Restaurant Customer Retention: How to Get More Repeat Business
Did you know that acquiring new customers costs five times more than keeping existing ones?
For that reason, it’s wise to focus on restaurant customer retention. What can you do each and every shift to maximise customer satisfaction?
Happy customers are a restaurant’s most potent form of marketing because they do a lot of the work for you: suggesting your establishment to friends and family, writing stellar online reviews and sharing content on social media platforms.
If you’re searching for ways to create happy, loyal customers and drive repeat business, you might want to bookmark this page.
In this article, we’ll cover:
- What customer retention is
- Why customer retention is important
- How to increase customer retention
- What customer retention rate is
- How to calculate customer retention rate
- What a good customer retention rate is
Let’s get started!
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What is customer retention?
Customer retention refers to strategies restaurants use to grow repeat business. Put simply, it’s how they keep customers coming back. Good food and great service are one thing, but with 26,000 UK restaurants to choose from, customers need more reason than that to keep dining with you.
Why is customer retention important?
Every restaurant should concentrate some of their efforts on acquiring new customers, however, retaining existing customers is less expensive and even more profitable. In fact, existing customers spend 67% more than new ones.
Restaurant customer retention involves delivering a consistent, positive experience to customers again and again. Doing so can be more beneficial to your business than spending time and money on marketing to acquire new customers.
Why? Because happy customers can act as ambassadors for your restaurant, singing your praises to friends and family. This is the result of good customer retention. It’s commonly known as word-of-mouth marketing.
How to increase customer retention
Now that you know what customer retention is and why it’s important, it’s time to learn what you, your servers and kitchen staff can do each service to keep customers satisfied and wanting to visit your establishment time and time again.
- Keep customers engaged
- Improve the dining experience
- Gather customer feedback
- Introduce seasonal menu items
1. Keep customers engaged
Whether it’s through social media platforms or in-person events, creating a community among customers can boost engagement.
As social creatures, we’re drawn to a sense of belonging and shared interest. Build a sense of community to inspire loyalty and demonstrate the value you place on your customers.
Telling an engaging brand story can further reinforce a sense of community. It also helps spread brand awareness.
Why? Because good stories stick out in our minds. They facilitate emotional connections between the audience (your customers), characters (your staff, food, events, origins and aspirations) and storytellers (you and your brand).
Encourage user-generated content (UGC)
User-generated content does more than create a buzz around your restaurant. Because it’s created by the customers themselves, it comes from a more authentic place than traditional marketing. It’s content that your consumers can engage with and relate to in a way they’re familiar with.
UGC grows trust in your brand by providing social proof of its selling points. A 2020 report by Mention Me found that 51% of UK consumers trust brand recommendations from friends and partners more than anyone else. Trust is a strong determining factor in restaurant customer retention.
There are various ways you can encourage UGC among your customers. Vibrant, beautifully plated dishes or aesthetically-pleasing interiors can compel customers to share their experience on social media. You could also run Instagram competitions or advertise your Yelp page in your restaurant
No doubt you’ve used one or two loyalty programs yourself, so you’re probably familiar with how they work. Most commonly, customers acquire points based on the purchases they make. They can then use those points to gain rewards over time. The more they spend, the better the reward.
The psychology is simple: rewards motivate us. They make us feel good, so we’re more likely to do them again. Ramping up the feel-good factor for your guests is fundamental to growing engagement and customer retention.
Be careful to structure your loyalty program in a way that keeps customers engaged. Rewards should be frequent and easily attainable. If a customer’s rewards fail to reflect the money they’ve spent with you, they could end up feeling cheated.
2. Improve the dining experience
The likelihood of repeat business from a customer depends on the kind of experience they have with you. Thinking of ways to give your guests the smoothest and most painless restaurant experience possible could really set you apart from your competition.
Self Order Menu
Installing a Self-Order Menu into your restaurant adds a novel touch to your guest’s experience. It also saves time, reduces the risk of human error and frees your waiting staff up to focus on those elements that require a human touch.
The efficiency of a Self Order Menu will appeal to a younger clientele who may have less time and have come to expect a higher level of convenience. If you can offer them that, you could convert them into returning customers.
Attention to detail shows your customers that you value their presence and want their experience to be a memorable one. Good design turns functionality into a pleasurable experience. Therefore, it’s important to apply good design to one of the first things your guest sees: the menu.
A menu should be pleasing to the eye. It should serve to whet the appetite and align with the experience you wish to create through your food, interior and service. A pleasurable experience creates a positive emotional connection to your restaurant and vastly increases the chance of repeat business—not to mention increases your profits.
