The restaurant industry continues to face serious headwinds. Sustained high inflation, coupled with economic, political, and social factors, compels consumers to be selective about dining out.
Data from the Ipsos Consumer Tracker shows that “a third of Americans have cut back on fast food, sit-downs, and delivery alike since the start of the year. Nearly half report cooking dinner more at home, while 38% are doing the same for lunch.” This presents restaurant leaders with the daunting task of consistently remaining the top choice for their customers.
While quick-serve restaurants are accustomed to playing the value game, we are seeing a significant uptick from casual dining brands participating more heavily in this competition, driving prices down industry-wide. This trend, combined with rising labor and supply costs, has led to record bankruptcy levels. Over 20 prominent chains, including Red Lobster and Buca di Beppo, declared bankruptcy in early 2024.
Forward-thinking restaurant brands are innovating across all facets of operations and marketing. Their goal is clear: increase visits and ensure every customer experience exceeds expectations. Brands need to operate from the perspective of their core customer.
Emotional Connections Drive Brand Choice
Retaining a core customer base is crucial for restaurants wanting to keep their doors open. To maintain engagement, brands should focus on delivering exceptional quality and a superior customer experience. This means focusing on every detail, from the ingredients to the level of service provided, to ensure an experience that resonates with customers.
While driving immediate transactions is important, the true key to sustainability lies in investing in long-term brand building. This is where the emotional connection a consumer has with your brand becomes indispensable.
A Harvard Business School study reveals that customers, with an emotional connection to a restaurant, are 27% more valuable than those without. Given the enormous opportunity to create new value, companies should view emotional connections as a foundation for their strategy.
For many brands, this journey begins with truly understanding what sort of feeling and experience their core customers crave.
Crafting a Seamless Experience
Developing these emotional ties naturally leads to the need for a seamless customer experience. By integrating in-store and digital interactions, brands can create a fluid journey for customers, reinforcing the emotional bonds that drive brand loyalty.
A study by 84.51°, highlights the importance of providing a seamless transition between in-store and online shopping for an optimal consumer experience. Over 50% of consumers expect the same coupons and pricing to be available both digitally and in-store. Ensuring the in-store experience is as consistent as the digital one, and vice versa, allows customers to expect a certain level of experience.
Customer data helps bridge the gap between digital and in-store interactions.
For instance, greeting customers by name at the drive-thru and suggesting items based on past orders enhances personalization. According to Platform9, this technology, known as Automatic License Plate Recognition (ALPR), matches license plates to retailer customer and order databases, with consumer opt-in, to ensure customers feel valued, whether they engage digitally or in person
Rewarding Your Core Customer
A personalized customer experience lays the groundwork for effective loyalty programs. Today's customers desire more than traditional discount programs. Loyalty programs evolve to offer true value exchanges between brands and their customers.
According to recent findings by William Blair, as reported in QSR Magazine, “55% of respondents actively participate in loyalty platforms, a notable increase from previous months. This trend is even more pronounced among younger consumers, with 59% of those under 60 engaging with these programs.”
Gamification introduces a creative spin to traditional loyalty programs. Brands like White Castle develop programs that encourage deeper engagement through rewards and exclusive benefits, driven by customer data insights.
As Aaron Lahman, White Castle’s digital marketing manager, shares, "Our newest program iteration offers rewards but encourages more engagement with our Cravers. It’s like a game where they complete quests to earn badges and unlock new tiers for perks, rewards, and exclusive benefits." This style of loyalty program uses insights from customer data to perfect and personalize the customer experience.
The Future
In the face of economic challenges, restaurant brands are forced to go beyond traditional price promotion to continue to thrive. By building emotional connections and crafting seamless experiences that integrate digital and in-store interactions, brands can foster genuine customer loyalty.
Personalized loyalty programs offering meaningful rewards further solidify these bonds, turning occasional diners into core customers.
After an extended period of stalled revenue growth, the food and beverage industry is on the cusp of rallying. This fresh outlook showcases the resilience and adaptability of the industry, suggesting a promising future for brands willing to innovate and connect deeply with their customers.
Connect with our team of retail and food experts to explore key topics like loyalty, local store marketing, martech stacks, creative content, customer journey mapping, and enhancing guest experiences with digital strategies. Stay ahead of the curve—reach out today!