There has always been 3 ways to grow sales: more guests, more often and at a higher spend.
As a previous restaurant operator (now data hound) it has only become more obvious that frequency is king over the other two. And in fact, one of those other two may actually be negatively impacting future visits.
For the most part, frequency equals loyalty when it’s a byproduct of food and service quality. Greater spend on a single visit… not so much! You may actually be pushing someone outside their comfort zone. Focusing on individual transaction revenue and profit versus annual margin dollars per person can easily lead to less frequency when a guest has limited discretionary funds for food. They will tap out.
On the flip side, greater frequency typically steals business from your competition as they are replacing that visit with yours. Without consistent growth in frequency, you have to advertise and that additional spend typically erodes profit since the offer lures guests in with a discount. It’s the worst of all worlds. Not only are you discounting to maintain frequency, you are creating new guest acquisition with a value-oriented offer. Data shows when a first-time guest responds to a discount the brand often struggles to fully convert them to full price… ever! However, a guest that comes in at the direction of a friend is fine with full price because it has been suggested the brand is worth it. To take it a step further, most people that are happy with their restaurant choice don’t use coupons, even when available – they don’t want them or need them.
Hard to argue that revenue thru increased guest frequency is how to grow responsibly. It generates word of mouth advertising (no cost) hence new guest growth. Your annual sales and margin dollars from that customer are maximized since frequency equals loyalty, while also reducing visits to your competitor. It’s like double dipping, but in a good way. The moment your value gets minimalized or treated as a commodity your troubles can begin. Take food and labor for instance. These are the 2 core cost categories that determine frequency more so than any other. Yet they are often the easiest to target because as a variable cost, adjusting portion, ingredient choice or hours scheduled can be altered with the wave of a pen. Rather than being cost categories, think of them as revenue strategies. You’ll make better choices. Years ago, our best franchise operators had one simple rule; schedule for the sales you want, not for the sales you’re at. It doesn’t have to be complicated. Often the very same restaurants that are slicing schedules down to the minute are the very same ones that need service help the most.
Another way to look at frequency – you’re working off a number that has a maximum achievable goal. For instance – if a person eats out 3 times a day their out of home meal count is 21 times per week. Your task is simple – claim more of those visits than your competitors. I promise that raising price to cure bottom line woes only magnifies the issue. You cannot sustain having the same guest constantly spend more money. It just does not compute. They will reach their breaking point and quit the brand or best case, just come less often resulting in the brand purposely trading increased ticket amount for less frequency. Coming soon to a theater near you, “The Hamster on the Wheel.”
How do you protect frequency? It’s in your restaurant POS software data on a per trade area basis. Which items drive affinity to brand? What basket combination drives frequency? Is there a smarter way to position menu items based on trade area palate preferences? Sure! Why push what’s popular nationally if it isn’t a trade area favorite. End of day… there is no more honest way a guest can talk to you about your brand than how they buy your food. The answers are in your data. How you speak to those millions of data points is the new language.
It just so happens that speaking the new language is what we do for 170+ brands and growing. Visit MarketingVitals.com to learn more.