Customer Loyalty Key to Restaurants Surviving Recession

In just the past year, we have witnessed many restaurant chains filing for Chapter 11 bankruptcy protection – Black Angus Steakhouse, Metromedia Stakehouses (which operates Bonanza and Ponderosa steakhouses), VICORP (operator of Bakers Square and Village Inn Restaurants) – and the Chapter 7 liquidation of Bennigan’s.  The economy, undoubtedly, was a key culprit in these restaurants’  troubles.

While it is true the people dine out less when times are tight, it is also true that people do not stop dining out all together.  In fact, loyal customers continue to patronize restaurants that deliver a highly satisfying dining experience, according to an article in the March 2009 issue of Quirk’s Marketing Research Review by Joe Cardador and Mark Hunter of Kansas City, Mo.-based research firm Service Management Group.

According to Cardador and Hunter, highly satisfied restaurant guests spend slightly more money than guests who were merely satisfied.  In addition, highly satisfied restaurant patrons are twice as likely to return and three times as likely to recommend the restaurant to others than those patrons who were simply satisfied.

Creating the highly satisfying experience  that creates a loyal customer begins with the server, say Cardador and Hunter.  “By simply greeting guests, checking back with them regularly, thanking them for their business and ensuring that a manager is visible in the dining room, restaurants can nearly quadruple  (emphasis added) guest satisfaction compared to a guest who receives zero or just one of those behaviors.”

The authors go on to say that patrons who come to a restaurant either because of a highly satisfying prior dining experience or a recommendation tend to spend more money than those patrons coming into the restaurant because of a promotion or ad.  And customers who experienced all of the service behaviors stated above tend to tip better.

Cardador and Hunter’s article can be viewed online at Quirk’s web site.

The lesson applies not just to restaurants, but to all businesses.  Customers can be made loyal when businesses deliver more than they expect to receive.  And this does not mean giving away the store.  Overdelivering can be a simple and costless as those server behaviors above, or courtesy calls to customers telling them the status of an order.

In any case, it is far cheaper and more profitable to provide knock-your-socks-off service to customers than promotional discounts.  The former creates customers who value your company and your brand; the latter generates price-sensitve customers who will switch to your competitors for a better offer and lowers your brand’s image in their eyes.

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One Response to “Customer Loyalty Key to Restaurants Surviving Recession”

  1. “Must Haves” for Designing an Effective Customer Satisfaction Survey « Insight Central Says:

    […] influence satisfaction.  For a restaurant, these can be numerous.  Recall that my March 16 post Customer Loyalty Key to Restaurants Surviving Recession cited some research that recommended asking patrons whether they were greeted by the server; […]

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