How much is a loyal guest worth to your restaurant? The Customer Lifetime Value (CLV) of every guest retained will help you determine how much you’re willing to spend in order to attract and keep those guests. When you and your team improve on restaurant customer service, you’ll work to increase your guests lifetime value.

When deciding how the lifetime value of each guest is important to your restaurant, consider the following guest value facts from CORE Restaurant Marketing, and how they might impact building loyalty and communicate with your VIP guests:

  • Restaurants can expect a loyal guest to buy 1.7 times per month.
  • The average number of years a loyal guest will visit a restaurant is 2.7 years.
  • A typical dissatisfied guest will tell 8-10 people. Those people will tell 5 more people. That means up to 60 people could be affected by just 1 guest’s bad experience.
  • According to the National Restaurant Association, 46% of guests say they that would be more likely to patronize a restaurant more if it offered a rewards program.

Upserve’s founder and CEO, Angus Davis, offered insight into appreciating and valuing your guests. He stated:

Instead of sending the same message to all your guests at the same time, what you really want to do is to send the right message to the right guest at the right time.

One way of providing this more personalized approach is by segmenting your guests, and sending a different message to different guest segments based on their value to your business or their stage in the customer life cycle.

For a restaurant, calculating the CLV of a guest or of a group of guests is a great way to find out how to offer that personalized approach that he’s talking about. Take this example from the Marketing Metrics Handbook blog:

fast food restaurant customer cash flow

  • Guests buy less expensive items (32% margin) in the first year, which produces an average gross profit of $32 per year.
  • The guest’s life is 4 years.

As shown, each year the average guest buys more and buys higher margin products.

  • The restaurant spends 5% of sales each year on the average customer to retain them.
  • Using a 25% discount rate, the Lifetime Value of the average guest is $15.
  • This means the rate of return for this guest is greater than 25%.

The rate of return for this guest is 32%.

Measuring this helps you determine the return on your marketing efforts, and puts the information towards attracting new guests, retaining them and building loyalty.

Understand how to communicate better with your guests with this guide. 

Get Started Assessing Lifetime Value For Your Customers

Not sure where to begin? Check out this handy tool available from Loyalty Path.
customer lifetime value

For additional smart business calculators, be sure to check out this treasure trove that Restaurant Partner boasts is “the complete set of restaurant specific business calculators available anywhere.” There are certainly some fantastic resources there to help you start crunching numbers.

Want a kit that can help run your restaurant business from marketing to inventory? Click here for more information.

If you have any examples of how calculating the CLV of your most loyal customers can help restaurants tailor their marketing better, or any ideas on how to do it, we would love to hear from you in the comments!

Want even more insight on your guests? Upserve’s Guestbook can help. Learn more here.

happy guests

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As part of Upserve’s family of more than 10,000 restaurants, The Chef is Restaurant Insider’s secret weapon in the kitchen. As a restaurant expert in all things marketing, menu building, management, training and more, restaurateurs trust The Chef and the award-winning Restaurant Insider to dish out the ingredients needed to make your business a sweet success.