As restaurants continue to compete for diner dollars with higher value, lower prices, and unique offerings, is this approach viable over the long haul? Many operators have adopted a strategy focusing on value to reflect the unstable economy and thrifty consumer trend, but this may be a shortsighted approach, offering short-term relief and higher revenues without a focus on building long-term loyalty.
Recent studies reveal some interesting data points about recent restaurant trends and whether value has resulted in retention for restaurants:
- 83 per cent of restaurants offered value propositions and consumers responded by expanding their spending across more brands than they did two years ago, rather than increasing visits at specific locations.
- Of the 12 brands that increased transactions in the past year, nine saw retention drop over two years, and none of the six brands that lost transactions gained retention. So, retention does not appear to be tied to value, based on these findings.
- Brands with flat or lower than average order value during promotions saw better retention with their traffic growth, but brands with rising average order value often saw more unstable retention.
This information shows that the correlation between value and loyalty is not what many operators have hoped for, and simply lowering prices may increase traffic and sales in the short-term, but it does not necessarily bring customers back. So how can restaurateurs add value and increase retention?
The secret may lay in the customer experience and an evolved definition of value. By defining value simply as lower prices, operators are underestimating their customers’ behaviour. Today’s diners are weighing the ‘bang for their buck’ not only to costs, but to the overall value that guests assign to their restaurant experience. True value for today diners is about satisfaction, rather the bottom line.
Research shows that 86 per cent of consumers would pay up to 18 per cent more for an exceptional experience. Several elements like quality, personalization, convenience, connection, like-mindedness, and cost all factor into what a restaurant guest considers a “valuable experience.”
Getting to know your guests, analyzing the data, and adjusting your approach can help operators raise revenues and improve loyalty. Understanding what guests are looking for and delivering on those expectations means providing guests with the value they crave – and the experience they’ll continue to come back for.
