It’s the Frequency, Stupid

I’ve heard it so many times this year I almost started believing it myself. “I need more customers! How do I get more customers?!”

Sales people have jumped on that bandwagon. Many aren’t telling you what you need, they’re telling you what you want to hear. “We reach 50,000 people ready to buy. We’ll get you more customers.”

Here are the facts:

  • The average American is dining out 4 fewer times per year
  • Depending on the type of restaurant you have, you probably have around 4,000-6,000 unique customers
  • 4 fewer visits per year x 4,000 customers = 16,000 fewer visits x $10 ticket average

Not all of your customers have taken all of their four visits from you, but maybe you lost 1.5 of those (times 4,000 = 6,000 x $10 ticket = $60,000). Sound familiar? Is this about how much you’re down?

Now your ticket average is probably higher now than last year. Why? Because the customers who remain are your loyal ones, and loyal customers spend more and bring friends. So if you normally have a $10 ticket average, but now it’s up to $11 or $12, you’re missing your not-so-loyal (but very profitable) $8-$9 customers.

You need to focus on getting them back, focus on getting customer counts up.

New customers will come, but they cost more to get and take longer. Former customers, not visiting because of the market, are easier to get back more often (email, bounce-backs, promotions, LTO). Solidify your base.

Posted August 12th, 2008 and filed in Uncategorized
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Restaurant Market Share

Chipotle’s doing it. Buffalo Wild Wing is doing it. So are Brueger’s Bagels and BJ’s Restaurants. They’re planning to aggressively open new stores this year. This from the June 30, 2008 edition of Nation’s Restaurant News.

And they’re doing it even as consumer confidence slides. Even as people dine out less. Even though new store openings have outstripped demand every year since 2003 (there is one restaurant for every 662 people in the U.S., according to the NRA).

Why?! Two reasons: 1) because they can (good cash positions and limited debt) and 2) because it makes sense – grab market share now, cash in when the market rebounds.

Those who advertise now, who aggressively market, who open new units, have a great chance to grab market share, increase profits during the downturn, and come out far ahead of the pack after the recovery. So says nearly every study of every economic downturn since WW II. If you’re waiting it out, you might be in trouble.

So…what to do? Here are some suggestions from those in the know:
- Cut costs, but don’t skimp. Customers who perceive you’re giving smaller portions without lowering prices, or charging for items that used to be free, will make you pay for it by giving your share to someone else.

- Invest in the culture. Nearly half of all lunch and dinner diners say that excellent atmosphere and customer service would help them forgive rising menu prices. Even if your prices aren’t rising, you’ve gained goodwill (and loyalty).

- New menu items. Limited time offers and new menu items give existing customers more reasons to visit more often.

- New offerings and dayparts. Late night meals, breakfast, mid-afternoon specials, carry-out, delivery, catering – make it easy to purchase from you.

- Share, not profit. Profits matter, you’ll never hear me say they don’t. But you can’t take percentages to the bank. Do what it takes to get butts in seats, but be careful not to addict your customers to discounts. Offer an exchange of value: apps for 4 when you buy them for 2; free dessert with purchase of salad and entree; free upsize before 11:30am (start lunch earlier).

Head count, butts in seats, are more important now than percentages. The more mouths you have in your restaurant (and the better you take care of them), the more mouths there are to spread the word.

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