3 ways restaurants can prevent guests from reaching ‘tipping point’

With annual menu price inflation at its highest since 1982., Matt Lukosavich, strategy director of Vericast, reveals how restaurants can rely on smart targeting strategies and incentive marketing to keep customers choosing them.

Inflation is reshaping consumer dining decisions. In fact, research shows that 60% of consumers indicate that prices have already made eating out too expensive — reaching a tipping point where menu prices outweigh value received, causing a pullback in consumers eating out. And it’s no surprise — annual menu price inflation is at its highest since 1982.

We are starting to see the impact of rising prices across the industry. Restaurants experienced the highest average check growth in over a decade in 2021 and, while there has been a moderate improvement in sales, traffic is declining. As of late April 2022, restaurant traffic had posted itsfifth consecutive week of negative year-over-year growth and remains the biggest challenge for restaurants.

Eventually, high menu prices will outweigh the value received and demand will fall. To combat the impacts of a guest tipping point, restaurants will need to adapt with smart targeting strategies and incentive marketing, as the right deal at the right time can often be the defining factor in where consumers choose to eat.

Capitalize on mega pay weeks

At a time when consumers have less discretionary spending dollars, restaurants should be strategic and target communications during weeks when most Americans receive a paycheck.

According to IHS Markit payroll tracking data, there are five upcoming 2022 “mega pay dates” in which paychecks and benefit payments will happen simultaneously, meaning more Americans are getting paid on the same dates: July 1, September 2, September 30, December 2 , and December 30. Advertising before, during and after these key dates can help brands across all industries, but especially restaurants, drive incremental traffic at a time when people are more likely to treat themselves.

Use incentive marketing to complement loyalty marketing

Consumer spending and visitation patterns are enhanced when guest loyalty is combined with incentives. Recent data fielded by Technomic for Vericast found that 68% of loyal incentive users visit once a week (compared to only 26% of not loyal, non-incentive users) and there is a 113% increase in visit satisfaction when loyal guests use coupons ( compared to not loyal non-incentive users).

But only speaking to loyal guests is not enough to drive sustainable traffic; it must be combined with incentive marketing to drive new customer acquisition. Recent research shows that:

  • Over half of consumers are encouraged to try a new restaurant with a coupon or discount.
  • 51% state that discounts are important to save money when eating out.
  • 28% say they use print ads to help plan restaurant visits.

It’s clear that diners are looking for deals and reward programs to help make spur-of-the-moment decisions when eating out. They also feel more positively toward brands that offer value, making them more likely to exhibit loyal behavior.

For brands concentrating efforts on online/ app orders, print advertising can be a powerful tool to drive online activity. The Vericast Restaurant Report found that, after seeing a print ad, younger consumers are more likely to search online for a menu, mobile app or, most importantly, place an order, proving that offline messaging can online actions.

Win now and build long-term loyalty

The financial crunch is real, but brands can still win during these inflationary times. Incentive marketing is not only providing to inspire action with today’s cash-strapped guests, but it’s also becoming a highly effective tool when encouraging app downloads and loyalty behaviors – key performance indicators for restaurants.

In planning the second half of 2022, restaurants must consider a strategy around the remaining mega pay weeks to ensure they are top of mind when consumers have spending power.

Restaurants who deliver incentives using an always-on, omnichannel marketing approach through direct mail, online channels and a mobile app are most likely to capture business when consumers have the discretionary income to dine out.

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