The digital wave is profoundly reshaping the restaurant industry. Whether large chains or independent restaurants, data mining is seen as key to winning in the new competitive landscape. However, a common dilemma is that very few companies truly know how to harness data.

"Every number is a clue to improve your business," Hope Neiman, Chief Marketing Officer of digital ordering software company Tillster, told Restaurant Dive. "Sometimes you need to rely on intuition to observe how data evolves, because you know your brand better than anyone else."

This intuitive judgment is leading many restaurant giants—and thereby the entire industry—toward the same goal: personalization.

McDonald's acquisition of Dynamic Yield, a personalization and decision logic technology company, for $300 million, is perhaps the most striking evidence of this trend. The fast-food giant will use the new technology to launch digital drive-thru menus that adjust in real time based on time of day, popular items, restaurant traffic, and weather conditions.

Just this month, Sonic announced it would become the first restaurant to test AI voice-assist technology developed jointly by Mastercard and self-service kiosk provider Zivelo in its drive-thru lanes, aiming to create a customized menu experience for customers.

However, the potential of data goes far beyond drive-thru personalization. These insights can also help optimize restaurant policies, menu design, advertising campaigns, and even employee training. But the gap between data collection and value realization should not be underestimated.

This is why an increasing number of third-party delivery, reservation, and POS system platforms are beginning to offer data refinement services to restaurant clients. Small restaurants accelerate technological upgrades through partnerships, deepening their understanding of diners. But many such partnerships mean restaurants must relinquish data ownership—a risk considered too costly within the industry.

"I think third parties will ultimately destroy brands... There are quite a few 'data hoarders' out there," Steve Holmes, co-founder of scheduling and hiring platform ShiftPixy, told Restaurant Dive. "Whoever owns the data owns the customer relationship."

The risk balance between data control and optimization

Industry concerns about data ownership largely center on the rise of third-party delivery platforms. Holmes likens such platforms to "Trojan horses" for companies seeking expansion.

Neiman advises that instead of partnering with platforms like Uber Eats, Postmates, or DoorDash, restaurants should offer delivery through their own websites to collect customer data, track diner trends, and implement targeted marketing for different consumer segments.

The relationship between reservation websites and customer data is also under scrutiny. Steve Hafner, CEO of OpenTable, told The Wall Street Journal that its partner restaurants do not own the corresponding data. The platform updated its customer agreement to protect diner privacy—although restaurants and reservation system provider SevenRooms complained that this move was intended to block knowledge sharing.

"We have a moral and legal obligation to protect everyone's privacy rights. We cannot sit idly by when third parties systematically extract data from our systems without adequate user consent," Hafner wrote in an email to OpenTable users.

Others believe that these integrated services and their accompanying terms help restaurants avoid burdening employees with work beyond their job responsibilities.

"We know that restaurant general managers are not analysts," Dan Dillon, Vice President of U.S. Operations at Yumpingo, told Restaurant Dive. "Expecting a GM to go into a dashboard and toggle and cross-reference by menu category, item, time of day, server, etc.... That's not their expertise, and it shouldn't be their job."

To keep these employees on the restaurant floor rather than stuck at a desk, Yumpingo built an insights tool that pushes key information managers need to focus on for the week ahead, based on the previous week's performance and current opportunities, Dillon explained.

"When humans are involved in bookkeeping, they often can only keep their heads above water. Ninety percent of effort goes into entering data, and only ten percent into analyzing what it means," Enrico Palmerino, CEO of automated bookkeeping platform botkeeper, said during a panel discussion at the NRA Show. "(Automation) helps them get rid of trivial tasks."

Review sites are also enhancing their data service capabilities. For example, Darnell Holloway, Director of Business Development at Yelp, said at the NRA Show that with its accumulated 1.8 billion online searches, the platform is no longer just a review site but a data goldmine.

Emily Washkovick, Business Development Manager at Yelp, told Restaurant Dive that the company's data processing capabilities can provide restaurants with predictive analytics, helping them anticipate major food trends such as poke bowls and plant-based burgers before specific markets become saturated. Washkovick said restaurants that updated their menus accordingly have found success on Yelp.

Some platforms are actively improving data-sharing relationships between restaurants and third-party partners. John C. Wolfe, founder and CEO of House Advantage, parent company of digital menu solutions provider eTouchmenu, told Restaurant Dive that when clients terminate partnerships, eTouchmenu deletes restaurant data from its systems and returns it to the restaurant. But this is not common practice in the industry.

"The conversation really needs to shift to what data can bring to the business, and how dangerous it can be when data falls into the hands of others whose goals don't align with yours," Wolfe said. "Protecting data means protecting the company's growth potential."

How much diner data is too much?

Many current concerns about data ownership center on the possibility that third parties may use this information in the future to compete directly with restaurants.

Holmes speculates that these platforms could use information obtained from restaurant customers' diners to develop their own competitive menu products. He said he wouldn't be surprised if one day marketing for "Grub Burger" or "Uber Burrito" appeared on these platforms.

"When they can build products targeting (customer preferences), that's scary, like what Amazon has done in retail," he said. "If you're in that industry, it's terrifying."

Aman Narang, co-founder and president of Toast, told Restaurant Dive that within the next five years, restaurants will collect more data about customers through an increasing number of ordering touchpoints. The question, he said, is how companies can turn this vast data into productive and actionable insights while balancing the interests of both diners and restaurants.

"You don't want every restaurant you've visited to text you—that would be too annoying," he said. "(Restaurants) must find ways to make data valuable... ultimately serving the customer."

Joseph Essas, Chief Technology Officer of OpenTable, told Restaurant Dive that as the company delves deeper into data analytics, it faces a similar dilemma.

"Finding the balance between 'uncomfortable' and 'feeling at home'—that's what we're striving for," he said.

Essas noted that deeper data mining requires strong privacy protection commitments, as diners are highly sensitive to data breach threats. Over the past two years, Panera, Applebee's, Cheddar's Scratch Kitchen, Chipotle, Wendy's, and Arby's have all suffered major hacking attacks. According to a report by cybersecurity company Shape Security, 80% to 90% of consumers logging into retailer e-commerce sites are hackers using stolen account credentials.

In the coming years, restaurants may increasingly adopt artificial intelligence to enhance data collection capabilities, as McDonald's and Sonic have done. Palmerino said AI can help restaurants integrate data from multiple systems for better reporting, analytics, budgeting, and forecasting.

Although such technology is currently concentrated among industry leaders, Narang believes AI can also help small restaurants level the playing field.

Even without cutting-edge data mining technology, restaurants can still leverage these insights to develop strategies that enhance customer loyalty, monitor store performance, implement segmented and highly targeted marketing programs, and make informed decisions for market expansion, Neiman said. In the fiercely competitive restaurant landscape, these measures will become increasingly critical for survival.

"Companies that know how to use (data) can drive growth," Wolfe said. "They can achieve more reliable business execution. What you can accomplish with good data use is amazing—it strengthens your relationship with customers."

Julie Littman and Thai Phi Le contributed to this article.