What Restaurant Loyalty Really Means — And How to Achieve It

Posted
March 24, 2022
Bikky Team

What Is Restaurant Loyalty — Asked and Answered

How many times have you heard about the restaurant industry's razor thin margins?

Chances are, you're intimately familiar because you live the reality day-to-day.

It's a daily shave you never want to happen. 🪒🪒🪒

You also know that to fight these razor-thin margins, there’s a heavy emphasis on increasing loyalty to drive up retention revenue for your brand.

You're so familiar that terms like "increasing loyalty" and "driving retention revenue" have become a snooze fest. 😴 You have vendors pitching to you left and right about what they can do, but it all feels the same.

Let's pause for a second and address an elephant in the room.

🐘

What do we all even mean when we toss around the word "loyalty"? How exactly are we all defining loyalty and how can we measure loyalty over time?

loyalty definition and how to increase loyalty

What Is Restaurant Loyalty?

Restaurant loyalty is an emotion that leads to a behavior of increased engagement with a brand. It’s a feeling of highly-positive sentiment thats results in increased visit frequency and lifetime value. Loyalty could look like:

  • Higher than average open and click-through rates on marketing emails
  • Customer lifetime spend >2X the average
  • Frequency of ordering or visiting in-person > average
  • NPS score of 9 or 10
  • "Extremely satisfied" on a CSAT survey

Every restaurant owner and marketer needs an actionable way to identify loyalty for their brand and to increase revenue by recognizing their guests and making them bigger advocates. To know this, you must understand your average frequency, recency, and retention rates. We’ll get more into this later, but definitely contact us if you need a way to do this across your entire tech stack.

It's also important to understand that loyalty will look different for every brand. For a fast-casual brand it might mean ordering takeout more the twice a month and spending more than $30, on average. For a full-service brand, it could be dining in person at least once a month and spending more than $100.

Makes sense, right? Okay now let's cover some misconceptions that most vendors and other businesses in the industry are operating under.

What are the most common misconceptions with loyalty? 

The biggest misconception with restaurant loyalty is that “loyalty” = rewards. Loyalty does not necessarily mean a membership program. It is a measurable behavior from a guest. 

what restaurant loyalty really looks like

Here’s looking at you, real-life loyalty. Discount-free strategy and tactics that result in more happy customers. Every business's dream, right?

Okay, so what are some other loyalty misconceptions? 

Misconception: There’s one big secret to driving more revenue. 

The Truth: There’s no one, single secret. 

Assuming there is one tactic would be like thinking a track runner wins a race with one simple practice technique. That’s not how it works. Month and years of practice, sleeping habits, practice during the week, eating well — all of these things factor into success. 

For loyalty, there are the elements of: 

  • Delivering a positive dining-in experience (food + atmosphere + service) 
  • Delivering a positive takeout experience (food + packaging + delivery time — actual vs. estimated + portability of items ordered + friendliness of delivery service) 
  • Brand values vs. guest’s values
  • The volume of other exciting brands a guest may have top-of-mind, alongside yours
  • Proactive outreach from the brand that hits on the interests of the guest

That last one is where marketing can control. It’s one out of five bullets, but it’s an important one. Even if the stars align for the first four, you absolutely need that proactive outreach to stay top-of-mind and keep a happy guest remembering to come back. 

Misconception: You need a formal guest program in place to say that you focus on “loyalty.” 

The Truth: No, you don’t. Focusing on loyalty means you simply have internal processes in place to get a first time guest to come back. 

Let’s rethink of how we all define “loyalty.” It could mean increasing brand value in the eyes of your guests. Or driving up the lifetime value of a customer by using targeted marketing. In fact, it’s both! Think about it this way: 

Are you marketing to first-time guests? 

Do you recognize their behaviors and speak to them outside of order confirmations? 

Do these guests feel seen by your brand after their first order? 

If the answer is yes, then you focus on loyalty. “Loyalty” does not require an opt-in program. 

