Around 35% of restaurants fail within their first year of business.
And, while the “why” behind failure varies from restaurant to restaurant, many operators cite the same few causes — including customer retention.
(Or rather, a lack thereof.)
Retaining a strong, regular customer base is a “must” if you want your restaurant to succeed.
Not only are existing customers more likely to purchase from you in the first place, but they’re also more likely to spend more per purchase — around 3x more, to be exact. Combine that with the fact that retaining a customer is 6-7x less expensive than acquiring one, and customer retention quickly becomes a “must” for keeping your doors open long-term.
Yet, despite the clear importance of customer retention, the average restaurant’s retention rate is only 30%, with 56% of operators reporting retention as a current struggle for their businesses.
So, while keeping customers happy (and willing to return) has always been important for restaurant operations, it’s getting more and more crucial by the day…
And here’s why.
Why Customer Loyalty Matters: Stress-induced Budgeting
Over the past few years, customer preferences and expectations have changed in ways that directly impact how easy it is to retain them.
Diner expectations have generally grown more volatile, with constantly competing demands for quality, quantity, variety, and innovation. But, even more than that, people are trying to save by cutting personal costs — and they’re focusing on dining out, first.
In their 2024 “State of the Restaurant Industry” report, the National Restaurant Association (NRA) shared that 33% of consumers are “very concerned” about their finances. And, according to Deloitte, this level of concern manifests in consumers’ day-to-day anxieties, with 9 in 10 adults saying “money [impacts] their stress levels.”
Combine those general financial concerns with money-induced stress and what do you get?
Lower spending habits than we’ve come to expect from diners.
In a 2024 survey, TouchBistro reported that 33% of restaurant owners and operators have noticed a decrease in customer spending. “RRD revealed that this reduction in customer spending habits is intentional, too, with 67% of diners saying restaurant prices are “pushing dining out of reach” for them.”
The Silver Lining
Despite this year’s decline in customer spending habits, recent data suggests hope is not lost.
The NRA found that “well-presented value propositions” like loyalty programs and discounts can effectively encourage consumers to spend, especially with 70% of diners actively seeking deals and specials when choosing where to dine.
Plus, when you reward your diners with strong value propositions, they’re more likely to reward you right back — 48% of loyalty members say they’re unlikely to dine outside of the places they earn rewards at.
But, while that might be a nice silver lining… what’s the solution?
How can restaurants increase retention rates while meeting ever-changing customer needs and a penchant for lower spending?
The answer lies in three, simple words — build customer loyalty.
Did you know that repeat customers order up to 1.5x more through Craver?
5 Ways For Your Restaurant to Nurture Customer Loyalty
Fostering loyalty in your customers is crucial to improving retention, not only because it’s what your customers want but because it’s the most desirable solution for your operations, too.
When you focus on improving your restaurant’s retention through loyalty, you can forget about less desirable retention-boosting solutions like reduced menu prices (or closed doors).
Plus, retention has a higher return on investment than other strategies; as little as a 5% increase in retention can lead to a profit increase of up to 95%!
So, if you’re ready to start nurturing loyalty in your restaurant’s customers — or you want to ramp up your existing efforts — here are 5 ways to do it.
1. Make Ordering Irresistibly Simple
With 97% of customers saying they’d back out of an “inconvenient” purchase, offering simplicity is a key facet of nurturing loyalty. The best ways to offer your customers the convenience and simplicity they crave are with an online ordering platform and mobile app. With digital-first ordering methods, your customers can order ahead to reduce waiting times, customize orders (and ensure they’re error-free), and use saved payments for faster checkouts, making your process stand out as simpler — and better! — than the rest.
2. Personalize Every Interaction
Whether your customers are dining in person or ordering for take-out, personalization is the greatest make-or-break factor in their experience. And, creating a consistently personalized experience becomes the default when your restaurant uses a mobile app. With an app, you can set up easy-to-edit modifiers and single-tap reorder capabilities for your customers to explore. Plus, you can leverage in-app push notifications, sending users personalized notes, reminders, and deals that show you’re paying attention to their wants and needs.
3. Give Regulars the VIP Treatment
Customers want to feel seen, heard, and valued… and a restaurant loyalty program can accomplish all three things in one. Loyalty programs create a community of “insiders” that your restaurant can offer VIP treatment through exclusive rewards and offers like discounts, deals, or points toward future rewards. Then, as your customers accumulate points or get a discount they can’t refuse, they’ll have to come back for another visit. Engaging your customers and incentivizing them with rewards they like means they’ll always come back.
4. Become a Staple in Their Day
If your customer base responds positively to rewards and incentives, that preference can easily be expanded with memberships and subscriptions. These kinds of programs are an extension of the rewards your customers have grown fond of while further integrating your brand into their daily choices. With paid subscriptions and memberships, your restaurant or cafe becomes the go-to for breakfast, lunch, dinner, coffee, and dessert. Why wouldn’t they when your business not only offers the best bang for their buck but rewards them for it, too?
Become your guest’s “must visit” spot with Craver’s Membership & Subscriptions feature.
5. Let Your Guests (& Their Data) Do the Talking
Nurturing customer loyalty doesn’t have to be as obvious as discounts or rewards — it can be done behind the scenes, too! When you use customer data to inform your restaurant’s decisions, for example, you let their purchasing behaviors and preferences guide what decisions you make (or don’t make). While data-guided decisions may not sound as beneficial as incentives or discounts, they can actually inform those incentives and discounts, too. After all, you can’t give your customers what they want if you don’t know what that is in the first place!
How Sips Coffee Increased Customer Loyalty with Craver
So, what happens when a coffee shop (or restaurant!) moves loyalty nurturing from an afterthought to a top priority?
Increased sales, happier customers, and a better customer experience — at least according to the team at Sips Coffee.
After successfully launching its custom-branded Craver app, Sips Coffee started exploring the possibilities for optimizing other loyalty-boosting operational processes. That led the brand to explore Craver’s range of integration capabilities, connecting its app to its kitchen display system, Fresh KDS.
That’s when results really started pouring in (coffee pun absolutely intended).
With its integrated Craver app, Sips Coffee was able to:
- Make ordering irresistibly simple for all customers (including the not-so-tech-savvy ones)
- Prioritize the personalization of every interaction, from mobile order to in-person pickup
- Give its regulars the VIP treatment with ultra-precise pickup times and improved accuracy
- Become a staple for its customers, increasing the number of customers ordering like clockwork every day
- Let its guests (and their data) inform the brand’s future decisions with order histories and tracking
“Every day we have new customers on the app. And then we have a lot of the same ones. And some of them, like clockwork, I see come through at the same time every day at the same time.” — Nina Laughlin, General Manager at Sips Coffee
How does a 20% increase in average order value sound? See how Craver can get you there.
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