In New York City, businesses and lawmakers are playing tug-of-war over consumer data. On Wednesday (Sept. 15), DoorDash sued New York City over a new local law requiring third-party delivery services to share consumer data with the restaurants on their marketplaces anytime those restaurants request it, and as long as consumers haven’t opted out.
For restaurants struggling to hold their own in the highly competitive online ordering space, consumer data could be the difference between success and failure, allowing restaurants to establish ongoing relationships directly with the consumers who enjoy their food.
How Restaurants See It
The kind of loyalty that restaurants can build with their customers when they have access to contact information can be key to their success. PYMNTS data from the 2021 Restaurant Readiness Index, created in collaboration with Paytronix, found that 92% of top-performing restaurants offer loyalty programs, compared to 65% of middle performers and just 21% of bottom performers
“[Customers are] primarily expecting to have an online ordering experience and to have a digital relationship with the brand,” Adam Brotman, CEO of customer growth platform (CGP) Brightloom, told Karen Webster in a conversation. “Where digital was sort of a bolt-on, now it’s the primary relationship.”
Customer data can also be the difference between a restaurant being able to succeed in new markets and being forced to stay local.
“As our company has grown, we’ve noticed that it’s harder and harder to do a companywide launch of new products,” Ted Vu, co-founder and managing member of Southern California-based beverage chain Tastea, told PYMNTS in an interview. “A lot of times, you want to be able to test the product in certain markets first and be able to market it to the people who actually are interested in that product … Being able to combine different variables together makes it a lot more powerful for us, really being able to target what products we should move forward with.”
Read more: Brightloom CEO Says Smart Segmentation Can Boost Restaurants’ ‘Most Important KPI’
Also see: Beverage Chain Tastea Uses Digital Segmentation to Ease Growing Pains
How DoorDash Sees It
Third-party delivery services, on the flip side, benefit when consumers are more loyal to their marketplaces than to the restaurants that appear therein.
Related news: Restaurant Aggregators Sue NYC Over Fee Caps
“The city has made clear that the ordinance’s purpose is to reduce DoorDash’s profitability — or remove DoorDash from the equation altogether — and to allow restaurants to free-ride on DoorDash’s confidential, commercially valuable data. The ordinance reflects ‘naked animus’ toward third-party platforms,” reads the complaint, which was obtained by the Verge. “The ordinance violates DoorDash’s First Amendment rights by compelling it to speak a particular message it otherwise would not speak — namely, the disclosure of its sensitive business information.”
How Lawmakers See It
The bill, titled “Data on orders placed through third-party food delivery services,” was proposed in May and enacted in late August.
“This has been such a hard year for our restaurants and our local businesses,” Council Member Keith Powers said in a June hearing discussing the bill, “and this is a really good opportunity for us to again look at them and think about ways to keep them surviving here in the city, but also give them a better opportunity to compete and to be able to stay in our communities for a very long time. And so that’s the goal of my bill here today.”
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