THINK LOCAL, THINK LOYAL

Back in the 1990s, working on the Meadowhall shopping centre as their marketing director, I calculated that their 20 million visits a year were made by only 100,000 shoppers, living within a 20 minute drive time of the centre.

This statistical basis for this was calculation was a combination of party size, visit, frequency, and gravity.

The latter equation is “s=mc/d2” where s= shoppers, m= mass or square footage, c = constant and d = distance from the centre. On the last variable, d, this meant that someone living 3 km from the centre was ?nine times less likely to visit then someone living 1 km away

This led to a switch from conventional above the line advertising to targeted social media, with significant savings.To put this into context, how often nowadays do you see a television advertisement for Westfield or for your local large out of town Mall?

They’ve all cottoned on! A very similar relationship applies to restaurants, where a seemingly large customer base narrows down to a tight, local group.

At the core of this is the difference between covers, customers and guests, very often thought to be synonyms.

As a rule, I liked to refer to everyone who came into one of my restaurants as a guest so that they are treated as they would be if they were a guest in my home.

However as a statistician, I have to make the discrimination between a guest, a cover and a customer.

“Cover”, ?I define as a meal taken at some point in the year.

So if your turnover is C, ￡500,000 and your average spend ?is ￡25 then, in a year, you would do 20,000 covers.

However, the visit frequency of guests comes into play. By using a little in-house research to ask people how often they visit your restaurant you can come up with a frequency figure.

in my Brighton restaurant people visited on average once a fortnight so that’s about ?25 visits a year.

So with my 20,000 covers and that frequency I am looking at 800 “guests” visiting every year.

But, guests don’t visit alone, at least not usually. In my experience with casual dining, the average party size is 2.7 so the number of parties visiting each year goes ?from 800 to just under 300.

In this instance, the guest who is the bill payer is someone I refer to as the “customer“.

So there you have it.

￡500,000 worth of turnover is made up of only 300 customers.

As a case in point, my restaurant was in the postcode BN2 1EE. The total population in postcode BN2 is 120,000 households, so the penetration of my restaurant was only 0.2%! Even if I focused only on social classes A& B penetration here was 1.1%.

Therefore, there was enormous scope for expansion by just limiting ?communications to the immediate postal sector, although, of course, we did have visitors from further afield and a reasonable amount of tourist business.

Nonetheless,, the communication focus was on restaurant menus, point of sale material, A-boards, loyalty programmes and localised leaflets.

The second point that this concentration of trade in very few households highlights the vital importance of retaining customers.A simple, quality checking questionnaire delivered with each bill is a highly effective mechanism for allowing guests to share their feelings and gives you the opportunity to respond either immediately or by email.

Continuous training of waiting staff to identify customers with grounds for complaints is a critical part of keeping guests happy and avoiding the negative consequences of unhappy guests both in terms of lost sales and, in the context of attracting ?new customers, reputation.

So, if you’d like help in identifying your key target groups geographically, with improving your customer retention methodology or training your team to spot and deal with complaints, just contact The Restaurant Expert.