This Is Why Restaurants Close.
At 416 Coffee we have worked with hundreds of restaurants. Some of them are our clients forever, beating the odds and thriving for years. Others are a flash in a pan. Here today, gone tomorrow. As there coffee supplier and as a marketer it has always fascinated me to observe the ones that stick around versus the ones that disappear. What makes a restaurant successful?
There are the obvious factors; service, atmosphere, and of course the food. If any of those pillars aren’t there, then the business is doomed to fail. But, what about the restaurants that get all of those factors right and still close their doors, what happened to them?
It usually comes down to one very broad problem. They didn’t get enough repeat customers.
When a new restaurant opens in a neighborhood, it’s frequented by all of the locals eager to try out something new. The owners get great feedback, the locals love the new restaurant! The tired entrepreneurs sit late at night thinking about their exciting new business. And then. Nothing.
If a customer has a great first experience at a restaurant, the statistical likely hood of them returning is only around 30%, if they have a second experience that is also flawless, the chance of them returning increases to 40%. Now, if the customer has a third impeccable experience at your restaurant, the percentage jumps to 70%. This means that restaurant owners need to wow customers three times to turn them into regulars.
So now that we have a metric forsuccess, 3 successful visits, the questions becomes how do we get a customer to come back over and over again?
The answer is simple, give them something for free. Create 3 coupons, one for their first visit, one for their second, and one for their third. Each coupon gives away something for free, not free with a condition, not kinda free, something that is completely FREE.
People will always come when something is free, and they will often buy more. When you give something away for free you are also inviting a psychological phenomena called the reciprocity effect. In layman terms, the reciprocity effect means that when people get something of value for free they feel obligated to purchase from the business in the future.
So start big and get smaller. Offer a free entree on the first visit, then scale it down to an appetizer on the second visit, and finish with a free dessert on the final visit.
“People get used to discounts, they don’t get used to free.” — Jon Taffer
