A wise crab fisherman once said, “there are three kinds of people in business – those that makes things happen, those that wait for things to happen and those who wonder what they bloody hell just happened”.
We was thinking about his prophetic statement recently while dining in a local restaurant that had recently been refurbished and reopened a few months ago after a multi-million dollar investment. While dining there the first week it re-opened we got chatting to the manager. The restaurant was full, if just slightly on the chaotic side of a good customer experience. It certainly wasn’t an awesome experience and the manager explained that while he hadn’t gotten round to organizing any means of collecting customer feedback but real-time feedback would be incredibly useful for him because, “we’re so busy I need eyes in the back of my head right now”. Rolling forward only 12 weeks we revisited the same restaurant. It was more than half-empty plus our customer experience was nothing short of comical but not in a good way. Our abiding memory was that just about every member of staff apologized at one time or other for the most trivial of errors but still there was no way of us helping the poor manager with constructive advice. Speaking with friends over dinner recently, the aforementioned restaurant came up in conversation whereupon it was unanimously agreed that no one would ever return. This got me thinking because it’s just the little marginal things that need to change to persuade guests like us to return. But with no way of collecting guest feedback, the manager is oblivious and the restaurant is slowly dying on its feet.
Both The Restaurant Brokers and Perry Group International have done studies on the average life span of restaurants. Their results are slightly different but show the same trend. The PG study concluded that most restaurants close during their first year of operation with 70% of those that make it past the first year close their doors in the next 3 to 5 years. Whereas 90% of the restaurants that are still operating after 5 years will make it to 10 years. The Restaurant Brokers’ research concluded that up to 90% of independent establishments close during their first 12 months. Almost all other studies suggest that chain restaurants have a longer life span than independents. Chain restaurants will have an average five-year life span.
Many restaurants, particularly independent establishments, fail during their first year because they are undercapitalized. What does this mean in practice? Well it usually means they spend so much time and money advertising for new customers and mostly they succeed – because they offer introductory coupons and people are naturally curious. But in the excitement of being busy they forget that repeat customers are eight times more profitable than first-time customers. If they don’t actively provide a way for first-time customers to give feedback at the point of experience, and then respond quickly, it becomes pure guesswork as to what motivates a first-time customer to become a repeat customer.
Typically what happens, as the restaurant fails, is there are fewer and fewer customers to give feedback. So with a decreasing statistical pool it becomes even harder for the restaurant manager to get objective information to manage a turnaround … and well as our wise old crab man said … when there is no capital to invest in buying new first-time customers our restaurant manager suddenly wonders, ‘what has the bloody hell happened while I wasn’t looking’? The restaurant has blindly reached the point of no return. So when is the best time to ask for guest feedback? – when you are at your busiest and your most popular – because it’s at that point when you have access to the most amount of feedback and also sufficient time to adjust the marginal things that can turn first-time curio guests into repeat customers. What better way to extend your marketing capital as well than simultaneously rewarding guests for their feedback with a coupon incentivizing them to come back?
If you are looking for a way to reward your customers for their real-time feedback about your business then start a free trial, you can start collecting feedback in minute via our free mobile survey app.