2024 Restaurant Guest Engagement Report

September 24, 2024

1:1 Marketing Increases Guest Engagement by More Than 3x!

The DataDelivers 2024 Restaurant Guest Engagement Report presents a comprehensive analysis of guest behavior across more than 2,000 restaurant locations encompassing purchase behavior data from 65 million guests. This report illuminates trends in restaurant consumer behavior, retention levels, and the impact 1:1 marketing has on these behaviors.

Key findings from this report reveal significant insights on guest engagement related to marketing efforts. Specifically, we found utilization of 1:1 marketing resulted in significantly higher guest engagement levels as measured by year to year retention. All other marketing resulted in lower levels of engagement and much higher guest churn rates.

What Surprised our Experts

“While I know marketing works, I was amazed at how much 1:1 marketing can impact guest engagement. The fact that 87% of guests churn if they are not getting 1:1 marketing is the largest undiagnosed challenge impacting restaurant financials today. ”
– Pat Riley, VP of Sales and Marketing at DataDelivers

“I think what surprised us most was the level of churn that restaurants are seeing today. Without 1:1 marketing, only 13% of guests in this study returned to the same brand within 12 months. Brands need to take a hard look at 1:1 to improve ROI and achieve higher levels of sales and traffic.”
– Neil Culbertson, Restaurant Business Strategist, at DataDelivers

Methodology

To conduct this analysis DataDelivers utilized data related to more than 300 million credit card transactions from over 2,000 restaurant locations occurring between January 2021 through December 2023. Data was obtained from DataDelivers clients, including QSR, Fast Casual and Casual Dining concepts. Customer profiles were developed for more than 65 million unique guests with detailed purchase information associated with each profile.

Tracking guest engagement and retention is a significant data challenge for restaurant operators. Measuring data accurately requires the establishment of unique guest identifiers and the ongoing connection of purchase data to these identifiers over time. However, many restaurants lack the necessary data management capabilities within their marketing or IT departments to accomplish this effectively. Consequently, guest tracking often relies solely on loyalty program data, which typically captures only a fraction of a brand’s total guest base.

Reliance solely on loyalty data can be misleading. It’s common to find that many loyalty members are inactive, but those that are active are very engaged.

As a result, relying on loyalty data alone provides a limited view, primarily highlighting the behavior of a small percentage of highly active guests and potentially skewing perceptions about overall guest engagement levels.

Key Findings

Among the 34.5 million guests who patronized more than 2,000 restaurants in 2022, only 6 million revisited in 2023 for a 17% retention rate.

However, in our analysis, guests who received 1:1 Marketing demonstrated remarkably higher engagement levels, with 42% revisiting and remaining active with the brand. Conversely, only 13% of guests who received other types of marketing (i.e. general advertising) returned in 2023.

In simple terms, 9 out of every 10 guests are not staying engaged with the brand if the brand is unable to target them using 1:1 marketing. Yet if you are able to market to these guests directly, retention rates are more than 3x higher!

The Trend Continues with New Guests

Analyzing the data further, new first-time guests were isolated and studied. These were guests that appeared in the data for the first time in 2022. The goal was to understand how many of them returned in 2023. Our findings show that 50% of guests that received 1:1 marketing remained engaged with the brand. Whereas, the same 87% of first-time guests churn if they did not receive targeted marketing.

What About Winning Back Lapsed Guests?

When isolating inactive guests who have not visited for at least 12 months, the analysis found without 1:1 marketing only 4% reengaged during 2023. However, with 1:1 marketing 13% returned to engaged status an increase of more than 3X.

What Surprised our Experts

“Typically we see very few guests return to a brand after they’ve gone inactive. To see a 13% win back rate is impressive!”
– Neil Culbertson

Conclusions

This analysis shows a direct correlation between the efficacy of 1:1 marketing strategies and guest engagement. In our experience, restaurant brands that make 1:1 marketing a priority, allocating budgets that match or surpass those of acquisition endeavors, will consistently see increased sales and heightened foot traffic. This shows the impact of personalized marketing efforts in fostering guest relationships and driving sustained business growth.

The Missing Piece of the Puzzle

“In talking with many restaurant brands, I see a great emphasis put on new guest acquisition. This tells me that brands instinctually realize they have a churn problem and they need to replace disengaged guests. But I do not think brands realize how big of an issue this truly is.”

“When looking at all guest behavior beyond just loyalty members, the data tells us that guests are much less engaged and loyal to a brand than operators realize. 1:1 marketing is a big piece of the solution to this problem.”

– Pat Riley

Increasing Engagement

Based on this analysis, increasing the number of guests you can market to in a direct, 1:1 manner is critical to growing guest engagement. How can you get more guests engaged?

Collect as much information as possible during the visit.

Promote opt-in opportunities consistently such as loyalty sign up.

Employ bounce back offers that require guest contact information, such as email.

Partner with a firm that can harness your data to identify guests beyond your eclub and loyalty programs to increase your ability to do 1:1 marketing to more of your guests.

Typically DataDelivers can identify 10,000 previously unknown guests per location for 1:1 marketing.

Terminology

Known Guests – Current who had at least one transaction in the analytic window (January 2021 – December 2023) For this analysis there were 65.4 million known guests.

Engaged – For someone to be considered engaged with a brand they need to have at least one transaction within that calendar year. In order to be retained in 2023 a guest needed to be engaged in 2022 and engaged again in 2023. For the analysis, 34.5 million guests were engaged in 2022.

Inactive – To be considered inactive the guest needed to have at least one transaction in 2021 but none in 2022, these guests would be eligible for win back in 2023. For the analysis, 30.9 million guests were inactive heading into 2023.

1:1 Marketing – Known guests who receive marketing directly to their devices and have purchases connected to their guest profile.

All Other Marketing -These known guests cannot be attributed to specific marketing efforts. Because we do not know the individuals who receive general social media and broadcast advertisements, any engagement from these guests are included in the all other marketing guest segment.

Retention – Guests who had a transaction with the same brand in 2022 and 2023.

Churn – Guests who had a transaction in 2022 but did not have a transaction with that same brand in 2023.

Win Back – A known guest who was inactive in 2022 and had a transaction in 2023.