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A report from Swiggy and Bain & Company says that by the end of the decade, the market for dining out and ordering food is expected to almost double, reaching ₹9 trillion. This means the restaurant industry in India is vibrant.
“Higher incomes, digitization, improved customer experience and an inclination to try new experiences have all contributed to this growth. We are very upbeat about the growth in the coming years. For instance, China has four times the number of restaurants per million urban population, as compared to India.”
– Rohit Kapoor, CEO, Food Marketplace, Swiggy
That being said, running a successful restaurant is challenging too, with busy weekends, a delicious menu, and a mix of customers from first-timers taking selfies with their meals to regulars who know your menu by heart.
But here’s the question: Should you be focusing your efforts on new customers or pampering the regulars?
The answer isn’t as straightforward, but one thing’s for sure — your profitability relies on how you manage this delicate balance between new and repeat customers.
The Value of New Customers
Initial Attraction
New customers bring with them the promise of new revenue streams. For instance, a group of food bloggers could turn your pizza into an Instagram sensation. And then, the possibilities are endless!
But attracting these fresh faces isn’t simple. In a continent where over 10,65,000 restaurants compete for attention, getting noticed is tough. New customers bring a wave of excitement and potential, but they also come with a price tag attached.
Marketing Costs
Getting a new customer can be five times more expensive than keeping an old one. That includes a hefty chunk of your earnings being poured into online ads, influencer partnerships, and discounts that seem to lure everyone in, from college students to office-goers.
In fact, 28% of Gen Z diners use social media to find restaurant recommendations, and 39% have visited a new restaurant just because an online influencer suggested it.
First Impressions Matter
Once you’ve got these new customers through the door, the pressure is on to impress. If that first bite doesn’t blow them away, the marketing budget might be wasted. But if the meal exceeds expectations, you’ve got yourself a potential repeat customer.
One-Time Wonders vs. Potential Regulars
Of course, not every new customer will become a loyal regular. Some are just there for the one-time thrill. In fact, the restaurant industry has the lowest customer retention rate, around 55%. This means you’re working pretty hard for a relatively small return.
But when they do come back, they bring friends and family, as 86% of people say they would recommend a restaurant to others if they had a good experience there.
The Power of Repeat Customers
Loyalty Pays Off
The repeat customers don’t even need to look at the menu because they’ve already got their favorites memorized. Over 39% of customers are willing to spend more with a brand they’re loyal to, even if there are cheaper options elsewhere. Why? Because they trust you. They know that your dishes are always on point.
Lower Marketing Costs
The beauty of repeat customers is that you don’t have to spend a fortune convincing them to come back. They keep returning because they know they’ll get exactly what they’re looking for.
Word of mouth is a powerful thing, especially in India, where families love to share their latest food discoveries. A well-fed customer is your best marketing tool, and the best part? They’re free! Moreover, repeat customers spend 67% more money than first-time customers.
Consistency is Key
What keeps these loyal customers coming back? Consistency. If you’re serving up the same mouthwatering dishes every time, they’ll keep returning for more. In fact, more than 90% of people are more likely to buy again if they have a good customer service experience.
Mess up your customer experience once, though, and they might just move to the new joint down the street. A repeat customer’s loyalty is built on trust.
Upselling Opportunities
Once you’ve got a customer hooked, it’s time to reel them in with some upselling. Regulars are more likely to try new dishes, order that extra dessert, or upgrade to a fancy cocktail. They already trust your food, so why not suggest something new? They’re probably going to take your word for it.
Balancing Act: New vs Repeat
Businesses are much more likely to sell to an existing customer — 60% to 70% of the time — compared to just 5% to 20% for a new customer. This is why companies that focus on keeping their current customers are 60% more profitable.
However, even for small businesses that get over half of their revenue from repeat customers, the rest still comes from new customers, showing the importance of both.
So, how do you strike the right balance between new and repeat customers? The answer lies in diversification. Your customer base should have a bit of everything — newcomers looking for a taste of something different and regulars who just want their usual.
Segmented Marketing Campaigns
For new customers, focus on promotional offers, special events, and introductory discounts to attract them to your restaurant.
For repeat customers, use targeted campaigns to reward their loyalty with exclusive offers, personalized recommendations, and early access to new menu items. This way, you ensure that each group receives relevant and appealing incentives.
Implement Loyalty Programs
84% of customers are more likely to stay loyal to a brand if it offers a loyalty program. Members of these programs make up 43% of a company’s yearly sales. Develop an amazing loyalty program that incentivizes repeat visits.
64% of people say they’d be willing to pay for a loyalty program if it came with extra perks like discounts. So, offer rewards such as points for every purchase, discounts on future visits, or complimentary items after a certain number of visits.
Keep the program simple and easy to use, so customers are excited to join. Add new rewards and special offers regularly to keep it fun and worthwhile for your loyal customers.
Use Technology for Personalization
Use POS systems and data analytics to keep track of what your new and repeat customers like and what they’ve ordered before. With this information, you can create a more personalized dining experience.
For new customers, suggest dishes similar to what they first ordered. For regulars, offer special discounts or deals on their favorite meals. When customers feel you care about their preferences, they’re more likely to come back.
Create Special Events and Promotions
Plan events and promotions that appeal to everyone, whether they’re first-timers or regulars. For example, you could host themed nights or exclusive tastings that draw in new guests while giving your loyal customers some special perks.
You might also try “bring a friend” deals, where regulars get a discount for bringing someone new. These kinds of events create a community vibe and keep your regulars coming back while attracting new customers.
The Bottomline
Both new and repeat customers are essential to a restaurant’s success. New customers bring the excitement of discovery, while repeat customers provide the steady, reliable revenue that keeps the lights on.
But when it comes down to profitability, it’s clear that regulars are where the money’s at. They spend more, cost less to retain, and are more likely to bring in additional business through word of mouth. That said, don’t neglect the newbies — they’re your future regulars, after all.
The best strategy is to strike a balance that works for your specific restaurant, taking into account your location, cuisine, and customer base. Both new and repeat customers deserve a dining experience that leaves them hungry for more. Try Reelo for Free!
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