Repeat Customer Guide for Restaurants and Bars

Benefits of Repeat Customers

To make the most of marketing dollars, restauranteurs want repeat customers. Repeat customers provide:

1. Consistent Revenue – they come back more times, and they spend more per visit
2. Lower Marketing Costs – Acquiring new customers is expensive. Marketing to existing customers is significantly cheaper.
3. Referrals – they are likely to recommend the restaurant to friends, family, and coworkers.
4. Positive Reviews – they are likely to leave a positive review on one of the big three review platforms (Google Review, Yelp, and Trip Advisor).

According to industry statistics, 70% of diners never return for a second meal, yikes 😱.  

The Best Advertising is a Happy Customer; Exponential Growth
The number of new customers brought in by marketing efforts is generally linear. If ads are shown to 100 people, a certain percentage will visit the restaurant. If we double the ads to 200 people, roughly the same percentage of people will visit the restaurant.

A happy customers bring 2 more people. Those two bring four, four brings eight, etc. That is exponential growth.

Nothing scales like word of mouth.

Only two groups of people can let others know about the restaurant: you + your staff and other people. There are more of them than you + your staff.

Why Diners Don’t Comeback

Diners don’t return for five main reasons.

1. Food was bad
2. Service was bad
3. Wait was too long
4. Dirty Restaurant
5. Prices are too high

Mismatch in Expectations

Addressing Reason 1 (Food was bad) and Reason 5 (Prices are too high)

Our expectations of an experience can dramatically affect the experience itself.

Ever had that experience where a new movie or show gets hyped up by friends / media, then you see it and think it is just ok?

On the other hand, ever watched a heavily criticized movie, and think it was better than expected?

Increase customer satisfaction by lowering expectations. That gives the restaurant room to over deliver. Customer expectations are fickle. By setting expectations appropriately, we can exceed them.

Price is what you charge, value is what the customer gets.

The difference between price and value is goodwill. Price communicates value *and* is how customers judge the value received. In economic term, this is called economic surplus.

You want lots of goodwill. Lots of goodwill means repeat customers.

The key point is to align the dining experience with the price charged. Customer expectations for a $3.00 fast food burrito are dramatically different than those for a $30.00 salmon meal. By all means, charge what is appropriate, just ensure the rest of the dining experience exceeds the expectations of that price point.

Tips for Better Service

Addressing Reason 2 (Service was bad)

Never expect customers to forgive you. Act like it.

Delivering better service comes down to a hand full of key ingredients.

1. Smile
2. Greet the customer
3. “No cell phone” policy for front house staff – Nothing will turn off a customer faster than seeing their waiter/waitress on a cell phone. If staff are using a legitimate restaurant app, they should use tablets supplied by the restaurant.
4. Know their name and favorite drink – 50% of customers will rate a visit as excellent if the waiter / waitress knows their name. That number jumps to 65% if they know their favorite drink, even if it is just a Diet Coke.
5. Updates on food delivery – Don’t leave customers hanging. Providing regular updates when the kitchen is busy or the meal is taking a while is a win. Good communication goes a long way to earning trust.
6. Have the manager deliver the check, and ask “Is there anything about your visit that would prevent a 5-star review?”  – It gives the customer a chance to provide valuable feedback and voice possible complaints (in-turn, possibly stopping a negative online review). It also prompts the customer to leave a positive review if they had a good experience. This is a must for fine dining establishments.
7. Thank the customer for the visit
8. Get rid of toxic employees – They don’t like their job and they are bring the team down.

Waiting Experience

Addressing Reason 3 (Wait was too long)

Waiting for a table does not need to be the awful experience customers have become accustomed too.

Make faster wins. A win is any positive customer experience.

Faster wins increase the perception of speed and increases the likelihood they will have a good experience.

Don’t simply take their name and ignore the customer until you call their name 20 minutes later. Their is no win to be found in that.

Reduce the Waiting Time

1. Reservation System – Use a reservation system like OpenTable, Resy, or Seven Rooms.
2. Call ahead of time – Let customers know they can put their name on the waiting list before driving/walking over. This is an easy solution that can be implemented at all full service restaurants.

Making the Waiting Time More Pleasurable

1. Set expectations longer than anticipated. Then, provide updates every 5 – 10 minutes. You can deliver early, but never late. Add expectation of 50% time delay so early delivery looks good.
2. Provide complimentary snacks – Costco is famous for their bite size snack offerings. Plus, this is a great way to steer customers towards higher profit menu items.
3. Provide entertainment – Have a TV in the lobby using  Upshow or Atmosphere; These systems have the side benefit of giving you options to display additional marketing material which can also help steer customers to more profitable items and advertise special events or seasonal dishes.
4. Use coaster pagers; Texting your table is ready via cell phones is unreliable.
5. Offer something for the kids – puzzles, kids books, oversized tic tac toe, or giant toy blocks available from companies like Korxx and TubeLox. This is a must for family restaurants.
6. Music – Play venue appropriate music in the background.

Dirty Restaurants / Bathrooms

Addressing Reason 4 (Dirty Restaurant)

I have a friend who visits the bathroom before placing an order. If the bathroom is dirty, we leave the restaurant. She has a no-exceptions rule to this policy.

That may be a bit extreme, but their is no excuse for a dirty restaurant.

This should not need to be spelled out:

1. Have night staff clean before leaving
2. Have breakfast staff clean after the morning rush
3. Have lunch staff clean after the lunch rush
4. Keep restrooms clean and check them hourly

You should never lose a customer due to a dirty appearance.

Measuring Success, Customer Retention Rate

Customer retention is the ability of a restaurant to keep existing customers returning for repeat visits. These are the happy customers.

Customer Retention Rate (CRR) measures how many people are returning over a period of time. It answers the question, “Are customers still happy with the restaurant’s product and service?”.

Repeat visits can be measured on a monthly, bimonthly, or quarterly basis.

The formula is:
CRR = ((Customers at End of Period – New Customers Acquired) / Customers at Beginning of Period) * 100

E.g. If a restaurant:
Ends a period with 700 customers
Gained 150 customers during the period
Started the period with 625 customers

CRR = ((700 – 150) / 625) * 100
CRR = (550 / 625) * 100
CRR = 0.88 * 100
CRR = 88%

The industry average for restaurants is a paltry 55% (significantly lower than other industries).

A good profitable restaurant will have a CRR of 70 – 80%.