For restaurants trying to generate some income stability in less-than-stable times, subscription services can provide important benefits for restaurant and guest alike. They can offer restaurants some guaranteed income when guest traffic can be down, as well as appeal to guests who are looking for a good value, a little help with weekday meals, or simply a pick-me-up to look forward to at the start of the year. (And while subscriptions aren’t necessarily designed to be offered for purchase and left unused, we all have those subscriptions we sign up for and forget – and the business reaps some extra benefit as a result. Why not restaurants?) Is there room on your menu for some new subscription offers in 2023? If your weekday lunch business has been down, help your guests enjoy a weekly lunch entrée at home or at the office. Offer a warming winter soup and fresh bread combo, an easy-prep meal kit for busy weeknights, or a specialty cocktail or coffee subscription. Your subscriptions need not be for just people dining off-premises, either. You can offer a dine-in subscription that allows guests to plan ahead and look forward to a regular night out, or a monthly event for guests interested in trying the chef’s newest experimental dishes. Finally, at a time when customization is king, take the opportunity to make each subscription more personal – by tapping into your data to account for food preferences or allergies in each order, or by simply including a hand-written note of thanks. Revenue from loyalty program promotions has grown 74 percent year over year – that’s according to new research from the restaurant tech company BentoBox. As consumers have become even more comfortable with buying from their favorite businesses online in recent years, businesses of all sizes have gained more streamlined, all-in-one tools necessary to capture a loyal following. As a result, smaller restaurants have been able to launch sophisticated loyalty programs just like their larger counterparts. In fact, this is a critical area of business growth that levels the playing field for restaurants in ways that aren’t otherwise possible. As Andrew Robbins, CEO of Paytronix, said in a recent Nation’s Restaurant New report, “McDonald’s plays a game of scale and smaller restaurants can’t compete with it when it comes to contracts, finding great locations, systems – all that stuff. But loyalty and digital guest engagement with loyalty as the centerpiece, you can compete with the big guys.” Of course, once everyone has a loyalty program, some refinement is needed to stand out. Even for small independents, this can happen through detailed personalization and segmentation. Start by analyzing your brand, your ideal guest and the values you want to project. What offers tick all of those boxes for your restaurant? There is still time for restaurants to develop a plan to capitalize on the coming holiday season. But at a time when the economy is uncertain, consumer spending is in flux, and inventory is unreliable, it’s critical to lean on your marketing programs, as well as your data, to generate interest and sales in the places where they are most likely to bring in profits. Consider what combinations of offerings and experiences your restaurant can promote this season – including onsite events, offsite catering, VIP dining packages or other high-end experiences, meal/dessert/wine subscriptions, gift cards, and items you can sell at retail. But before launching a wide range of programs, study your audience. For your most loyal guests, offer a personalized offer now that helps you gather data for upcoming promotions. Launch an offer to help convert regular guests to your loyalty program so you can better study their purchasing patterns too. What audience best suits each promotion? What channels can you use to reach them? What holiday menu items have been most popular with those guests in the past – and where are the best places to feature those items again? Where can you generate the best combination of value and experience with the resources you have available – and how should you allocate your budget accordingly? What promotions are best left to another season or year? Restaurant operators have been offering more limited-time offers (LTOs) this year than last year – and according to Datassential research, 54 percent of operators say they are a central part of their business. In uncertain economic times, they can be a valuable tool for gaining control, enabling operators to test new menu items, make use of limited ingredients amid supply chain strains, and simply have something new, interesting and urgent to offer and promote to guests. The fall months tend to feature a litany of LTOs at restaurants, but the season shouldn’t dictate your plans. Datassential advises operators to think beyond seasonal ingredients when planning LTOs, opting for fresh, high-quality ingredients or new flavors before items that people typically associate with the season. Consider having guests themselves vote for their favorite LTO or invite them to provide feedback about items you’re testing – it can help you not only secure guest buy-in but also offer an experience that will better connect them to your brand. Use LTOs as opportunities to upsell profitable items on your menu – like a specialty cocktail that pairs well with the LTO and can be promoted alongside it. Finally, it’s most important to build LTOs that suit not only the guest but also the times: Make sure your offers are foolproof to prepare with the staff, skills and ingredients you have on hand. During this period of high inflation, some restaurant leaders are noticing a reduction in sales or traffic, though this has been uneven across restaurant brands. A recent CNBC report indicated that at McDonald’s and Chipotle, lower-income guests were spending less and higher-income guests were visiting more often. On the other hand, brands including Starbucks, Bloomin’ Brands and Restaurant Brands International say they aren’t seeing major changes in guest spending. Regardless, it’s a good time for restaurants to focus on nurturing loyalty — particularly fine-dining and other higher-end brands that may experience more of a dip in business during an inflationary period. According to a recent survey of over 2,000 American consumers by LendingTree, half of consumers said retail, food and other loyalty programs are more important to them than ever. You can encourage consumers to make your business one of the ones they continue to visit in a rocky economy if you focus on offering special experiences — members-only dinner promotions, wine cellar tours or sommelier talks for your wine-enthusiast guests, or early access to reservations for a special event. Attract more guests who are similar to your favorite visitors by creating a referral program that offers a free appetizer or drink on their return visit, or some extra loyalty points in both accounts after a new guest signs up — it may help you bring both people back when they are looking for a place to dine together or with a larger group of friends. At a time when technology is replacing some interpersonal connections between your staff and guests, ensure that the ones you do have with guests are high-quality — remembering their names and food preferences, ensuring their payment is especially