The concept of “Guests for Life” is a consumer relationship that’s centered around guests who have already sampled your food and service.  If guests already have tried your restaurant, why market to them?  For additional profits that are already set up in your existing guest list.

Many restaurants throw money away trying to develop new business and new guests.  They often neglect the additional profits that are right ‘under their nose’.

It is easier and cheaper to realize increased business, and thus profits, by selling more and more to your existing guest base.  Often, these people are overlooked which could in time lead to guests who become unsatisfied and may become inactive patrons.

Many restaurant owners think of selling in the same way that the sportsman goes fishing.  By dangling the bait (the offer), hoping they’ll bite (and come into your store), and then you hook them ‘(make the sale). You think your job is done. Mentally, you place your fish (the guest) in your ice chest and move on to the next catch, and the next, and the next, always ‘focusing on the guest you haven’t reeled in yet.

This is so wrong!

You know why? Because, unlike hooked fish, you set your guests free again! That’s right. You let them go out the door, back into the “lake” where other fishermen (or restaurant owners) are ready to hook them next if you “let the big one get away”. They’re not going to come back on their own.

You need to do everything possible to build a good guest/restaurant relationship. Have exceptional service for your guest and even send a “thank you” note or e-mail. It is your responsibility to make them feel good about their experience when they’re in your restaurant from the time they walk in the door all the way through the time that they walk back out the door.  Then you make sure to remind them regularly that your restaurant is there for them. Not for your gain, but theirs.  If you don’t look at it this way, in time, there’ll be no gain.

This is why Telemarketing and Direct Mail are essential to keeping your store’s name and the good feeling attached to the name alive in the mind of your guest. It’s your responsibility to remind your guests of their last visit to your restaurant and keep those taste buds excited!

You want this to become a cycle that keeps your restaurant in good shape.  If your good to your guest, they’ll be good to you by coming back because they like your restaurant, they like your servers or crew, they even like you!  If they like you, they’ll spend more money.  If they spend more, you’ll want to treat them better.  You can’t do enough for guests who are going to spend thousands of dollars at your restaurant!  This cycle could go on and on… and that’s what you want!

This doesn’t even take into account the great workout you’ll have when your satisfied guests give their great opinions to others and they tell two friends and so on and so on and so on!

In most restaurant businesses, it costs about five times more to develop a new customer than it does to keep an existing one satisfied.  The “Lifetime Value of a Guest” (how much this guest would bring into your restaurant over their lifetime) is often, to my amazement, not even considered by restaurant owners.  In order to figure out what this value would be, we need to do a calculation.  There is a formula for figuring out an estimated profit potential for every guest that you have in your list.

Once you know your average guest’s lifetime value, you are then in a position to make a judgment on how much you can afford to spend to convert a prospect into a guest. This can bring in the real profits!  Find the answers to the questions below:

1.  How much is the average sale at your restaurant?

2.  How many times per year does the average guest eat at your restaurant?

3.  How many years will the average guest continue to buy (assuming you keep him happy)?

For example, the first time your average guest dines with you, he spends $20.00. He stops in every other week (2 times a month, 24 times a year).   So in 5 years, he will have spent a minimum of $2,400.00 with you.  That doesn’t count all the times they try new menu items or bring additional guests.  It also doesn’t count the folks who learn about your restaurant because of this guest’s rave reviews!

You have to figure out how much of that is profit. Let’s just say it’s 50%. So you’ll make $1,200.00 profit on your average guest over the next 5 years.  How much are you willing to pay to get a guest?  It doesn’t have to be much!

Be sure that when you’re making your calculations, that you include your guests’ referrals.  Get them to refer more often by offering a reward of some type.

As you can see the profits that one guest can bring in to your store can really add up making the lifetime value of that guest more than you may have first thought.  Be sure to treat your guests as the profit makers they are!

Lifetime value of one happy restaurant guest

1. Average sale per person                                             $12

2. Number of visits per month/year                                24

3. Sales per 1 happy guest per year                               $288

4. Average number of people per  table                         2.3

5. Number of referrals per customer                              1

(this is assuming they refer you 5 and you only convert 1 as a happy guest)

6. Gross sales per year                                                   $662

7. Gross sales over life of customer                               $3310

(We assume 5 years, people move, transfer, pass on)

8. Gross sales for 1 referral                                            $3310

That 1 happy customer is actually worth  $6,620 in sales over 5 years

That 1 happy customer is actually worth  $6,620 in sales over the next 5 years.

Total value of 10 happy customers                            $66,200

Total value of 100 happy customers                          $662,000

Total value of 1000 happy customers                        $6,620,000

Think about catering for a quick second – the average transaction is anywhere from $100 to a few thousand.  Lifetime Value of a good Catering Client is huge and you should think of that as you begin to go after more and more of them.  I have single catering clients that spend anywhere from $50,000 to $100,000 a year.

What would you do for a client that spent that much?