How restaurant operators can keep up with changing dining habits

By Mo Chaar

In today’s economy, Canadians are cutting back on extraneous spending wherever they can to cope with a higher cost of living, and less than 30% of Canadians are satisfied with their recent restaurant experiences. A new consumer survey of Canadians’ dining attitudes and motivations revealed that a whopping 82 per cent of diners find it more challenging to dine out this year due to increased menu prices. In a market where more than half of restaurants are operating at a loss or barely breaking even, it can feel like an uphill battle for the industry.

Restaurant operators must innovate and adapt to effectively meet these evolving demands and keep customers coming back. Here are some key findings for operators to consider:

How the dining landscape is changing

As discretionary spending budgets get trimmed and wallets get tighter, dining out is generally one of the first categories to be cut. Roughly half (49 per cent) of Canadians are dining out less often than in 2023 — a 40 per cent year-over-year increase. This number increases to 52 per cent among Canadians aged 18 to 34, marking a staggering 79 per cent surge compared to the prior year.

The younger Canadian population is evidently feeling the impacts of inflationary pressures slightly more than their older counterparts, and 45 per cent of this group say they are making dining purchase decisions based on where promotions are being offered.

This shift in behaviour extends beyond sit-down dining. In fact, Canadians are also ordering less delivery and pick-up from restaurants, with respective 48 per cent and 39 per cent decreases compared to last year. Restaurant operators aiming to counter rising inflation and regain their loyal customers should focus on the key factors influencing their purchase choices: attractive deals and value-centric loyalty programs.

The significance of loyalty

As food prices rise, loyalty programs are increasingly important; 57 per cent of Canadians say they are a dining motivator, with preference intensifying among younger Canadians.

Loyalty programs could be a mutually beneficial solution for restaurants and consumers alike. Nearly half (44 per cent) of survey respondents are inclined to order takeout or delivery when a restaurant offers a loyalty rewards program. When every dollar matters, earning points for purchases becomes more enticing, and 42 per cent of Canadians say they use rewards or points from a loyalty program when making a purchase at least once a month.

As diners grow more discerning, loyalty programs help operators get to know their valued guests — and, in turn, encourage repeat visits. Brands must tailor their loyalty programs to stand out in a crowded marketplace. This involves understanding their target audience deeply and offering unique rewards that resonate. Restaurants should keep their loyalty strategies flexible and aligned with emerging consumer behaviours. The landscape is dynamic, and being adaptable is key.

Promotions are powerful

Restaurant operators should consider additional offerings or complements to loyalty programs to generate more interest. The decline of sit-down dining, delivery, and pick-up illustrates the need for restaurants to utilize promotions and other means to capture consumers’ attention.

Despite opting to dine out less this year, four-in-five Canadians say incentives such as buy one, get one (BOGO) promotions make them more likely to dine out, followed closely by coupons or discounts (77 per cent). Happy hour is a draw for 42 per cent of Canadians, rising to 56 per cent for the younger generation. Having promotions such as these in place can be a huge difference-maker in attracting new guests, encouraging past guests to make repeat visits and spend more.

The evolution of AI in restaurants

Restaurants are incorporating more artificial intelligence (AI) into the guest experience (for instance, AI-powered online order recommendations based on a customer’s previous orders and preferences). However, the survey found that the comfort level with AI use in restaurants is divided. Almost half (48 per cent) of Canadians are comfortable with its use in restaurants, increasing to 59 per cent amongst younger Canadians.

This is noteworthy as restaurants adopt AI tools to improve customer relationships through data-driven insights and personalized engagement campaigns. These tools go beyond traditional loyalty programs by enabling restaurants to offer tailored communications and promotions based on customer profiles and purchase histories. By integrating data from POS systems with AI capabilities, restaurants can convert casual visitors into loyal patrons through targeted marketing efforts across multiple channels. This approach helps operators better understand customer behaviour, craft customized marketing strategies, and increase customer lifetime value.

RELATED: AI helps restaurants cut costs and improve service

While AI technology has a broad range of benefits, operators should be thoughtful about its implementation. AI tools are not designed to replace a workforce, but rather, to make day-to-day work more effective. As AI becomes even more integrated into our daily lives, comfort levels will likely grow naturally over time for consumers and operators alike.

Setting your restaurant up for success

As restaurants gear up for a busy summer season, it’s essential to adapt to changing behaviours, keeping customer engagement top of mind.

While customers may be more selective about when and where they eat out, they still want to visit their favourite restaurants — it will just take a bit more effort to get them in the door. Restaurants must ensure they have a firm understanding of what diners want, so they can deliver on their expectations and encourage visits. By adopting a customer-centric approach that anticipates evolving consumer preferences, prioritizes promotions and loyalty, and thoughtfully integrates technology, restaurants can better align with shifting demands.

Mo Chaar is the Chief Commercial Officer of Givex, where he oversees commercial strategy and development worldwide, including the development of GivexPay, as well as managing sales teams within North America.