Customer Attrition in the UK: Casual Dining and its Post-Holiday Blues

We’re in the midst of one of the dining sector’s most important times of year; but far from the festive period being the “most wonderful,” for many brands it can be a time of unease.

After allocating large amounts of their budgets towards holiday season marketing strategies, brands are eager to see results. But even if gains are made over Christmas, historically it’s tricky to hold onto new customers into the new year, even with January’s sales and promotions.

Customer attrition is a significant problem for retailers. This is particularly true of casual dining, where the post-holiday blues, and the associated diet and gym fads, leave restaurants feeling the pinch as consumers rein in after the festive excesses.

Coming at a time when casual dining chains are already struggling to stand out, this is a problem.

The post-holiday blues

It’s common sense and common knowledge that the Christmas season is a boom time for consumer spending. Generally, you might associate this with retail spending, or perhaps the spending that happens at pubs and bars. But casual diners also head out en masse over the festive period, with a higher total spend in December 2017 than in all but one of the preceding months.

However, our data shows that this trend suffers a sharp drop-off in the new year, both in the number of trips and the total spend. From December 2017 to January 2018, spending fell by 16 percent, while the number of transactions dropped by 11 percent.

This is a repeated problem for restaurants, who struggle to keep consumers engaged once the holiday season is over. This comes at a time when the casual dining category is already suffering, with average spend dipping 10 percent since 2015, according to a Cardlytics’ restaurant spotlight earlier this year.

Casual dining and customer attrition

Unfortunately, the issue of customer retention for casual dining in the UK is not unique to the post-Christmas period. Non-seasonal struggles in retaining customers persist for the high street’s restaurants whatever the weather. In fact, 55 percent of casual dining customers do not make a repeat purchase at the same retail brand within six months. This is known as the “leaky bucket” effect – where brands on-board customers at a high rate but lapse non-returning customers at the same rate. The “leaky bucket” slows business’ growth and is trending behind in the casual dining category.

There are three strategies that restaurants can implement to arrest this trend and keep the customers they earn, whether it’s during the January slump or after any other big event where volumes drop-off.

1. Win back dormant customers by providing offers or rewards for their business and prevent active customers from lapsing by ensuring your offer is competitive and appeals against other peers in the market.
2. Implement strategies that will lock new guests in for a second visit by giving them a reason to return in the near future, such as a bounce-back offer within seven days of their first purchase.
3. Work with providers like Cardlytics, who can keep customers engaged by automatically triggering offers for customers who may have lapsed.

Post-Christmas can be a tough time for the high street’s restaurants, however it need not be if you can effectively build on the success during the festive period. By working with a platform which can keep customers engaged, casual dining can make the new year just as merry.