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Relationship Between Restaurant Customer Experience and Profitability

Relationship Between Restaurant Customer Experience and Profitability

Customers Expect Superior Restaurant Experiences

A restaurant’s brand is no longer just about the food. Now, the restaurant customer experience (CX) plays a vital role in which restaurants customers choose. The CX is the connection a customer has with your brand and all of the touch points included in their experience with you. It includes everything from your marketing messaging, to how they interact with your website, how your staff treats customers, how your atmosphere makes people feel, and everything in between.

As new technologies have developed and consumer lifestyles have changed, the CX has evolved. Years ago, food and price were the main things that mattered most to customers. But as competition gets tighter in the restaurant industry every year, restaurants are competing for business and are stepping up their games to stand out and provide the “wow” factor customers want. If you aren’t paying attention to these shifts in trends and expectations, your restaurant profitability could quickly fall behind. Here’s how a positive customer experience affects your restaurant profit margin:

1.   Great Customer Experiences Produce Happy Customers

The first step in creating an ideal customer experience is to reduce or eliminate pain points, such as long wait times or incorrect orders. Improving your operational efficiencies helps create a more seamless experience for your guests. For example, an improved seating layout might create more comfortable dining, or a tablet POS system can help speed up wait times and provide a more accurate ordering experience. Offering multiple ways for customers to order (onlineapp, phone, and in person) provides the convenience today’s busy diners demand. By solving your customers’ problems, you’re giving them a more pleasant experience.

Another big part of the restaurant customer experience is the way you interact with your customers. By personalizing the way you communicate with them, you’re creating stronger, more positive relationships. Consumers want to feel connected to a brand, and improved communication is the perfect way to increase their bond to your business.

Providing outstanding customer experiences can give you a real competitive advantage. Consumers today are looking for new, exciting experiences. In one survey, 42% of people said they are more likely to buy from a company that offers novel ways to experience its products and services. They don’t respond well to traditional marketing methods like they used to, so finding ways to keep the experience fresh can have a direct impact on your restaurant profitability.

2.   Happy Customers Lead to Greater Customer Loyalty

A satisfied customer can quickly turn into a loyal customer, and loyal customers can almost literally be worth their weight in gold when you consider their lifetime value. If a customer is happy with their experience, they are more likely to stick with your restaurant and return time and time again. The next time they’re craving a bite to eat, they will remember the great experience they’ve had with you in the past. Being attentive to customers’ needs allows restaurants to convert up to 95% of diners into repeat customers.

Not only will loyal customers make return visits, but they’re also likely to bring in even more customers. People who are happy with their restaurant choices will share their experiences with their family and friends.

Word-of-mouth marketing is an increasingly crucial factor in today’s environment—it’s 5 times more effective than paid media marketing, as people are 90% more likely to trust and buy from a business recommended by someone they know. Online reviews also heavily influence how consumers choose brands. A 2019 study found that 72% of respondents always or frequently read reviews before making a decision on places to eat.

By providing great customer experiences, you increase the positive word-of-mouth and online review recommendations, which help draw in new customers and strengthen the loyalty of your current customers.

3.   Greater Customer Loyalty Results in Greater Restaurant Profitability

More loyal customers mean more repeat business for your restaurant, resulting in greater sales. As with any business, the probability of selling to an existing customer is much higher (60%-70%) than the chances of making a first-time sale to a new one (5%-20%). When diners return, they’ll likely spend more per transaction and will be more willing to try new menu items. Plus, the restaurant profit margin is higher for both repeat sales and sales brought in through word-of-mouth, because you don’t have to subtract acquisition costs. For these reasons, increasing your retention rate by just 5% can increase profits anywhere from 25% to 125%.

When you provide an outstanding customer experience, not only will your profits increase, but you’ll also gain a loyal following and set your business up for long-term success. If your customers are sticking around and supporting your restaurant (and bringing friends), your business will continue to thrive. 

Looking for more information on how to improve the customer experience in your restaurant and boost profitability? Download our free eBook to learn what you can do to keep those satisfied repeat diner dollars rolling in.  

HungerRush is a leading provider of restaurant POS solutions & technology that helps you create the best possible customer experiences. Our integrated, comprehensive solutions are designed by industry experts and backed by 24/7 customer support. Learn more, Request a Demo today.