Posted 3 years ago by Jane Sea

How to Retain Restaurant Customers Like a Pro18 min read

Customer retention. How important is it, really? We’ll explore that in more detail in the next section. For now, suffice to say, it’s important. The bottom line is that if you can keep people coming back, you spend less on advertising. Plus, every time a customer returns and then leaves happy, it increases the odds that they’ll bring a group next time. That’s money you didn’t have to spend to acquire those new customers.

In this post, make a strong case for why you should focus on increasing customer retention, and then we’ll tell you about 10 customer retention strategies you can use today. Right now. We follow that up with an exploration of customer psychology, and we teach you seven ways to use that psychology to your advantage.

Read this post before your competitors do.


What’s the Big Deal Anyway?

You’ve probably heard the axiom, it costs five times more to get a new customer than it does to retain an existing customer.

 It isn’t true.

That is, the 5x figure can’t be universally applied to all industries. The earliest reference to this platitude we could find refers to work done by the Technical Assistance Research Project, based in Washington, D.C. This research hails from the 1980s. That in itself certainly isn’t a problem. What is a problem, though, is that it seems to be the only source for the quote, and the exact study or research paper the quote supposedly appeared in remains elusive.

But this didn’t stop pundits from picking the line up and running with it. Consumer Connections Corp, Customer Service Institute and ITEM Group have all made customer retention claims since the ‘80s that appear to be based on the 5x figure. Tom Peters, in his bestselling book, Thriving On Chaos references the 5x figure as well.

But even if it is true, what does it mean? How do we translate that into increased revenue for our restaurants? And if the 5x figure is an exaggeration, what’s the truth?

The truth is, whether the actual figure is 2x, 5x or 10x, is irrelevant. In the paper, The Hidden Costs of Customer Dissatisfaction, the authors make the case that any level of customer dissatisfaction will tank customer retention over time.  What’s more, customer dissatisfaction will damage your brand, which can in turn hamper your advertising efforts. That makes getting new customers all the more difficult.

Because a restaurant is particularly affected by word of mouth, the above goes double for restaurant owners.

One thing is certain: your existing customer base is the lifeblood of your business. Without this core of loyal customers, you might as well close up shop. If you had to constantly fish for new business via advertising, social media marketing and other methods, you would spend all your time in front of a computer or else spend a fortune retaining the services of experts.

But according to Harvard Business School if you can just increase your customer retention rate by 5 percent, you stand a good chance of boosting profits by a whopping 25 to 95 percent. That’s the power of repeat business.


Then let’s get right into the first restaurant customer retention tip.


Make Your Menu a Statement

An appealing menu that’s well-designed is absolutely crucial. A stellar menu design does a few things for you:

  • It conveys your restaurant’s personality
  • It stimulates appetite

Your menu should provide your customers with a snapshot of what you have to offer. It tells your customers what they can expect when they dine with you.

To this end, it’s important to carefully consider which menu items to feature on your menu. It’s equally essential to have those dishes and items photographed by a professional photographer. This isn’t the place to skimp. A well-designed menu is an investment.

Here’s a menu template that works well for most restaurants: feature a few customer favorites mixed in with your unique dishes. So, if you’re a diner, you would feature the old standbys, such as burgers and dogs. But you would also want to feature images of your signature dishes.

This setup entices the customer to explore your menu and may encourage them to choose your signature, pricier items over the classic options.

Ready for more tips? Let’s go.


Core Restaurant Customer Retention Strategies

Retaining loyal customers is one of the biggest challenges a restaurant owner can face. Some customers will go to the same restaurant time and time again, but many are notoriously fickle. What’s more, consumers are swayed by the constant tug of social media. The restaurant industry is far from the only industry affected. In the paper, How Travelers Use Online and Social Media Channels to Make Hotel-Choice Decisions, the authors state that social media will have an increasing impact on all industries as time goes by.

So, with that in mind, let’s explore some of the ways you can boost customer retention right now.

