Share
These venues are the fabric of high streets, communities and entire cities. They’re more than just the place we go for dinner or a drink – they’re our ‘third places’, where we spend significant quality time outside of home and work.
The industry is feeling the effects of softened consumer spending as much as any sector, with venues entering insolvency at record rates in 2024. However, despite challenges, many venues are seizing opportunities to focus on guest experience and strategic, targeted marketing to improve revenue and retention.
But what are the green shoots of optimism for marketers in an industry that adds so much, both economically and culturally, to Australia? And how is that impacting marketing budgets and strategies?
Reservations and retention on the rise
Yet again, the defining domestic narrative in 2024 has been cost-of-living pressures and the impact on discretionary spending. Few businesses are more vulnerable than restaurants. However, when restaurants really get to know their customers – and use marketing and guest experience as a point of difference – people will prioritise them over their competitors.
SevenRooms’ Restaurant Trends and Diner Expectations report sought to understand how venues are improving loyalty and guest experience in the age of AI and automation. It revealed reservations at venues prioritising exceptional experiences and strategic marketing rose by 26 percent from Q1 2023 to Q1 2024. Not only are Aussies dining out more, but they’re also happy to spend more for elevated, personalised experiences, with one in six willing to spend between $98-$291 per person for a meal out.
The surge in reservations is being driven by younger generations, who are making restaurants part of their weekly routine. A quarter (26 percent) of Gen Z dines out more than five times per month, while 41 percent do so three to four times per month. Gen Z (67 percent) is more likely to dine out at least three to four times a week, compared to Millennials (51 percent) and Gen X and Baby Boomers (34 percent).
So how are the behaviours of Gen Z impacting marketing budgets and strategies?
Social media and SMS on the rise
It’ll come as little surprise that social media is the primary focus of investment for many restaurant marketers. Indeed, 86 percent of marketers are funnelling most of their budget into social media. That’s because more than half of Australians (56 percent) say their restaurant choice is influenced by social media.
This year, the top social media goals for venues are driving bookings or online orders (64 percent) and increasing brand awareness (22 percent). With influencer marketing driving the most bookings for 27 percent of respondents but proving less effective than organic social media (36 percent), marketers are turning to organic, personality-driven content.
One in three (37 percent) Gen Z are influenced by posts from restaurants they follow that highlight their personality. For Millennials, posts that highlight the menu (34 percent) are the most influential. Gen X is most influenced by posts that highlight a venue’s personality, while Baby Boomers want menu-driven content.
While every demographic and every channel is different, each drives value. As a result, restaurant marketers need a well-rounded approach to reach both new and existing customers in order to fulfil their goal of driving bookings and increasing brand awareness. SMS is a great example of a channel that is growing in influence – particularly for younger audiences.
SMS marketing is a fairly new concept in restaurants, but it’s growing rapidly. By 2029, the Australian SMS advertising market is predicted to be worth over $20 million. Texting can be a powerful tool when used strategically. In fact, the average open rate of SMS marketing is a staggering 94 percent. One in three (37 percent) Gen Z diners prefer texting for restaurant communications.
Using marketing to turn guest experience into revenue
Understandably, diners today are being more selective in how often they visit restaurants, and which restaurants they visit. They’re being less spontaneous. Instead, they’re prioritising venues that grab their attention through smart, strategic marketing, then incentivise their retention through both the quality of their guest experience and the effectiveness of their follow-up marketing.
The key for marketers is understanding the unique needs and habits of each demographic. What works for your Gen Z customers, might not for Baby Boomers. So segment them, and roll out tailored communications that grab their attention, then loyalty. For example, use social media – and particularly a focus on promoting the personality, values and morals of your venue – to Gen Z.
Simultaneously think about targeting demographics like Baby Boomers with email campaigns that highlight your menu, and specifically personalised recommendations based on their previous visits or purchases. For example, target those who frequently drink wine with an invite to an evening with your sommelier, or those who’ve purchased shellfish before with news of your fresh Sydney rock oysters. This is a great example of how the combination of marketing and guest experience wins over customers.
Marketers who roll out one-size-fits-all campaigns will struggle to appeal to a large portion of their audience, while those who understand the unique nuances of each demographic will improve ROI, conversions and retention. For all their differences, across generations, consumers share a few key expectations when they dine out. They’re looking for convenience, personalisation and value from brands they trust. When they’re are satisfied with the experience and the pre- and post-visit communication, they’re more than just happy customers – they’re brand ambassadors.
When dining out, people want to feel like VIPs. They’re prioritising venues that provide exceptional, personalised guest experiences and use marketing to demonstrate a clear understanding of their personalities and habits.
Economic pressures don’t mean cutting corners or compromising on quality, and nor does it mean your guests won’t come. Instead, if you can understand how to optimise your marketing to get them in the door, and your guest experience to ensure they come back time and again, you’ll become the ‘third place’ they remember, recommend and return to.
Paul Hadida is the Asia Pacific managing director at SevenRooms – a guest experience and retention platform for the hospitality industry. With more than a decade of experience in Australia’s hospitality sector, first as a cafe owner and now hospitality industry expert, Hadida is uniquely positioned to understand hospitality operators, including the challenges they face and the solutions to empower them.
Lead image accredited to Tombo Den.
