Restaurant Sales: How Customer Retention Affects Revenue

Push Operations
December 10, 2020

The 80/20 Rule and Why Repeat Customers Make 80% of Your Revenue

The number of items a customer orders isn't where you'll find your biggest profit generator. A single table that orders 30 items once a year won't be where your profits lie. Rather, it's the table who orders 15 items but return once a week. Ordering more items on the menu isn’t the only reason why restaurants experience big leaps in profits. It's the customers who enjoy their experience, and consistently return to your establishment. Studies show that even a 5% increase in customer retention leads to an increase in profits up to 95% and retaining customers is by far more inexpensive than acquiring new ones. This, is why (if you aren't already) you should be working on investing in customer retention initiatives. After all,  loyal customers are returning customers.

Here are 3 strategies to encourage customers to return.


First, you need to know your baseline. How many repeat customers do you have? What are the profiles of your repeat customers? Are there any similarities between the people who visit your restaurant on a regular basis? If your restaurant POS doesn't have robust reporting qualities, try an email campaign for feedback. According to a study done by Oracle, 58% of guests would exchange personal details in exchange for a personalized offer or promotion.

In this case, a comped dessert is priceless for personal customer data! Within the data, you'll be able to figure out factors that differentiate between one-time buyers and those who are likely to come back. This will help reveal your strengths and what people like about your restaurant. You'll be able to track your progress and it'll help determine out who your ideal client is. The more you know about your clients’ tastes and lifestyles, the more you can tweak things like your menu, or employee training methods as needed!


Secondly, you need to tap into your existing data. Restaurant point-of-sale systems allow your staff to collect data and anticipate preferences. You'll be able to keep track of your customers’ habits like how long they'll dine for, what dishes and drinks are typically ordered, etc. By personalizing a guest's experience, they'll more than likely return! Details such as allergies, preferences, or birthdays can make a big difference. Who wouldn’t like to be served a free dessert for their birthday when they go out to their favorite restaurant? These sort of small gestures lead to lifetime clients and a steady stream of recommendations.


Thirdly, you need to implement practices that ensure customers are loyal to you. This can mean a number of things like providing the best service possible, offering complimentary appys if there's a wait. In a competitive market like the restaurant industry, loyalty is ket. Repeat customers are responsible for the bulk of your income. For example, an Oracle study found that of 52% of customers will recommend to others the restaurants they are most loyal too. Word of mouth still welds more power than any ad or marketing campaign because it’s considered to be real experiences by real people. If a guest enjoys their experience with your establishment, it's likely they'll recommend it to others ... on top of returning. It's like a snowball effect! If guests keep recommending your restaurant, the new visitors will likely recommend to others in their social circle or network!