The Unusual Suspects: Unmasking hidden reasons behind dining decline
What goes up must come down. Isaac Newton might have been talking about apples and gravity, but his words ring true for your dining services program. The once-bustling dining areas of spring give way to quieter, shorter lines as the seasons change. Why does this happen? Summer vacation is one obvious answer. While it definitely has an effect on dining participation, there are other factors that are also influencing the industry:
The Inflation Diet: Inflation bites hard, hitting dining services with a double whammy: increased costs for food, supplies, and labor, followed by flattened sales as customers tighten their belts. Fighting inflation’s effects isn’t easy, but taking a step from Taco Bell’s playbook may be part of the solution. Creating a “craveable” product can be key to bringing customers back through your doors. Case in point: last year, Taco Bell wanted to jump start its sales by bringing back its Beefy Crunchy Burrito which was extremely popular in 2018. Creating a new and innovative menu item is great, but so is reintroducing one of your greatest hits. Jeff Poe points out that, “Taco Bell created an experience and buzz around these products. Price wasn’t the first consideration. Consumers wanted it and would pay for it.”1
Rise of the Flex-Foodies: Most onsite dining programs rely on the lunch and dinner crowds for the bulk of their sales. The pandemic completely changed the face of onsite dining, and dining programs have had to adapt. Dine-in-only facilities pivoted to offer alternatives like takeout and delivery to meet their customers’ needs.2
You Had Me at Hello: Retaining existing customers is far more cost-effective than attracting new ones. The pandemic caused a significant drop in customer retention rates, with the industry average falling to 55% in 2023, down 20% from the previous year.3 An optimal retention rate hovers between 70% and 80%. If you’re below this mark, you’re not alone, but it’s time to act. Analyzing your customer retention data can reveal where improvements are needed.
If you’d like help fine-tuning your customer retention efforts, or if you need help making sense of your data, we’d love to hear from you. Click the button below to contact us.
1. Fifth Third Bank. (2023, September 15). How can restaurants navigate inflation? Fifth Third Bank. https://www.53.com/content/fifth-third/en/financial-insights/business/grow-business/how-can-restaurants-navigate-inflation.html
2. Murphy, G. (n.d.). How restaurants are coping with the hybrid workplace movement. Fobesoft. https://www.fobesoft.com/Blog/restaurants-adopts-to-hybrid-workplace#:~:text=The%20hybrid%20workplace%20model%20has,employees%20or%20after%20work%20hours
3. Howarth, J. (2023, December 5). Average customer retention by industry (2024). Exploding Topics. https://explodingtopics.com/blog/customer-retention-rates#customer-retention-by-industry