#1 Install Self-Service Kiosks

You’ll need a good, modern POS system in place to take advantage of this one. But self-service kiosks are going to be big. Self-service kiosks allow technologically-adept customers to help themselves. This reduces wait times and, without a doubt, it reduces customer dissatisfaction. These self-help kiosks started out as a gimmick, or quirk, of the fast food industry, but they have since proved their worth. Other types of restaurants are adopting them. Don’t be left out in the cold.

A kiosk or two allows you to streamline your operation, and it might even lower labor costs. Reducing labor cost is certainly why fast food operations like McDonald’s adopted them as soon as they could. Most customers go through the drive thru. But if people coming inside can input their own orders, then the person manning the front counter can spend more time cleaning, manning the fry station or doing pretty much anything else. This gives McDonald’s more bang for their buck, but it also means they can schedule fewer hours for a dedicated fry person or cleaning staff.

#2 Invest in Digital Signage

Another modern touch that can make a big difference is digital signage. Digital signage is a great customer retention tool because you can use it to educate your customers about your special offers, promotions, social media contests, etc. You can also use digital signage to engage with customers as they’re waiting in line.

Digital signage allows you to feature select menu items on a large, high-definition display. Use this real estate to advertise seasonal specials or any other dish that will generate buzz. It naturally attracts customer attention and conveys the message that you’re willing to invest in tools that make their visit more special.

 #3 Create a Customer Loyalty Program

You can use a loyalty program to incentivize customers to patronize you again and again, and you can even use it to regain customers you’ve lost. Loyalty programs are immensely powerful, and given the potential upside, they’re a reasonable investment. According to Nielson, 79 percent of consumers look for loyalty program deals before they make a purchasing decision.

Therefore, simply by creating a loyalty program you can encourage consumers to think about you before they go out to eat. Whether you use a points system or some other mechanism, you can gamify the dining experience, increasing the odds that people will choose you over your competition. Even better, this process happens automatically, with little to no input from you.

Once you get your loyalty program set up, display it on your new digital signage to quickly get people enrolled.

Whether you use a third-party app like Belly or your own custom-built solution, customers have proven time and again that they’re happy to work toward a free snack or entree.

#4 Use CRM Software

The days of easily remembering your repeat customers are long gone. International travel and couch surfing consumers mean that if you want to make a lasting impression, you need to enlist the aid of some heavy-duty tools. Customer relationship management software should be an essential component of your toolkit going forward.

This software—there are many brands with various price points—tracks, organizes and monitors customer information as you acquire it, such as:

  • Customer name
  • Contact details
  • Purchase history
  • Customer preferences
  • Much more

A modern POS should integrate with the most popular CRM solutions. If you’re using an older POS, it may be time for an upgrade. If your competitors utilize CRM software and you don’t, they’ll more readily utilize the psychological tactics and triggers we cover in the next section.

Besides, if you create a loyalty program but aren’t doing anything with the data you collect, that’s just wasteful.

#5 Create Special Offers

If your customers know that you offer regular promotions, they’ll keep coming back. Let’s face it: most people are trying to save a buck or two. Unless you run a very high end establishment, you should try to make that work in your favor. A proven way to do this is to create special discounts. You can give these discounts to regulars. If you do, don’t tell them ahead of time. Instead, have the waiter mention it when they bring the check. This will have a much bigger impact.

More on how to use psychology to your advantage in the next section.

You can also offer broad discounts, such as happy hour, late night specials, and drink specials on specific days. All of this adds up and provides value to the customer.

This need not be a boon to the customer only, though. For instance, if you’re going to discount drinks on a specific day, do so on a slow day, like Wednesday.

# 6 Seek Feedback & Act on It

Nothing tells your customers you care like asking them to complete a survey and then actually acting on the results. If you can show your customers you care, they’ll keep coming back. Millennials, in particular, value businesses that make an effort to connect. Moreover, understanding your customer’s preferences as those preferences shift and morph can give you a leg up.