Want to learn how to craft a beautiful menu that increases your restaurant’s profitability and sales per service? Read our Ultimate Guide to Menu Design.
3. Get customer feedback
Negative reviews are a blessing in disguise for restaurateurs. They offer valuable feedback which, if used correctly, can help improve food quality, service and more.
Read bad reviews
Bad reviews can be a big problem for restaurant customer retention. If, however, you can respond to them in the right way, they could become an opportunity to get some unexpected repeat business. A 2018 study by ReviewTracker found that customers are nearly 45% more likely to visit a business that responds to negative reviews.
Taking the time to respond to your customer’s grievances shows that you value them. If you don’t listen to your customers, you cannot expect to retain them. It may be painful, but reading reviews from unhappy customers can help you create happier ones in the future.
With every bad review, there’s a lesson to be learned. Pinpoint what went wrong in your customer’s experience, and work out how you can work to avoid it in the future.
For a complete tutorial on how to properly respond to negative customer reviews, read out guide The Right Way to Respond to Bad Customer Reviews.
Leverage emails and SMS messages
Requesting a customer’s feedback shows that you value their opinion. This can help boost customer retention by reinforcing a sense of community and collaboration. Consider sending customers an email or SMS message asking how they found their dining experience within 24 hours of them visiting your establishment. And as with all communications, be sure to have the customer’s consent and not to send too many communications (it may feel spammy.)
When your customers feel valued, they’re more likely to develop a sense of loyalty toward your restaurant. It also demonstrates your commitment to creating the best possible service for your customers. Plus, it can be great for your restaurant’s public image. Requested reviews are shown to receive an average rating of 4.34/5, whereas unprompted reviews yield an average of just 3.89.
The lesson here? proactively asking for a customer’s feedback tends to yield better overall results than passively waiting for them to trickle in through channels such as Yelp.
4. Introduce seasonal menu items
There are obvious benefits to a seasonal menu. You can ensure your guests that the ingredients are at their freshest and creates constant opportunities to try new dishes.
Our brains are wired to seek out novelty. That’s why new things are attractive, but get less so over time. It might be the case that a few of your customers are content with eating their favourite dish the exact same way each time they visit your restaurant. If so, that’s fine.
For the most part, however, if your menu doesn’t change, your guests will seek out new experiences elsewhere. According to GrubHub, seasonal restaurant menus can boost sales by up to 26%.
New menus also work as an effective marketing tool. Updating your customers on any menu changes via email keeps them engaged with your business. What’s more, new offerings are a great way to attract new customers too.
We get it. Changing your menu can seem like a big risk. You could lose the customers that liked things the way they were. But a complete overhaul needn’t be the case. Use your ePOS system’s sales data to gauge which dishes sell the best. That way, you can make informed decisions to keep them in, improve them, or scrap them.
You could combine that data with customer profiles to cater seasonal menus more closely to your guests. Notice you’ve got a lot of regular vegetarian dietary requirements? Include more vegetable-based dishes on your menu this season.
Create a seasonal menu in minutes
You don’t need to be a designer (or hire one) to make a beautiful menu. Download your free, easily-customizable menu templates today.
What is customer retention rate?
Your restaurant’s customer retention rate is the percentage of customers you’ve managed to keep during a particular time period. This simple calculation can help you see whether your marketing efforts are paying off, or whether they’re in vain.
Keeping a close eye on restaurant customer retention rate is a crucial aspect of business management, especially for restaurants. Keeping track of it over time can indicate clearly what your business is doing right, and where you can improve.
How to calculate customer retention rate
Calculating customer retention is easy if you’re using a loyalty program. Subtract the number of new customers (NC) gained during a given time period from the total amount of customers at the end of that time frame (EC).
Once you have that number, divide it by the sum total of customers at the beginning of the period (SC).
Next, multiply that number by 100. The equation looks like this:
What is a good customer retention rate?
According to research from management consulting firm Bain & Company, growing your customer retention rate by just 5% can hike profits by more than 25%. That’s a huge margin; one that should communicate the inherent value in restaurant customer retention.
The value of customer loyalty and retention
Driving repeat business to your restaurant isn’t always easy, but there are a range of strategies you can use to get positive results.
Keeping up good relationships with your customers is paramount for increasing customer satisfaction and restaurant customer retention. Show them that you appreciate their business and don’t take it for granted. Ask for feedback (and actually use that feedback to improve).
The saying, “the customer is always right” may seem a little dated. But there’s still truth in it—after all, it’s your customers that decide whether your business lives or dies.
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