Establishing customer loyalty will be a critical factor for success in the restaurant industry according to NPD Group, Port Washington, NY.
That was among the findings in the research firm’s report on the restaurant industry: Planning for Growth in New Normal Marketplace.
Historically, many of these restaurants have catered to the 18-47 age group, Bonnie Riggs, NPD’s restaurant industry analyst told Loyalty 360. But due to the economic downturn of the last few years and the high unemployment rate that has hit those under 30 particularly hard, Boomers and older consumers now comprise a higher usage per capita visit rate. So those are the consumers that restaurants should be focusing on for growth.
The industry as a whole is expected to have little or no growth, Riggs added. NPD foodservice market research finds that, although there were over 61 billion restaurant visits in 2012, restaurant traffic counts have yet to recover to pre-recession levels, and it’s more difficult now for operators and their suppliers to find growth paths in the new normal marketplace of less consumer demand. So loyalty programs will be a critical part of the marketing mix.
“To build loyalty, you need to cater to their [Boomers and older] wants and needs,” Riggs said. “They want to be rewarded for their loyalty. Good loyalty programs are important. But people want the loyalty program to be easy. People don’t want punch cards, they don’t want a card. Smartphone users have grown from 45 percent to 55 percent of the population. People want to be able to use their phones or to go online [for registration and tracking]. They don’t want to have to mess with it.”
Riggs added that the restaurants also need to have good quality, good tasting food and offer good value. Patrons don’t mind paying higher prices if they feel they are getting higher value. Similarly, if they feel value is substandard, they don’t care how low the price is.
NPD’s QSR Market Monitor, an ongoing report that tracks the correlation between loyalty and visits, finds that loyal quick service restaurant (QSR) customers visit twice as often as QSR restaurant switchers. NPD defines loyal quick service customers are those allocating 20 percent or more of their QSR visits to the chain, switchers allocated 19 percent or less. Other advantages that loyalty brings are higher brand awareness requiring less costly marketing, loyal buyers bring in other buyers; loyal buyers tend to be less price sensitive, and have a higher tolerance for mistakes.
“The current new normal marketplace requires operators and their suppliers to develop or realign their marketing strategies to address the needs of today’s consumer, like incentives that keep customers happy and deliver perceptions of value,” Briggs added. “It’s also important to keep in mind that there are other marketplace growth opportunities to leverage, and there will always be winners, even in a soft market.”