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Research Report: Keep Customers Coming

This exclusive Driving Traffic research asks chain operators which methods they use to keep guest counts up and which ones really work.

By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 10/1/2008

This year the question is more relevant than ever: How do you get more customers coming through the doors?

Operators use many methods, from sending an e-mail newsletter to a small group of loyal guests to airing a national television campaign, from sponsoring a charity's 5K run to running new menu specials more frequently. But when margins are slim and consumers are cautious, which methods are the best investments?

To learn some answers, Chain Leader surveyed 56 operators, each from a different restaurant company. A majority of the executives hold director, vice president or chief officer titles in marketing or operations. 21.4 percent of them have four to 10 units; 37.5 percent have 11 to 99 units; and 41.1 percent have 100 or more. Respondents represent quick service, fast casual and full service; corporate offices and franchisees; and a wide range of menu segments, average checks, unit counts and average unit volumes.

Asked how their traffic counts compared with last year, 28.6 percent of respondents say they are up, 39.3 percent say they are down, and 32.1 percent say they are flat. Those figures are different depending on segment: 38.5 percent of quick-service operators say traffic is up; 20.0 percent of fast-casual and 33.3 percent of full-service operators say the same.

When asked their three biggest concerns for this year, 12.5 percent name reduced or soft customer traffic. Increasing food, labor and energy costs, as well as recruiting and retaining employees, all were of greater concern. However, 22.2 percent of full-service respondents cited reduced traffic in their top three.

Ads on Top

All of the respondents use some sort of advertising, from signs at the restaurant to e-mail campaigns. When asked their primary advertising method, television rises to the top, named by 30.6 percent of operators. 26.5 percent cite Internet or e-mail, and 12.2 percent, newspapers. During the past 12 months, 17.9 percent began using Internet or e-mail advertising for the first time or increased its use, while 16.1 percent say they decreased or stopped use of TV.

When respondents were asked which method of driving traffic was most effective, three of the top four methods cited were advertising: 10.7 percent, Internet or e-mail advertising; 8.9 percent, TV; and 7.1 percent, newspaper. More than a third (33.9 percent) named some form of advertising as their most effective way to drive traffic.

Prices, Menus, More

Most, or 94.6 percent, of those surveyed use some sort of price promotion to drive customer visits. Fully 60.7 percent of respondents use direct-mail fliers/coupons to help drive traffic, and more than half (51.7 percent) of those using price promotions say it's their primary method. And 28.3 percent have increased or started use of direct-mail fliers. About one of 10 respondents say they are their most effective means of increasing guest counts.

When it comes to other price promotions, 30.4 percent of respondents offer discounts for bundling or upsizing meals, and 28.6 percent offer senior discounts.

Respondents also use their menu to keep customers coming. 69.6 percent of operators update the menu or add new items. About half (51.4 percent) of those who use any menu updates say adding new items is their primary means, and 26.0 percent say they have increased the rate of updates.

Other top menu methods are updating the beverage menu, cited by 46.4 percent of operators, and featuring menu specials, cited by 44.6 percent. Almost 9 percent of respondents don't use menu changes to try to drive traffic; in last year's Driving Traffic survey, 39 percent did not use menu changes.

While it's hard to quantify the results, 87.5 percent of respondents say they use community involvement to help drive traffic. 60.7 percent of respondents support charitable organizations, 57.1 percent sponsor or participate in local events or sports teams, and 48.2 percent have student or school involvement. When asked which methods they have started or increased use of in the past year, 14.3 percent list special events held in the unit such as cooking classes or parties.

85.7 percent of operators say they use service methods like training servers to invite customers back (58.9 percent) or increasing the speed of service (55.4 percent). Of those who use service methods, one-third have started or increased their budget for training servers to invite guests to return.

More than three-quarters use electronic methods to increase customer counts. For example, 48.2 percent of respondents use e-mail news or newsletters, and 42.9 percent use promotions via their Web site. A growing trend, 23.3 percent of those using such electronic methods are using e-mail news more than the prior year, and 25.6 percent have increased their use of promotions on their Web site.

Means to an End

Directed to think about their most successful method of driving traffic, respondents were asked about what they hoped to achieve. 46.4 percent were hoping to increase visits by frequent diners; 37.5 percent, to attract more of their current target demographic; 30.4 percent, to attract a new demographic group; and 21.4 percent, to increase traffic during a specific daypart.

On the positive side, 80.4 percent of respondents said their most effective method of driving traffic did indeed raise customer counts. But only 60 percent of those can quantify how much. 22.2 percent say their traffic went up between 1 percent and 5 percent; 17.8 percent say 6 percent to 10 percent; and 15.6 percent say 11 percent to 20 percent. The mean figure for those who quantified an increase is 11 percent.

Supply Side

Suppliers often try to help grow chains' business. Asked which methods suppliers have offered them, 21.4 percent of respondents name menu development; and 19.6 percent, promotions or prizes for customers. 17.9 percent of respondents cited shared advertising expenses, in-store POS materials and wait-staff incentives.

Respondents were then asked to tell how effective the methods they have been offered are. One size does not fit all. Of those who cite menu development, one-quarter say it has not been effective in driving traffic. But another quarter say it has been effective. Of those citing customer promotions, 36.4 percent say they are not effective, but 27.3 percent find them to be effective.

Interestingly, 51.8 percent of respondents say that no suppliers have offered help in driving traffic in the past year. In last year's Driving Traffic study, that figure was less than 30 percent. Chain Leader did not ask if suppliers were helping in other ways, such as offering discounts or new payment terms. Suppliers, also struggling with margin pressure, may be sharing their most effective tools with a smaller pool of customers.

MORE: Restaurant chains combine different tactics to drive more traffic to their stores. Click here for some real-life examples.

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