Here are some great examples of loyalty in practice without a formal program: 

  • Avocaderia sends a SMS text from the owner to every guest after their first order, asking them how the order went and sharing one of his favorite songs with them. 
  • Groucho’s Deli sends an email from the general manager after an initial purchase, welcoming the guest to the brand. 
examples of restaurant loyalty with real brands

See what we mean? Okay, let’s demystify another misconception. 

Misconception: “Loyalty” is a word that’s cheap. “Doing loyalty” means I’m cheapening my brand. 

The Truth: Maybe, if your “loyalty” program means you’re constantly giving away freebies or discounts, where you’re coaching a guest to start to expect those lower prices. But again, this isn’t what true loyalty means. True loyalty means actually increasing the value of your brand so that you can keep the same prices and they are perceived as lower by the guest, because value outweighs true cost. 

What it looks like: 

 🏁 A guest has an amazing experience. 

 🏁 They go home and receive a personal welcome from the owner of the brand by text. 

 🏁 They also receive a warm welcome over email from the general manager. 

 🏁 Over the next few weeks they learn more — by email — about the brand’s values, their mission and the story of how they came into being, and they get a couple sneak peaks at staff recommendation for menu items. 

 🏁 This guest now has a warm feeling when they think about the brand. They tell their friends about it. They learned that a core value of the brand is sustainability and community, and they really connected to that. Plus, they want to try the paella that the owner recommended. 

 🏁 They bring a family member with them and go back in the same month. They are happy to give business to this brand because they know they are doing something good for the world.

That right there, is loyalty.

Misconception: “Loyalty” is just for quick-service brands. It has no place in the seats or minds of full-service restaurants. 

The Truth: Any full-service restaurant that’s interested in bringing a first time guest back (in other words, every single full service restaurant) should be focusing on loyalty. 

Casual dining, fine-dining, we’re looking at you. 

In 2022, no brand should be resting on its laurels and assuming that every guest will be coming back again based on the food and atmosphere of their dining experience. 

Even if your leadership feels strongly against sending proactive emails or other marketing campaigns, if you’re not focused on “loyalty” then you have no way of knowing who your top customers. And if you think seeing them at your host stand is enough, you’re wrong. 

Think about the opportunity cost of having a regular who spends thousands and thousands of dollars with your brand. 

Have you ever asked them why? 

Have you ever asked them to give you feedback about what they would change? 

Have you ever thought about targeting other guests like them for acquisition marketing? 

Loyalty is all of this. It’s understanding who it is exactly who is already loyalty. Getting to the bottom of their values and desires, truly recognizing them, and using these values and behavior patterns to acquire new guests. 

The strategy of “provide good service, and they will come” just doesn’t hold up in 2022. 

There’s too much competition out there to think that you can sit idle and your business will serve as a magnet on its own, based on service. 

Not sure the right way to go about this?

Check out our webinar. 

lets bust loyalty myths

Misconception: Loyalty can't really be measured.

The Truth: It can! It just differs from brand to brand. We recommend that you look at these metrics: 

  • Your average lifetime value
  • Your average frequency (look at your volume of guests who order weekly vs. monthly) 
  • Your average reorder rate (on average, are guests ordering 1 time? 1.3 times? 1.7 times?)

You want to use measurable behaviors to find your top 10 percent of guests. You can play around with this by increasing your average and looking at audience sizes: 

  • How many guests order 2x your average customer lifetime value?
  • How many guests order weekly, if most guests order monthly?
  • How many guests order 50% higher than your average reorder rate? (i.e. if most guests order, 1.5 times on average, how many order 2.25 times?)

Your loyalty goal should be to get more guests to fit the criteria of your top 10%. So you want to widen that volume. To keep things simple, we recommend you stick with one metric, to start. Try your customer lifetime value, for example. Let's say right now, your average lifetime value is $300. Only 10% of guests hit that status. While most loyalty programs would focus on rewarding that 10%, your real goal should be to get more guests to fit that criteria. You want to widen your loyalty base.

