Why Your Restaurant Customer Retention Rate Matters More Than You Think

As a restaurant owner, you’ll know how rewarding it feels to have customers keep coming back. After all, it means you’re doing something right!

But customer retention has more benefits than just seeing a few friendly faces. On average, it costs five times as much to attract a new customer than it does to retain existing ones.

Having a loyal base of customers acts as a virtuous circle, with them more likely to recommend you to friends and family, while tending to spend more at your restaurant too.

However, it’s not always easy for owners to increase their restaurant customer retention rate. Measuring customer churn is key to understanding how many customers are not returning to your restaurant and identifying ways to address this.

This article will explain the importance of this key performance indicator and share how you can encourage your customers to stay loyal to you.

Why Customer Retention Rate Matters in the Restaurant Industry

So, why do customer retention rates matter in the restaurant industry? There are numerous reasons, including:

Reduced marketing and advertising costs

From finding the right energy supplier to using the most affordable online ordering solution, restaurants are always looking for ways to cut costs.

Marketing will often take up a large chunk of your budget, especially if you’re a relatively new restaurant. However, if you can rely on a loyal customer base, there’s no need to place so much emphasis on attracting new customers.

A good retention rate will also lead to positive word-of-mouth recommendations, effectively encouraging your customers to do your marketing for you!

However, it’s not always easy for restaurants to increase their retention rates. Measuring customer churn is key to understanding how many customers are not returning to your restaurant and identifying ways to address this with customer retention strategies, such as loyalty programs, personalized communication, excellent customer service, and offering incentives for repeat business.

Increased revenue and profitability

When customers are in a comfortable and familiar environment, they’re likely to spend more than new patrons. This will increase your profit margins and help your business grow.

Keeps customers loyal and happy

If you’re working toward retaining customers, you’ll be focused on ensuring a top-quality experience.

By keeping customers loyal and happy, you make life easier for you and your employees while also gaining an edge over competitors.

More positive feedback and online reviews

Everyone knows online reviews are increasingly important when people are choosing which restaurant to visit.

Satisfied and loyal customers are more likely to leave reviews, and it’s also easier for you to ask customers to leave feedback online once you’ve built a relationship with them.

Increased brand awareness and referrals

Improving people’s awareness of your brand should be one of the main goals of any marketing automation strategy, and having a good customer retention rate will help you achieve this.

Through word-of-mouth, your brand visibility will naturally spread through the local community. There’s no doubt that loyal customers are more likely to recommend you to their friends than one-off visitors.

Factors That Influence Restaurant Customer Retention Rate

The importance of customer retention is clear: it’s a great way to ensure your restaurant is profitable and continues to grow.

So, what is it that leads to customers returning again and again?

Quality of food and service

You own a restaurant, so obviously you know that the quality of your food and service is crucial, but during your busy day-to-day operations, it can be easy to overlook the obvious. Make sure you’re doing the basics well to improve customer retention.

Personalization

Making customers feel special is a surefire way to improve retention. Restaurants that remember customer preferences and have personalized communication with patrons tend to have stronger retention rates. Consider a data sharing strategy that allows you to send birthday wishes to customers.

Restaurant ambiance and atmosphere

Similarly, it’s important that restaurants have a welcoming ambiance and atmosphere. Customers should have a consistent and comfortable experience during every visit, so they grow to love your restaurant.

Staff attitude

An important part of any customer experience is customer service. However, improving customer retention isn’t just about having a professional and efficient workforce.

You should encourage your staff to be as friendly as possible with customers. If patrons develop relationships with your employees, they’re far more likely to return.

Price of meals and value for money

Restaurants that offer competitive pricing will naturally be more likely to retain customers. If a customer feels like a meal is good value, due to its price or quality, they’re going to want to return.

Convenience and accessibility

Customers are only going to return to your restaurant if they can easily get there. Location is crucial: restaurants should be located close to other attractions or housing and should allow for easy parking.

Offering a delivery service will allow you to retain customers even when they prefer to dine at home. Making your restaurant as accessible as possible will increase your retention rates exponentially.

How to Improve Your Restaurant Customer Retention Rate

Many of the factors that lead to a loyal customer base will already be the target of most restaurant owners.

But with the importance of customer retention rate second to none, here are some tips that can help you to improve this statistic.

Use technology to improve your service

Improving your service can be a daunting proposition. However, technology can make your life much easier.

Online ordering systems, which allow customers to view menus and order on their mobile devices, can reduce wait times. Meanwhile, mobile payments such as Apple Pay will speed up the billing process.

Watch the video tutorial below to learn how to enable online ordering at your restaurant in minutes:

You can also use email communication or tablets in your restaurant to ask for customer feedback. This is much quicker than using physical feedback forms and will help you recognize where service can be improved.

Offer discounts and promotions

With wholesale prices rising, offering value for money is difficult for restaurants. However, discounts and promotions can be a great way to make customers feel like they’ve had a good deal without damaging your profit margins.

Consider offering promotions that only apply to returning customers to reward their loyalty.

Similarly, referral programs that encourage customers to recommend your restaurant are a great way to widen your customer base while giving your loyal patrons a good deal.

Respond to reviews

Customers who take the time to leave a review should be recognized by you and your restaurant. By replying to reviews, you show you appreciate their custom while also establishing a relationship with them.

This doesn’t only apply to positive reviews. Even if you receive a negative review, responding allows you to rectify mistakes and improve the likelihood that the customer will return to your restaurant. Your brand will receive a boost too, as you’ll appear to be conscientious and caring.

With potential customers reading reviews, your responses should ideally direct them straight to your restaurant website’s domain name, helping to expand your customer base and improve retention.

This sort of approach can be particularly useful for conversion optimization, sending those who are interested in your offerings straight to your website—and hopefully to your restaurant itself.

Restaurant Customer Retention Rate: A Vital KPI for Any Business

The importance of customer retention rates should be obvious to any restaurant owner. With costs increasing every day, retention allows you to rely on a loyal set of customers without spending huge swathes of your budget on acquisition marketing.

Retention improves word-of-mouth recommendations, too, meaning it can also help grow your business.

By focusing on delivering a great customer experience that’s efficient and personalized, you’ll improve your restaurant customer retention rate.

This can be aided by the proper use of technology, promotions, and responding to reviews. Keeping hold of your customers has never been easier!

This article is a guest post.