We’ve all heard it: the restaurant industry is risky, volatile, and challenging. 60% of restaurants don’t make it to their first birthday, and 80% don’t make it to their fifth. That’s an astonishing rate for such a ubiquitous business model. Why is it so hard for restaurants to succeed?
There is no easy answer to that question. Increases in wages and food costs are likely culprits. It could also be that when the economy isn’t flourishing, people eat out less. Or perhaps it’s the industry-agnostic challenge of competition. That’s the one we’ll focus on today.
As ethnic, uber-healthy, and non-traditional cuisines continue to become more and more popular, so does the opportunity for restaurant entrepreneurs to attempt to cater to society’s evolving and expanding palette. There are so many options nowadays that you really need to set yourself apart from the rest of the proverbial food court. So how do you do this?
Jimmy Butera, the owner of Butera’s Craft Beer and Craft Pizza in Hamburg, NY, says there are three important qualities of a successful restaurant: consistency, customer service, and quality. Notice that he didn’t say anything about food. Sure, all of those can and do apply to food, but it’s about providing an overall great experiencor your customers. This can be done in a multitude of ways, but most importantly, Butera feels that it is about customer engagement.
Jimmy is a reputable source when it comes to the restaurant business. He began working at his grandfather’s pizza stand at age seven and has traveled across the country in various culinary roles. Today, Butera’s has an impressive 4.5 stars rating on Yelp out of a possible 5 and his most common negative review is about the long wait. He knows a thing or two about customer experience.
Customer engagement starts long before the customer actually steps foot in the restaurant itself. People trust online reviews almost as much as a spoken account from a friend or coworker – 94% of people say an online review has convinced them to avoid a business. Most restaurants live and die by their Yelp scores, as it has a direct impact on bottom line revenue. Butera says his sales dip 20-30% when his Yelp rating drops just half a star, while a Harvard Business School study found a one-star decrease could lead to a 5% loss in revenue, while a one-star increase leads to a 5-9% increase in revenue. Statistics show that review volume on Google and Facebook is surpassing Yelp, but regardless of the methodology or source, the impact is irrefutable. Restaurants owners must keep an eye on their online scores and do what they can to ensure a positive experience while the customer is still at the restaurant. No matter how authentic, simply responding to reviews online is not enough.
"A Harvard Business School study found a one-star decrease could lead to a 5% loss in revenue, while a one-star increase leads to a 5-9% increase in revenue."
The solution to avoiding negative reviews: knowledge. Knowing about negative experiences ahead of time, as well as amplifying positive experiences, are great ways to improve ratings. This can be done by an owner/GM constantly walking tables and building relationships with customers, as Jimmy suggests, or using a technology like Pulse, which collects real-time feedback from customers and sends it to frontline staff immediately. It is also smart to keep an eye on social media to see how people are talking about you, and discover engagement opportunities, like a birthday or anniversary. Having this info in the palm of your hand is how you “wow” the customer.
Local Measure helps restaurants understand sentiment and preferences in-the-moment, which allows you to progressively profile and cater to your most loyal customers. It helps you build operational knowledge that increases your ability you to fill seats via improved, more targeted marketing efforts. By collecting feedback and observing public sources of data like Facebook and Instagram, restaurants have the opportunity to make customer experiences special, as well as intercept an unfortunate negative situation before it can be broadcast to thousands of potential new customers.
Whether you are a family-owned business like Butera’s, a household name like Chick-fil-A, or a local or regional chain, engaging with your customer is the best way to keep your customers coming back for consistently great service and impeccable quality. Jimmy, who relies on Local Measure every day, says it best: “Restaurants, although competitive, need to stand together and use these tools to improve the experience of their customers and understand them better.”