How restaurants can re-connect with their customers since they have disappeared

Friday, the 13th, is generally considered an unlucky day in the western world. In 2020, it was that and a whole lot more for the restaurant industry. Restaurant sales in the US were already soft in the beginning of March before local, state, and federal authorities moved to close restaurants and other entertainment venues to flatten the spread of the coronavirus. Since then, restaurant sales have been in a freefall in what is likely the biggest demand shock to ever hit the industry.

As domain experts in analytics, customer loyalty, and business intelligence with leading clients in the restaurant industry, we’ve spotted three key changes to customer behavior over the last few weeks that are worth highlighting:

  • The Shock Is Not Felt Equally: Dine-in only restaurants have been hit the hardest, with online reservation platforms showing declines of 75-90% or more versus the prior year. Formats, such as fast-casual with dine-in and other consumption options such as delivery, have fared slightly better with sales declines of 60-70%. Least affected, but still heavily impacted, are quick service restaurants which have seen sales declines of 25-30%.
  • Drive Thru Is A Savior: Not too surprising, dine-in behavior has been replaced with a shift to in-store pick-up, delivery, and drive-thru. While delivery gets a lot of focus these days, drive-thru now accounts for the largest transaction share for many restaurants with gains of 100% or more. This, along with other factors such as value menus, may be a key reason why quick service restaurants have fared the best.
  • The More Things Change…: The more they stay the same. Promisingly, when we look at customer flows and sales contribution, we see that the most valuable customers before the coronavirus are still the most valuable customers during the coronavirus. They generally come in during the same dayparts they came in previously, and order similar items.

Despite these changes, there are ways for restaurants to engage or re-engage with customers in a way that is relevant for the customer and stabilizing for the restaurant. Four ideas to execute on include:

  • Focus on Delivery and Drive-Thru: Don’t assume that because a customer has dined in, they know about your other options. Whether it be a personalized email to a loyalty member or a geo-targeted paid digital ad to a new customer, restaurants should highlight their digital ordering, delivery, and/or drive-thru capabilities to drive awareness of and demand on these input and consumption channels.
  • Highlight Precautions Taken: In addition to promoting off-premises consumption, many restaurants are raising their hygiene standards with changes such as enhanced kitchen cleaning and sanitizing protocols, regularly assessing worker health, and rolling out contactless delivery.
  • Be Sweet: A little love goes a long way. Harness available customer data to identify demand preferences at a customer-level and surprise known customers in a personalized way with a low-cost and high-value treat. One might prefer the chocolate chip cookie, while another prefers the vanilla swirl. All will enjoy a sweet break in their day.
  • Connect Locally – Pay Forward: Every person is aware of the challenges in the restaurant industry. Continue to build connections within your local area by looking for ways to help the community. In return, the community will help and encourage others to order from you. Those same people don’t want to see their restaurants, of which they have a connection with, disappear.

Much in the restaurant industry will change over the coming weeks and months, but one thing that will remain as true as always is the importance of engaging customers in relevant and valuable ways. That much, at least, will stay the same.

While the demand shock from the coronavirus has been a severe blow to the restaurant industry, it has been a huge boon to the grocery industry.  To learn more about the changes in customer behavior we’ve spotted over the last few weeks with our grocery clients click here.