As you may know, nearly 80% of independent restaurants fail or change ownership in the first five years. (Some claim the number to be higher but that myth has been debunked by H.G. Parsa of Ohio State University.) With such a high failure rate, restaurants need to do all they can to get guests in the door.
So, shouldn’t I spend money on acquiring new guests?
Yes. Restaurants definitely need to market to new guests and cater to new market segments when practical. But, a 2014 study shows a typical American is only willing to drive 17 minutes to visit your restaurant and only 14 to visit your pub. In a clogged metro area like San Francisco, that means your typical guests come from 3-5 miles away max. Other areas have a wider distribution, but the concept is the same—you will eventually reach all of your target demographic and will need repeat business to stay afloat.
Well, what’s so great financially about a repeat guest?
This is where the money comes in. A typical party in a casual dining establishment spends at least $16 per guest, which means a two-top table pumps out $31 or more per party.
The National Restaurant Association (2012) claims repeat guests account for 64% of business in casual dining restaurants. A loyal customer spends up to 67% more than a new customer, according to a study from BIA/Kelsey. To simplify the math: at an average check of $16 per guest, a new customer is spending just $11.20 while a loyal guest brings in up to $18.70. What could your restaurant do with an extra $7.50 per guest?
My food speaks for itself. Isn’t that enough?
No. 34% of Americans visit a casual restaurant at least once per week. However, 70% of guests will never return after a first visit. Pleasing customers on a first visit is not necessarily enough to turn them into loyal diners. New restaurants open all the time. Once the new has worn off yours, you have to work to compete with your neighbors to maintain your share of the pie.
OK, so what can I do to keep my guests coming back?
Several things. Some eateries have resorted to simple, low-tech methods like comment forms in bill presenters, loyalty cards with stamps or punches, and even fishbowls for guests to toss in business cards. But, these only have a nominal impact since the guest is usually already in the restaurant when thinking about them. In essence, these are great to make repeat guests more loyal but may be less likely to turn a first time visitor into a weekly diner.
Several technology tools exist to manage guest information and communicate with guests outside the restaurant as well. Tools like CAKE’s Guest Manager, MailChimp’s email marketing platform, and Belly’s loyalty and reward system help a savvy restaurateur to recognize loyal guests and collect valuable information. But don’t think spamming guests’ email and SMS inboxes with a generic coupon is the best way to show them you want their business. What you do with the data you collect is critical.
Sending a vegetarian guest emails about your famous Bacon Bleu Cheeseburger is not likely to impress. However, tailoring content and communication based on guest profile and history information will. Recording guests’ preferences and purchase history not only allows you to provide a unique, custom experience on the next visit but also empowers you to market to them with a message that resonates.
Send wine enthusiasts invitations to a wine dinner or a complimentary tasting of your latest limited vintage Malbec. If you’re going to send it, make it personal. 56% of people in one study consider a brand more favorably if rewards and relationship marketing is individually tailored to them with 63% appreciate an award based on individual purchase history instead of a general offer.
How do I know it’s working?
Lastly, and most importantly, measure the impact of your efforts. Track your ROI in terms of costs and time as compared to incremental lift (ideally in repeat business if you’re tracking it specifically). If $100 spent per month in retention marketing can bring your restaurant even a single return party of two guests per day, the same $18.70 per guest number above generate upward of $1122 in incremental revenue. Don’t spend money on something that is not improving your bottom line.
Do you have other tips to keep guests returning? Be sure and comment below. Otherwise, like and share if you agree.
About the Author: Wesley B Wilson has spent well over a decade implementing systems and technology strategy in retail and hospitality environments. While consistently looking for new, innovative ways to delight guests through technology, he’s not afraid to embrace the tried-and-true. Wesley is the VP of Global Operations & Service at CAKE, a Sysco Company (NYSE: SYY).