In uncertain economic times, your loyalty program gives you an opportunity to solidify bonds with your best guests and transform more transactional relationships into loyal, engaged connections. What’s exciting about these programs is that while they are plentiful, they are also diverse – restaurants can (and should) develop their own loyalty playbook as an extension of their brand. The offers and experiences you promote should reflect your brand values. There is always room to refine your program and ensure it is effectively building your business. In a recent interview with Forbes, Savneet Singh, CEO and President of PAR Technology, suggests a range of actions restaurant operators can take to test the effectiveness of their loyalty program. Among them: Measure your program’s return on investment – for both you and the guest. Track how your roster of members is growing, as well as how engaged they are. Monitor your average transaction values so you can ensure program membership leads to more spending – and take action to make improvements if it isn’t. Use surveys to gather feedback from guests to ensure they are satisfied with the program. This may also help you gather a continuous stream of new ideas to help you keep your program fresh.
Strong third-quarter retail sales and overall growth in the U.S. point to a promising sign for restaurants as the holidays approach: Consumers may be looking to spend more freely than they spent in earlier months of the year. Are you ready to make the most of guest traffic? First lean on your technology – to enable seamless payments in the forms guests prefer, to generate greater participation in your loyalty program, to anticipate high-traffic peaks (and valleys), to schedule staff accordingly, and to deliver targeted promotions to guests looking to get out and celebrate with others over the festive period. Assess potential bottlenecks in your various sales streams, as well as opportunities to promote different parts of your business that could do especially well over the holidays. For instance, what mechanisms do you have in place to manage catering orders, track reservations, maintain your ingredients for your most popular holiday dishes, and promote retail items? What safety nets are in place to support you when problems happen? It can help to review the guest journey along every sales stream you have, gather feedback from staff about what works well and what needs to improve, and to check your online reviews to identify parts of your business that may need attention.
For years now, it has felt like restaurant operators have been furiously swimming upstream. First, the pandemic jolted restaurants into a new reality, forcing them to change their business models overnight and adopt new technology to compete. Then, even when the toughest months of the pandemic were behind us, restaurants still had to battle with supply chain problems and high inflation. Tough as these conditions have been, they forced a much-needed fix in the industry. In a recent essay in the New York Times about the current restaurant revolution, San Francisco Chef Anthony Strong said the survival of his business has meant transforming his business model from 2020 into something with more staying power: He shifted from an 80-seat restaurant to a 35-seat dining room with a separate retail shop that sells pasta, sauces and upscale pantry items. So right now, as things finally feel a bit more – dare we say it – normal, how does your restaurant look different? As we approach a new year, it’s a good time to take a step back at the changes you have made this year. Is there a leg to your business that can reliably prop you up when another leg weakens? How can you strengthen each of those pillars? Where have you made important progress this year that can be replicated in other parts of your restaurant – and where is there opportunity to fine-tune your practices so you can last for the long term?
You’ve probably already felt it in your restaurant – guests have lost patience with supply chain issues, staffing shortages and training problems – even if these issues are still part of daily life in your restaurant. Recent research from Ipsos about consumer expectations of restaurants confirmed that people expect that restaurants have found solutions to these problems by now and should be able to offer seamless experiences. If you struggle to do that, lean on communication to ensure you don’t alienate guests. For example, Ipsos found that many restaurants fail to communicate consistently, particularly when using technologies that enable pickup and delivery. Nearly one-quarter of restaurants fail to confirm an order or provide a pick-up time, 19 percent don’t provide clear pick-up instructions and 70 percent fail to notify customers when their order is ready. Further, it found that restaurants force consumers to use their app for communication instead of their preferred channel – which might be an indication that the restaurant app experience could be improved. In your restaurant, could you fine-tune your guest experience by making small adjustments to your communication and ideally automating your digital communication? That could include ensuring guests are greeted promptly upon entry to the restaurant, confirming their order contents, and keeping them up to date about the process of preparing their order. Making tweaks in these areas could help you get a little grace from guests in other areas where you may still be struggling.
The battle to win loyal guests continues in the restaurant space – and lately, many restaurant brands are vying with each other to stand out in the market with perks including special experiences and merchandise in addition to food. Amid economic challenges like higher interest rates and more controlled consumer spending, loyalty programs have become critical for restaurant brands. However, some brands have been pushing so hard to attract guest sign-ups that those with franchisees are getting some pushback from operators about the new offerings (and therefore delivering an uneven experience with regard to the loyalty rewards offered). If you’re trying to fine tune your loyalty program right now, it’s most important to be able to run it consistently and efficiently. Above all, keeping your loyalty program members interested and engaged means keeping your program simple. It should be easy for your guests to sign up and understand how they can accumulate rewards – and they shouldn’t have to jump through hoops to redeem them. Your guests should have the same loyalty experience across your stores. When you can deliver these things, you may be surprised to see how much your loyalty members value them. Case in point: An annual loyalty survey from Deloitte found that as consumer participation in loyalty programs has increased, it’s been fairly even across paid and free programs. So you may have an opportunity to offer a paid program that allows you to deliver a more premium experience and incentivize additional guest engagement and spending.
