are figuring who to target to and how to do so by mapping out their comprehensive location-based activity.
Now, a QSR brand could simply ask consumers in a survey, “Hey, where else do you shop?” And while a consumer may respond honestly, the location-based shopping patterns their smartphones have logged will likely hold the more accurate answers.
“What people actually do and where they actually go is a stronger indicator of what they may say they do or where they go,” said Sarah Ohle, head of data at xAd. “Not because they’re liars but because they may not remember or think about it. They’re not [logging] exact times and places.”
xAd’s research suggests that knowing what other brands customers visit (and when), can help businesses such as McDonald’s, Panera and Starbucks determine their audience segments.
Ideally, a brand can discover an overlap and from their forge a partnerhship. For instance, people who go to McDonald’s, famed for its dollar menu, are also likely to go to their local dollar stores. Marketers can use this information to team up and cross-promote. Also, the report found that McDonald’s strongest overlap is with the gas station BP, a brand that tends to have locations near McDonald’s locations.
“It’s all about how much behavior can say about a person and how use that information,” said Ohle. “You see people gong to TJ Maxx and Old Navy and you can create a picture of that person.
To be able to paint portraits of consumers in such a way is surely beneficial because it widens your viewpoint, allowing you as a brand to see how you fit into a consumer’s general shopping behavior on a given block. But there’s a slight glitch in the system, and it has nothing to do with technology and everything to do with how QSRs are shaking things up to broaden their appeal.
As xAD’s new research noted, consumers are increasingly seeking “healthier fast food.” QSRs seem to be doing their best to deliver on that desire. Earlier this year McDonald’s began testing low-carb breakfast bowls in 800 locations in Los Angeles and San Diego, two California cities where healthy eating is top of mind for many residents. If McDonald succeeds in drawing in more health-focused eaters, will it draw away from establishments like Panera? Such behavior could throw a wrench in the whole consumer-profile building system because it could render consumers unpredictable, and more likely to venture outside of their geo-boxes, so to speak.
Right now, the report shows that those who shop at Starbucks are 28% more likely than average to visit Nordstrom’s. Now, what if Starbucks started to offer cheaper breakfasts to compete with McDonald’s? Could that then attract McDonald’s consumers, who are 28% more likely than average to visit Family Dollar and throw off the Nordstrom’s figure?
QSRs don’t want to lose their essential target audience, but they do want to expand their value and reach, and that could thwart this model which is based not so only on what a local person is craving, but how much money that person is making.
Nicole Spector is a Street Fight contributor.