Note, however, that it’s often not enough to set up a survey and call it a day. You’ll need a way to promote your survey, whether that’s via social media, your digital signage, or both. You’ll also probably find that you need to incentivize participation. Offering a $25-$50 gift card to one lucky winner is usually sufficient.

In other words, give your customers a voice and then listen to them.

#7  Take Advantage of Social Media

We get it. This whole social media thing can get annoying. The thing is, it’s not going away. The Internet is a genie that’s not going back into the lamp. Restaurants that choose to ignore social media do so at their own peril. But if you take the time to learn how social media works, you can learn to leverage it for your own ends. We’ve covered social media on this blog before , and we’ll do so again. So here, we’ll just cover a few broad tips.

Social media provides you with a platform with which you can interact with your most passionate fans. These fans, often called ‘brand ambassadors’ by social media marketing gurus, can provide you with valuable word of mouth advertising. All it takes to keep these super fans happy is the occasional free meal, gift card or other special offer. You can find them by monitoring your social media mentions. A service like Mention  or Google Alerts  is great for this.

An influencer should have thousands of active social media followers. There are various services you can use to determine whether a given influencer has an active following, such as SocialBlade, FollowerCheck or Social Adult Pro.

Note, however, that if you’re offering an influencer a free meal—or especially if you’re straight up paying them—in exchange for a shout out, the influencer will need to disclose this to their followers. But there’s nothing wrong with comping them a meal. Where things become a bit more formal is if you make the free meal contingent on a review, exposure or some other form of reciprocation.

Note: if word gets out that you comp people who have active social media followings, you may find yourself being approached by lots of ‘influencers.’ It becomes even more important to vet these individuals with the tools listed above. It’s also a good idea to manually check some of their followers. Are they active elsewhere? Do they engage organically?

Though this sounds like a headache, and it can be, influencer shutouts can generate revenue. What’s more, it’s a relatively inexpensive form of advertising.

#8 Host Events

You can combine this one with the previous tip for a double up effect. People love having a reason to go out and spend money on meals. A pre-scheduled event gives consumers an excuse to go out and split the tip. This can help you entice budget-conscious customers. What’s more, they often spend more money in groups than they would have otherwise.

A theme night or other special event can get people out of the house, and there’s no reason you can’t make the event a regular thing. Get your social media influencers to attend and to tell their followers.

You’ll also want to post about these events on your Facebook page. If you have an email list, don’t forget to send them a blast email about the event. You do have an email list, don’t you?

#9  Focus on Customer Service

Sure, it goes without saying that if you want to survive in the restaurant game you’ll need stellar customer service. But customer service means different things to different people. Are you quick with the check? Do you remember your regulars and offer them their favorites? Do you offer new menu items regularly? Do you keep your classic dishes available? Do you avoid running out of stock? Do you offer a broad sensory experience that provides enticing smells, soothing sounds and, of course, comforting flavors?

When customers walk into your restaurant, do they feel welcomed?

You can’t be everything to all people. But if you focus on the above, you’ll cover a lot of bases. The goal is to be as objective as you can about your own customer service and to improve over time. If you can do this, you should see a corresponding boost in customer retention.

The reality is customer service often hits the back burner during peak hours. If the only thing differentiating you from your biggest competitor is that you manage to keep customer service top of mind during your busiest hours, then you’ll come out on top.

#10 Update your POS

If you’re using an outdated, old-fashioned POS, you’ll eventually be left in the dust. If your competitors are using a newer system, they will be able to manage customer relationships better than you can. This will, over time, translate into higher customer retention…for them. What’s more, they’ll have an easier time reducing labor costs and inventory shrinkage.

How long can you afford to keep using that 10 year old system?

So there you have it. Ten core customer retention strategies for restaurants in 2020. Next, let’s hop inside the customer’s mind to learn how you can entice them to spend more at your restaurant.


Avoid Welfare With Psychological Warfare

 But don’t wage war on your customers. Wage war on complacency, in yourself and in your staff. Use the strategies in this list to show your customers you care and value them. If you do this consistently, you will increase customer retention. Sounds simple, and that’s because it is. It’s an oft overlooked strategy that can pay huge dividends.