seamless, and simply welcoming them back like friends can go a long way. Does your loyalty program give as much back to you as it does to your guests? While restaurant loyalty programs once relied on discounts to get guests to return, times are changing. To be sure, you want to use your loyalty program to track guest tastes and buying patterns and translate that information into action. But you can also take your program a step further by harnessing it as an experience you can provide guests. As operators struggle with inflation and supply shortages, providing a memorable guest experience can be a superpower – and can help keep you afloat in these challenging times. How can you use your program to drive people to you? Tap into guests’ fear of missing out by offering an exclusive VIP menu to members. The loyalty program Thanx is helping one operator offer a hidden menu for their highest-spending loyalty customers – it unlocks after a guest spends $200 in 90 days, according to a Nation’s Restaurant News report. The hidden menu can include fan-favorite menu items, be used to test limited-time offers, or simply offer items that are easier to offer to a smaller audience (and can help a restaurant manage inventory more efficiently). All of these potential offerings can create a sense of exclusivity that provides the extra nudge guests need to order from your restaurant right now. Inflation is a worry for nine out of 10 adults, according to a survey taken recently by the online research firm Momentive for The New York Times. As guests scrutinize more of their expenses, discretionary restaurant spending is a natural place for them to cut back. But on the plus side, demand persists for restaurant food – it may just look different for a while. As John Church, co-head of HSBC Bank’s food and beverage unit, told The Food Institute, “Consumers are likely to trade down during inflationary times as they will want to continue to enjoy some level of out-of-home dining experience.” Restaurant operators may just have to double down on strategies to get guests in the door. Right now, focusing on providing value can help. Offer combo meals that emphasize cost savings – like a family meal deal that may even provide some leftovers for lunch the next day. Create a sense of urgency with guests by creating a rolling line-up of limited-time offers. Give people a reason to return by asking them if they want to receive special offers, then following up with deals related to foods they have enjoyed from you in the past. Take a page from your pandemic playbook and package up an experience – a cooking class or wine tasting, for example – that makes restaurant food or drink feel like a worthwhile outing or a go-to choice for someone looking to give a special gift. When you offer those experiences, talk them up on social media to inspire guests looking for memorable ways to gather with friends and family. Winning a new customer can cost five times more than it costs to retain an existing one. What’s more, even a small increase in customer retention – say 5 percent – can boost profits anywhere from 25-95 percent. Taking the best benefits of your technology and reinforcing them with strong interpersonal customer service skills can help you cement the loyalty of the guests who are already coming to you. Your guest data is your best asset, so analyze it and create opportunities to collect more of it – through your loyalty program, as well as through tech-based ordering and payment. When your Customer Relationship Management system is integrated with your POS, you’re better able to address repeat customers by name, pull up their preferred dishes and table location, and elicit regular survey responses from them to identify their likes and dislikes, as well as your own opportunities for improvement. But this information is even more powerful when it is blended with more anecdotal input from staff who interact with your guests. Your team can tag a guest as a VIP, a wine connoisseur or as someone who enjoys the best of what you offer, giving you extra intelligence to make the person’s visit special. Taking better care of your best customers is also likely to result in their sending their friends and family your way – so you may end up winning new customers anyway. Whether you’re participating in a Restaurant Week or developing other events designed to draw traffic during normally slower periods this season, now is a good time to fine-tune your loyalty program. It can help you capture the higher volume of guest data coming to you and turn an occasional guest into a regular one. What’s more, it may help you ride out otherwise challenging market conditions. Paytronix research found that loyalty program members were responsible for a larger proportion of total sales after the onset of the pandemic, and that the top 10 percent of loyalty guests were responsible for more than half of all spending for eight months in 2020. Further, according to Waze, 40 percent of consumers feel their participation in a restaurant loyalty program would encourage them to spend more on their food orders. But at a time when consumers are receptive to loyalty programs, it can also be difficult for restaurants to make their program stand out. To do so, focus on deeper personalization. That could mean using Bluetooth technology to automatically identify a loyalty program member and pull up their most recent orders, introducing a gaming promotion to drive traffic during certain periods, or simply rewarding customers with more of what you know they love. Dunkin Donuts, for one, sends “Year in Review” emails to its DDPerks members based on their yearly purchases and activity. It’s simple and it brings people back. As restaurants look for new ways to boost guest loyalty and ensure steady traffic in 2022, subscription offers have become more commonplace. Brands including Panera, Pret A Manager and Taco Bell have all extended subscription offers to guests – and now Sweetgreen is testing a $10 subscription offer that allows guests to get $3 off their orders within 30 days of their subscription purchase. Forbes reports that the offer is the latest phase of Sweetgreen’s initial loyalty program, launched over five years ago, which rewarded customers with $9 in credit for every $99 they spent in restaurants or on the app -- a program more akin to the punch-card loyalty programs of the past. Subscription offers are worth considering because they may keep a brand more front-of-mind for guests at a time when restaurants need the assurance of steady traffic. Each month, the guest is reminded that there is value in returning to you. At the same time, each of their return visits can yield helpful data that allows your business to craft future offers to that guest – data you would not have if you simply issue a blanket discount after the guest reaches a purchasing threshold not connected to details about their past purchasing behavior. What items on your menu tend to bring customers back? Does your coffee attract people on their morning commute? Does your soup-and-sandwich combo generate reliable lunchtime traffic? Or perhaps there are profitable parts of your menu that you’d like guests to support more steadily. These could all be areas worth testing with a subscription offer. |
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