By Mo Chaar
The challenges for the restaurant industry seem to be never-ending, with operational costs, labour shortages, pandemic debt, and bankruptcies all on the rise. Recently, Restaurants Canada stated that 50 per cent of Canadian foodservice operators are operating at a loss or just breaking even, compared to only 12 per cent from pre-pandemic days. Combined, these factors are exerting immense pressure on restaurants across the country.
At the same time that many restaurants are facing financial challenges, consumers are cutting back on their spending, with food inflation and high interest rates taking a toll on their wallets. A survey conducted earlier in the year found that Canadians appear to be dining out less often this year compared to last year, both for sit-down restaurants (35 per cent) and for takeout and delivery (35 per cent). While several factors are likely contributing to this decrease, it’s clear that customer retention is vital for restaurant operators to maintain their margins.
The importance of regular customers
It’s challenging to succeed in any business without repeat customers. They are your best advocates and influential brand ambassadors. For restaurants, customer engagement and loyalty have always been an important part of profitability, but they should be a top priority when guests are tightening their budgets and competition is fierce.
By nurturing a loyal customer base, restaurant owners can count on consistent patronage to cushion the impact of rising costs. According to a recent annual survey, 57 per cent of Canadians are members of between two and four loyalty programs, and one in five belong to at least five loyalty programs. It’s evident that Canadians value these programs, and luckily for foodservice operators, technology has evolved to enable higher rates of engagement.
Use data-driven tech to turn a casual guest into a regular
To convert a casual customer into a loyal patron, restaurants must first ensure their technology systems are strong enough to support their needs to communicate with their customers. By investing in an omnichannel technology platform, restaurants not only gain access to valuable data, but also unlock the potential for highly targeted marketing campaigns – and in today’s data-obsessed world, harnessing the power of data is not a choice, but a necessity.
With a robust POS system, restaurants can capture and analyze guest information such as customer demographics, preferences, buying history, and purchasing patterns. Brands can then take that information and use micro-segmentation to create targeted offers and messaging based on previous purchases to drive repeat business and build relationships with their customers.
Another use of this data is to reveal the most (and least) profitable menu items. By crafting clever promotions around the best-selling and most profitable items, restaurants can boost overall spending. Whether it’s buy-one-get-one (BOGO) deals or any other type of discount, promotions can attract customers, which, in turn, drives traffic to online ordering platforms. Then, restaurants can further entice customers with add-ons, discounted menu combinations, and extra incentives for loyalty members.
There’s no one-size-fits-all approach
As the world becomes more digital, so do loyalty programs. With all this information at their fingertips, restaurant operators can use digital motivation to keep customers striving to earn rewards and returning for more.
Creating a successful loyalty program requires a tailored approach, as no one-size-fits-all strategy exists. By implementing points-based rewards programs, restaurants can specifically target their most frequent customers, providing exclusive promotions that are accessible only once they unlock the rewards.
Another related trend is the integration of gamification into digital loyalty programs, which can provide an opportunity to drive engagement. Spin-to-win and other in-app games and tiered programs allow restaurants to incentivize loyalty program participation and encourage repeat business.
When creating or evolving a loyalty program, ensuring it’s easy for the consumer to understand is essential. An effective loyalty program should guide customers to the restaurant’s online ordering page, avoiding confusion or frustration when navigating the website. Keep it simple – as with any program, if it’s too hard for the end user to understand, you will frustrate customers, limiting adoption and discouraging long-term use.
Point-of-sale to profit
Dining out has become an expense many cannot often afford, and those who can carefully budget and choose where to eat. Whether operators are trying to stay afloat or stay competitive in this demanding market, knowing what resonates with guests and using that knowledge to drive repeat business is essential.
By harnessing the power of a robust POS system, restaurant operators can tap into this wealth of customer data to establish an impactful and customized loyalty program that truly resonates with their audience. When executed thoughtfully, a loyalty program becomes a powerful tool for restaurants to increase orders, boost profits, and forge a stronger connection with their valued customers. After all, loyalty is truly priceless.
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.