The coming holiday period is an opportunity to engage guests, encourage some extra spending, and hopefully give people an incentive to return and keep your business humming during quieter periods this winter. But you need to plan for it. According to a survey of restaurant operators by ResDiary, only 18 percent of early planners were never fully booked over the holiday period, compared to 34 percent of all restaurants surveyed; 82 percent of early planners made significantly more money over the holiday period; and only 10 percent of early planners did not say they struggled with no-show guests, compared with 26 percent of all restaurants surveyed. Hopefully you’ve already got a solid plan to generate holiday sales but there is still time to fine-tune your practices to protect your margins this season. Ensure you’ve optimized your menu with high-profit items (and have developed some subliminal cues to lead guests to your best ones). Scrutinize your food waste and make adjustments to your food ordering and preparation so you can minimize it. Consider how people are getting in touch with you to make bookings, order food or buy retail items – how can you use web-based and automated systems to ensure you’re not missing inquiries, orders and sales? Be the gift that keeps on giving into 2024 by offering gift cards and other incentives to return in the New Year. Finally, prepare your team from a scheduling and training perspective – make scheduling clear, arrange backup support where possible, offer incentives for staff working on key holiday shifts, and provide any special training they need to deliver your best service during the holiday season.
In the past few years, tipping has experienced a strange evolution. During pandemic lockdowns, consumers embraced it as a means of expressing appreciation to restaurants going the extra mile to remain open. But as restaurants’ adoption of the automated systems to facilitate tips dovetailed with a return to relative normalcy, tipping fatigue has set in, with consumers taking to TikTok to express frustration with being prompted to leave a large tip for the purchase of a muffin. To be sure, tips are still an important part of compensation for restaurant employees, and operators may need to take some steps to help guests navigate the new environment and feel good about leaving a tip when they choose to do so. A recent report from the National Restaurant Association advises restaurants to clearly communicate their tipping policy to guests – on the tipping screen, on receipts, or on menus, for example. Are you pooling tips? Which staff benefit? How are tips helpful to your team? When prompting guests to tip using a tipping screen, consider how much service you have provided and decide whether to use a dollar amount or percentage. If you’re a bakery or coffee shop, you might suggest a few small dollar amounts under $10, whereas a fine-dining restaurant might suggest a few different percentages of the food/beverage cost (not including tax). Or, offer a combination of options at different times of day based on what you’re selling – your POS should allow you to customize your display. Include a “no tip” option and don’t make the first option on your screen the largest one – no guest likes to feel like they have to hunt for a less-than-top-tier tip while the server stands by. Finally, weed out tipping options that are clearly out of place, like a 50 percent tip on a quick-service burger. If you’re fortunate enough to have guests looking to leave such generous tips, just give them the option to leave a custom tip of their choice.
Intouch Insight’s newly released 23rd Annual Drive-Thru Study tracked the performance of key brands in the quick-service space – and some of the lessons are worth considering in other restaurant categories as well. For instance, suggestive selling was again found to be a useful means for restaurants to direct guests’ attention to special offers and boost check totals. While it tends to add time to transactions, it doesn’t do so evenly: In the drive-thru setting, it added an average of 10 seconds to service time, but when the suggestive sell occurred after the order was placed (versus during the initial greeting) the orders took 28 seconds less to complete. Restaurant brands that are less focused on shaving seconds off the order completion process can still reap benefits from consistent suggestive selling – but surprisingly few brands follow through with it. (In the study, only 56 percent of the measured interactions across all brands included suggestive selling – even though it’s a more natural practice in the quick-service category.) That said, the brands that have implemented AI to automate suggestive selling upsold 88 percent of orders. In your online and app-based orders, are you automating suggestive selling – and incorporating AI-based applications to make consistent, targeted suggestions? Even if you’re not operating in the drive-thru space, if you’re not yet making additional suggestions based on a person’s ordering history, at a time when they are hungry and already craving your food, you are likely leaving money on the table on more orders than you might expect.
It’s competitive out there: According to research from the National Restaurant Association, 47 percent of operators expect competition to be more intense than last year. To be sure, the number of tools that operators have at their disposal to collect data and draw conclusions from it are raising the bar for competition. But despite the reams of metrics operators can study about their business, gaining an edge (and building authentic connections with guests) still really comes down to traditional marketing and public relations – knowing who you want to be, understanding your audience and why people come to you, and then crafting options and offers that fit neatly into their lives. This is especially critical if your business looks very similar to others in your neighborhood. A recent report from Modern Restaurant Management demonstrates the power of understanding your uniqueness in a crowded field. It shared case studies of two coffee shops operating in similar environments – they were in comparable city locations, had many competitors nearby, and had similar menus and interiors. On the surface, one might think of these businesses as interchangeable. But one business positioned itself as a destination for people working in nearby corporations, while the other positioned itself as an expert about coffee. This key difference was the seed that helped the businesses craft distinct events, social media posts, menus, atmospheres, you name it. So what makes your business unique? Understanding this and communicating it clearly to the public is the first step in building the loyalty that your restaurant needs to succeed.
Your loyalty program members are valuable – but do you know exactly how valuable? A recent Paytronix study may provide some insight. It collected in-store and online transactions for full-service restaurants, quick-service restaurants and convenience stores that occurred between January 1, 2020 and June 30, 2023. The results confirmed that active loyalty program members are climbing steadily, with FSRs seeing a 16 percent increase in members and QSRs seeing a 24 percent increase over the course of the study. But how these people are spending is more telling: The research found that in 2022, FSR and QSR active loyalty members had check sizes that were at least 5 percent higher than those of non-loyalty members. Further, the top 10 percent of active loyalty program members were responsible for nearly half of all loyalty visits (and spending) across concepts. These guests are true VIPs. In your restaurant, are they getting some special focus? There is a lot of noise in the loyalty space right now, with restaurant brands making bold offers aiming to grab people’s attention and generate increased program participation. But the offers may not even be practical for most guests. Drilling down on the data you have about your best guests will always be most helpful in determining how to take care of them. What do these guests love about your restaurant? Is it your homemade pasta? Your inventive desserts? Your friendly staff? Can you build an event, a reward, or simply include a personal touch around these elements for your best guests?