Top 4 Customer Retention Strategies for Restaurants

Top 4 Customer Retention Strategies for Restaurants
D. J. Costantino

By D. J. Costantino

Sometimes you want to go where everybody knows your name. The coffee shop where the baristas seem happy to serve you. The bar where you always feel welcome after a long day's work. Or the restaurant that always delivers on-time and throws in some extras.

The ideal customer for your business is the one who comes back time and time again. When it comes to getting people in the door, it’s always easier to get someone back then to find brand-new customers. Retaining an existing customer is five times cheaper than acquiring a fresh face. Loyal customers are also much spendier—averaging checks that are about 67% higher than a first-timer. Growing a loyal customer base is a key to growing your business and keeping it profitable year-over-year. But how do you get people back in the door? The most important thing is a solid customer retention strategy.

In this guide, we’ll cover:

What is customer retention?

Customer retention refers to a restaurant’s ability to retain, or keep, the existing customers that it has. Rather than spend all of your time (and money!) trying to put new people in seats, a customer retention strategy seeks to spend time bringing existing customers back.

How do you measure customer retention?

Customer retention is measured by a customer retention rate. Simply, your customer retention rate is determined by active customers at the end of a certain period (a month or a quarter), minus customer acquired and divided by how many customers at the end. Here’s a formula, courtesy of HubSpot:

Customer Retention Rate = ( (# Customers at End of Period - # Customers Acquired During Period) / # Customers at Start of Period) ) X 100

Say you have 100 regular customers at the start of the year, gain 40 new customers, and have 10 regulars churn, or not return. ( (130 - 40) /10 ) ) x 100 = 90% retention, which would be insanely good. A 2015 study found that nearly 70% of customers don’t return to a restaurant after their first visit, putting the average restaurant customer retention rate at about 30%.

Why is customer retention important?

Customer retention is important because it measures how good your restaurant is at making your customers happy and bringing them back in the door (or ordering delivery). Customer retention is one of the most cost-efficient ways to grow your business. A study conducted by Bain & Company determined that a 5% increase in customer retention rate can lead to an increase in profits from 25% to 95%. It’s a large range, but even at the low end a significant amount of money back into your business.

Simple customer retention strategies for restaurants

Collect customer information (and use it!) 📋

One of the most important steps in building your customer retention strategy is the collection of customer information. Once you have access to a guest’s contact info, it creates the opportunity to reach them via email or text and let them know about special offers, new menu items, changing hours, and more.

The simplest way to collect customer data in a quick-serve or fast-casual restaurant is to have customers supply it on a sheet of paper at the register. Once every few days, add that info to a spreadsheet of customer relationship management software like Constant Contact or HubSpot. Many restaurant website builders also allow you to put a sign-up form on your website. The basic information you should be collecting is first and last name, phone number, and email address.

It may sound a little easier than it is, as people aren’t always willing to give you their information. To make sure you are successful, give them a good reason to. Let them know what to expect and entice them with exclusive deals or early access. This applies to in-person asking as well as online forms. You have to earn it!

For full-service restaurants, many POS or reservation systems can also help collect data for you. Restaurant software like SevenRooms and ResyOS have deep capabilities that can even save diner preferences, like their favorite table, drinks, and more. The most important thing, however, is that you have a means of getting in touch with your customers when they’re not sitting down.

Engaging Social Media Accounts 📲

Chances are your guests will interact with your restaurant on their phones more often than they will in person. It’s essential that your restaurant’s social media presence is one that people want to follow. This means having a strategy of intentional posting and a content plan. Use our guide to help create a posting schedule and strategy that will highlight your food, team culture, and the overall vibe of your restaurant. Once you have a strategy in place, here are two great ways to make the most of your social accounts:

User-generated content

You don’t have to take every picture that you post on your feed, nor should you. Take a look at what your diners are posting and tagging you in, and with their permission, repost them. This is called User Generated Content (UGC), and it’s an excellent means of engaging your customers and converting them into ambassadors for your restaurant. It also gives existing customers an incentive to post—who doesn’t love a shoutout?

The rules of engagement

Your social content strategy is nothing without engagement from your customers. To help spur engagement, comment on and like any posts that tag your restaurant. This doesn't have to eat up your time, either. Set aside a few minutes each day during downtime to check in on your restaurant’s social media accounts and respond to any comments, direct messages, and comment on/like any new posts. This includes the less than positive ones, if there are any. According to a study by Thanx, customers who get a response to their feedback are 22% more likely to return to your business. It’s a low effort-high impact way to get people coming back.

Reward Their Loyalty 🥇

Customer loyalty programs have been around for a while, but they’ve seen tremendous growth over the past few years thanks to the restaurant industry’s digital evolution. And the stats back it up. According to a study from Accenture, loyal consumers spend an average of 66% more than their “non-loyal” counterparts. More than half of loyal customers (55%) will recommend your business to their family and friends. 12% would publicly defend your business on social media. A customer loyalty program is a surefire way to entice your guests to return, not churn.

The great thing about implementing a customer loyalty program is that it is only as complex as you make it. Here are two ways to set up customer loyalty:

Go lo-fi with simple punch cards

One tried-and-true way to get customers back is a simple punch-card. This can be for hot beverages like coffee, pastries, or other small items. Don’t be afraid to get creative, either; King David’s Tacos in New York City has punch cards for breakfast tacos—buy 10 get 1 free. Punch cards are cost-effective, too. With some simply-designed business cards and a hole punch, you’ll be on your way to higher customer retention.

Implement a digital loyalty system

Digital loyalty systems are also an increasingly popular option. Usually integrated via your POS, digital programs give a lot of flexibility as to how customers can receive rewards. They can be based on a spending threshold (spend $50, get $5) or an item threshold (buy 5, get 1). Digital programs are also useful for automating things like customer birthdays—who doesn’t want a free treat on their day?

As for setting it up, many POS systems have loyalty programs that integrate right in and can track customers spending via email, phone number, or even the card they use to pay. Here are a few POS companies that offer loyalty systems:

Great food and even better service 🍽

“Business, like life, is all about how you make people feel. It’s that simple, and it’s that hard.”

In his bestseller Setting the Table (a book everyone in hospitality should read), Danny Meyer graced us with some of the best advice there is when it comes to having a successful restaurant.

You can do everything that we mentioned above, but if your service or food is not up to standards, customers are not going to come back. In a recent study of restaurants by Deloitte, they found that what customers value most in a restaurant is friendly and hospitable employees. The second most important? Feeling empowered to make choices and having feedback valued.

A great staff starts from the hiring process and continues on through proper training and performance evaluations. Your staff, too, needs to feel engaged and empowered to do their job quell in order to succeed. Customer loyalty is formed with positive experiences. You can’t provide that to guests if your staff is not engaged as well. Make sure that both sides of the equation are balanced

It applies to delivery, too

The recent reliance on delivery doesn’t mean that service is not as important as dine-in. You can provide excellent delivery service as well. Is it someone's third order in a week? A handwritten card or free cookie goes a long way in making them think of you when they open up their phones to order in again.

Closing thoughts: Simple Customer Retention Strategy for Restaurants

At the end of the day, the customers that make or break your restaurant are the ones who come back time and time again. They’re the ones who post on social about you and suggest your restaurant to their friends. These simple strategies for customer retention will help you keep your customers coming back.

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D. J. Costantino
D. J. Costantino

Hi! I'm D.J., 7shifts' resident Content Writer. I come from a family of chefs and have a background in food journalism. I'm always looking for ways to help make the restaurant industry better!