December 14, 2021
Summary
Key restaurant companies have a Data Monetization Index (DMI) of less than 0.5 percent, primarily driven by the value of their loyalty data. The potential value of customer data is between 1.5 to 3.5 percent of enterprise value. Restaurant companies are able to capture only a portion of their potential customer data value within their loyalty programs.Chick-fil-A has a high DMI of 2.52% due to a higher penetration of the company’s loyalty program within its customer base.A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.
Summary
Key restaurant companies have a Data Monetization Index (DMI) of less than 0.5 percent, primarily driven by the value of their loyalty data. The potential value of customer data is between 1.5 to 3.5 percent of enterprise value. Restaurant companies are able to capture only a portion of their potential customer data value within their loyalty programs.Chick-fil-A has a high DMI of 2.52% due to a higher penetration of the company’s loyalty program within its customer base.A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.
Definitions
- Data Monetization Index (DMI) = Loyalty Data Valuation / Enterprise Value
- Data Valuation = Loyalty Data Valuation + Real Estate Data Valuation + Employee Data Valuation + Other Asset Valuation (this exercise uses Loyalty Data Valuation exclusively)
- Enterprise Value = Equity Value + Long Term Debt - Cash, a key metric used in the investment community
- Loyalty Data Valuation is the estimated data value of the company’s loyalty program
- Potential Data Valuation is the potential value of the company’s customer data
- Loyalty Data Valuation to Potential Data Valuation = Loyalty Data Valuation / Customer Data Valuation, the percentage of customer data captured by the loyalty program
Methodology
The YDC team recently published a DMI for top restaurant companies. Here is an example for McDonald’s Corporation along with a benchmark for other restaurant chains. Enterprise Value for Chick-fil-A was estimated based on publicly available information and comparable valuations.
The Loyalty Data Valuation methodology uses customer counts, loyalty membership, revenues, gross margin, churn rate, customer tenure and discount rates from October 2021. Data sources include financial statements and company research. The total value of data will likely be higher once additional datasets relating to real estate, financials, real estate and employees are included in the coverage. Going forward, we will be working to make the data valuation more real-time.
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