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Four critical factors that drive brand loyalty for casual dining restaurants

Credit: Foursquare

Casual dining restaurants (CDRs) are in a transition. The trials and tribulations that have tested the retail market, like over-retailing sparking more competition and the rise of e-commerce such as with online ordering—are beginning to present complex challenges for restaurants trying to turn tables. The time is now for brands to re-evaluate retention strategies for today's consumers.

Brand loyalty is coveted by all marketers, and even more challenging to attain in the restaurant space that's often subject to wavering consumer tastes. To better understand what inspires strong loyalty, we looked at the top 50 casual dining restaurants in the U.S., to highlight trends and commonalities between some of the country's most beloved chains.

Our unique understanding of where people go in the real world gives us the ability to analyze foot traffic patterns and dining trends from our nationally representative group of U.S. consumers who make up our always-on foot traffic panel. To determine who is winning when it comes to attracting loyal visitors, we define loyalty by four key metrics: visit frequency (the average number of visits per diner within a year,) market penetration (the regional percentage of all casual dining diners who visited the chain within a year), share of wallet (the percentage of the consumer's total visits that a particular chain captures within a year,) and fanaticism threshold (the number of visits within a year required for a customer to be within the top 1% of customers who visit a particular chain, on a scale of 1 to 50.)

Here are the top factors these restaurants with the most loyal patrons have in common:

For share of wallet: Going back to bar basics.
Winning chains have one major offering in common—beer. Brands like Buffalo Wild Wings (this year's No. 1 winner), Old Chicago Taproom, and Twin Peaks Yard House have some of the most loyal customers, enticing visitors with a wide selection of bar offerings (and a focus on beer.) Other brands are taking notice. We've seen that TGI Fridays has doubled down on its appetizers and is testing booze delivery, while brands like Chili's Bar & Grill have added craft beers to the menu.

For fanaticism: Following taste trends.
Not only are consumer spending habits changing, but so are their eating habits. Top ranking chains are tapping into current trends in taste like developing mindful menus. Char-grilled items, for example, are popping up places where fried used to reign. Noteworthy mentions: Beef O'Brady's introduced an entire menu section of chargrilled items from pork chops to ribs, Applebee's added wood fire grill stations, and TGI Friday's added fire-grilled proteins like sirloin, and shrimp.

For market penetration: Joining forces.
How do the big get bigger? They make smart merger decisions. Buffalo Wild Wings, for example, recently joined forces with Arby's, J.Alexander's merged with Ninety Nine Restaurant, and Olive Garden owner Darden bought Cheddar's Scratch Kitchen.

For frequency: Offering convenient experiences.
Often loyalty is about facilitating seamless brand interaction. For instance, many chains with loyalty success are investing in new technologies around delivery and to-go services. Buffalo Wild Wings, Chili's, and TGI Fridays are now on Grubhub, while some are building programs—Olive Garden constructed its own ordering platform, and Denny's is pioneering voice ordering through Amazon's Alexa. Others, like IHOP, are simply adding more wifi outlets to reel in a younger demographic, and adding photo-worthy dishes like "Criss-Croissant" waffles.

Wondering how your brand stacks up or want access to the full report? Download our Casual Dining Restaurant Loyalty Index to see the list of the top 50 national chains, more findings on this year's leaders, and strategies on driving on loyalty.

To get in touch, visit us at enterprise.foursquare.com or email [email protected].

Editor's Note:
For this analysis, we looked at chains earning over $100 million in annual revenue according to Restaurant Business Online's list of the top casual dining chains. Foursquare's data scientists examined the foot traffic of a panel of U.S. users who have been active on the Foursquare City Guide or Foursquare Swarm apps (as well as partner apps) for at least the past year, have opted-in to provide background location awareness, and have visited at least one of the analyzed chains within the research time frame (January 2017 - December 2017). All data was pseudonymized, analyzed in the aggregate, and normalized against U.S. census data to remove any age, gender or geographical bias. The Foursquare Loyalty Index is calculated by looking at the following metrics: visit frequency, market penetration, share of wallet, and fanaticism.

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Foursquare is a technology company that enriches consumer experiences and informs business decisions through location intelligence. Foursquare’s business solutions include Pinpoint, Attribution, Pilgrim SDK and Foursquare Analytics, which empower brands to understand and connect to targeted audiences as well as measure foot traffic and advertising success. Foursquare powers location data for Apple, Samsung, Microsoft, Snapchat, Twitter, Uber and 125,000 other developers. A community of more than 50 million people use the Foursquare City Guide and Foursquare Swarm apps and websites to discover new places, explore the world and check in. Foursquare app users have written more than 95 million tips and checked in over 12 billion times. To get in touch, visit us at enterprise.foursquare.com or email [email protected].
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