For Restaurant Chains, Emotional Connection and Profits Do Mix
Philadelphia, November 08, 2007 – For casual-dining chains like Applebee's and Red Lobster to succeed, getting the food right is just the first step. A new survey by a leading customer research firm has found that the bottom line is often most influenced when these restaurants make an emotional connection with customers.
“These findings are very compelling,” noted Kate Feather, PeopleMetrics (www.people-metrics.com) Executive Vice President who led the study, “restaurant chains that make customers feel emotionally connected to the dining experience far outperform those chains that don’t.”
In its study, PeopleMetrics evaluated Customer Engagement levels of recent diners of nearly a dozen national restaurant chains, including Chili’s, Applebee’s, Olive Garden, and Red Lobster. PeopleMetrics measure of Customer Engagement combines traditional loyalty metrics with an emotional component. The result is that highly engaged customers are found to be loyal, go out of their way to do business with, say good things about, and feel passion, even love, for the brand and experience.
Comparing the Customer Engagement scores of 1,200 recent diners with the financial performance of publicly traded restaurant chains revealed a strong correlation. Restaurant chains with high customer-engagement scores far outperformed low-scoring counterparts – including an average gross margin of 29 percent compared to -12 percent – and EPS growth of 75 percent to -50 percent for lower-performing chains. Financial metrics included return on assets and equity, gross margins and earnings per share (EPS).
While Customer Engagement ties to financial performance in restaurant chains, the study also considered what chains can do to build a more engaged customer base.
“We found operators need to do a few things well to increase Customer Engagement,” Ms. Feather noted, “They need to hire and retain employees who make the dining experience fun. But most important, restaurants who can quickly and effectively resolve customer concerns are the clear winners.”
Results from the Casual Dining Sector research are part of PeopleMetrics broader study measuring Customer Engagement and financial performance across the Retail, Banking and Hotel industries.
About PeopleMetrics:
PeopleMetrics is a leading research firm that helps organizations engage their customers and employees. We have remarkable people, proven methodologies, robust benchmarks and world-class technology. PeopleMetrics Rx is a division dedicated exclusively to the market research needs of the pharmaceutical industry and is a pioneer in developing the concept of Physician Engagement. We serve some of the most trusted brands and respected companies in the world, including AstraZeneca, Christie's, Coca-Cola, Comcast, Genzyme, HSBC, McDonald's, Morgan Stanley, Microsoft, Novartis, and Wyeth.
For more information send an e-mail to info@people-metrics.com or call 215.979.8030.
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