#1 Hey Guy, Smile

We all get aggravated from time to time. That new waiter dropped a plate of perfectly good food on the floor. Your old, buggy POS just went down again. Stuff happens. Take a deep breath. Slap a smile on. Let it reach your eyes.

The thing is customers don’t care that you’re having a bad day.

When in your establishment, the consumer exists in a bubble. It’s a special space that allows them to escape their own problems for a little while. Since they’re paying for your food and atmosphere, they’re entitled to inhabit that bubble. They just want to have a good time with their friends, or they just want a good meal at the end of a long day. Whichever the case, they don’t have to care that you’re having a tough day.

You don’t have to entertain, nor do you have to present a false sense of joviality. But at minimum, smile at customers as they come in. Make them feel welcome. If you do this consistently, they’ll remember. That might make them choose you over your competitor when they’re having a crummy day.

#2 Remember Their Names

Do you know what your customer’s favorite topic is? Themselves. The fastest, easiest way to make a customer feel important is to remember their name. Why do you want them to feel important? Because it releases dopamine in the brain. Dopamine is a feel-good chemical that’s part of the brain’s reward pathway and has a lot to do with motivation. Every time you cause a little dopamine release in the brain while they’re on your premises increase the odds that the customer will return.

So use CRM software—mentioned earlier—to keep tabs on your repeat customers, and then greet them by name.

Also make sure to greet a customer by name if they’re with someone you’ve never seen before. The stranger will take note, even if only on a subconscious level.

Another important aspect of this strategy is to use their name more than once, especially when you first meet.


You: Hello, what’s your name?

Customer: Oh, hey, I’m Richard.

You: Richard?

Customer: Yep. That’s me.

You: Welcome to ____, Richard, we’re glad to have you.

Customer: Thanks.

Frequent name use reinforces the notion that you are acquaintances. Customers prefer to shop with brands they feel they have a relationship with.

#3 Remember Customer Preferences

As you might guess, this one works on the same principle as the second item on this list. If you remember what your customer likes to order, they’ll get a little dopamine hit, and that makes them feel good. It’s like getting them to think, Hey, I like being here.

Use good CRM software and a modern POS to get this running smoothly.

#4 There’s Always More to Know

Remember how a customer’s favorite topic is themselves? Well, they love talking about themselves, too. If you notice a repeat customer, take some time to get to know them. Let them talk about themselves. Then remember what they said. Next time they come in, resume the conversation, referencing things they said the last time.

By now, you can no doubt sense a theme developing here.

Yes, this will give them a little burst of happy. That’s what you want.

 #5 Give Them More

Sometimes, it’s a good idea to give regular customers—or whales—something for free. But don’t do it so often that they come to expect it. It should be an occasional treat. You can use your CRM software or modern POS to track this internally. If you want to manage this on a per-customer basis, we suggest using a random number generator each time they visit. You can find these easily online. In fact, if you google ‘random number generator,’ Google will supply you with one as the top result.

You can set the minimum number to 1 and the maximum to 100. If you roll a 100, go ahead and comp the meal. But don’t tell them till they get the check.

Making your whale customers feel special accomplishes two things:

  • Keeps them coming back
  • Makes it more likely they’ll bring a group at some point

#6 Value Each Customer

On the other hand, don’t favor one customer over another. Everything you’re doing here should be happening under the hood, with the aid of sophisticated tools. This allows you to focus on each customer. View a first timer as an opportunity to earn a regular. View a regular as an opportunity to earn a whale.

#7 Train Your Staff to Do All This Too


Don’t try to do all this yourself. For instance, you can set up incentives for your staff to remember customer names and preferences. Or you might hold an internal contest to see which server can remember the most names. You should have at least one other person on staff you can authorize to comp the occasional meal, too. These tactics won’t take you very far if you can’t implement them in some way staff-wide.

We hope this concise guide on increasing restaurant customer retention has served you well. If it has, can you consider giving it a share? We would greatly appreciate it!