What Is a Restaurant Loyalty Program?

Typically it’s a process that allows a customer to opt in to a program where they receive special messaging and offers — either manually on-premise with in-person punch cards or more recently electronically before or after first purchase online.

restaurant loyalty program

What Can Be Shortcomings of a Restaurant Loyalty Program?

While a formal loyalty program has its benefits, it can also have these shortcomings:

  • Offers with discounts reduce profits for guests who would have ordered anyways.
  • Discounts can build a guest expectation for lower prices with your brand
  • Programs that require opt-in have limited participation with <15% of customers
  • These programs overlook the 85% of customers who can become brand advocates with recognition and targeted marketing. They often don’t have an automated way of acquiring new loyalty members and leave these guests to move towards loyalty on their own.
How to increase customer loyalty in restaurant

Here are two tactical ways to counteract this shortcoming and drive loyalty across your entire customer base:

Pro Tip #1 — Use SMS texts to identify bad experiences immediately, reach out from your location’s general manager, and rectify the situation.

Did you know that 93% of customers go on to re-order when they receive excellent customer service? Turn a negative reviewer into a loyal guest with a personal apology and acknowledgement from your GM.

Pro Tip #2 — Use email marketing to encourage first-time guests to come back, and to come back faster.

Restaurants that use Bikky to track first-time guests for welcome message drip automations see a 25% increase in revenue in each guest’s first 30 days.

What Else You Can Do Today to Increase Guest Loyalty

Let's talk about ways to achieve loyalty without a formal program.

  • Greet every new guest after they leave your restaurant or order online.

Rather than relying purely on the dining experience to drive a re-order, use proactive email marketing with a 5-step welcome drip email campaign. Get a full campaign template.

  • Keep it personal.

People connect with people. Instead of having your brand emails all come from a logo, personalize your most important communications to send directly from your owner or general manager.

  • Know your guests - have a way to glean insights across your entire database.

If you don’t have a way to access and analyze your entire customer database in one place, then you can’t measure loyalty in the first place. It becomes impossible! Learn more about data aggregation here.

  • React to guest behaviors automatically with behavioral marketing.

If your marketing team or owner spends the day trying to find guest purchasing patterns manually and send one-off campaigns to customer segments, you have a problem. You need a way to monitor behaviors, have real-time segments that add guests based on their behaviors, and a marketing engine that triggers emails accordingly. (Hint: Bikky does this.)

  • Don’t equate loyalty to discounts.

Use personalization to build brand value. Right now, if you’re using a loyalty program to constantly offer discounts, in the eyes of your guest: value < price. You need: value > cost.

  • Consider not having a formal opt-in program for wider reach.

If you do have a formal program, make sure you have a system in place to drive signups with minimal manual labor (i.e. after first order, guests who have not signed up are prompted to do so; having a homepage pop-up to encourage all website visitors to sign up for your membership program

what a restaurant loyalty program example looks like

Ready to learn more?

--> Check Out Our Webinar on Loyalty

Okay, let’s recap: 

  • Loyalty is not a cheap thing. In fact, it’s the opposite. It means increasing your brand value in the eyes of your guests and therefore driving up visit and/or order frequency, recency, and spend per visit. 
  • Loyalty doesn’t require a program. It just requires a strategy. Make sure your marketing team — or owner, if you don’t have a dedicated team — isn’t sitting on their hands waiting for loyal guests to appear. Being proactive is key. 
  • Talk to Bikky if you feel stuck. If you feel like you can’t get a clear sense of who your loyal guests are right now or you don’t have a way to measure loyalty on an ongoing basis into the future, we can help! We measure average order value, average frequency, and lifetime value. We can also tie your revenue to marketing campaigns for you. We’re basically a restaurant marketer’s secret weapon and lifesaver for spreadsheet-free, attribution-filled peace of mind. 😉

Get a Demo of Bikky

Not ready for a demo? Check out our blog post on customer loyalty FAQs.