Restaurants’ Declining Service Threatens Diner Loyalty

As restaurant prices rapidly rise, consumers are noting restaurants reducing costs by compromising on service — decisions that could come at the expense of diner loyalty.

For instance, The New York Times recently noted that consumers are growing impatient with higher prices for a lower quality of service. And certainly, the data bears out that there is widespread frustration among diners. PYMNTS research finds that nearly half of restaurant customers have noticed eateries reducing hours or shuttering dining rooms, 34% have seen longer order processing times, and 27% have received lower-quality service.

Plus, findings from a PYMNTS survey of nearly 2,500 U.S. consumers reveal that more than three-quarters (77%) of restaurant consumers say staff friendliness is the most important feature a restaurant needs to provide. The same study revealed that 63% of diners believe restaurants are becoming increasingly understaffed, and 39% said that they are becoming less and less personal.

Consistency is also key — the survey revealed that 74% of consumers say being served by the same wait staff every time they visit a restaurant has a positive impact on their satisfaction.

It is not only at full-service restaurants. Fast-casual brands as well are being challenged to find ways to maintain some degree of hospitality even as they leverage new technologies to make the experience more efficient.

“Kiosk continues to be a growing segment that I’m seeing more and more often at fast casuals, including Clean Juice, and we have to be careful,” Quick Chadwick, chief marketing officer of fast-casual juice and food bar chain Clean Juice, told PYMNTS in an interview. “People are familiar with ordering on their phones, so a kiosk was a natural transition, but we have to be careful not to commoditize or transactionalize the guest experience.”

PYMNTS data reveals that 51% of grab-and-go customers say ordering through a self-service kiosk would positively impact their satisfaction, while only 20% of dine-in customers said the same.

Some are even positing a category between fast-casual and full-service for restaurants that rely heavily on digital but still center hospitality in their value proposition, as Scott Lawton, CEO of Bartaco, a chain with more than 20 locations across 11 states and Washington, D.C., told PYMNTS.

“You’ve got QSR, fast-casual. I think there’s going to be a new class. We call it ‘on-demand hospitality,’” Lawton said. “It’s this hybrid — an experiential restaurant that implements more digital, so that it can run a leaner business but really focus on the food quality and the experience. I know quite a few restaurant groups and entrepreneurs that are putting together these types of brands right now.”

Research from the PYMNTS study “Connected Dining: Inflationary Pressure Squeezes Restaurant Tips,” for which we surveyed a census-balanced panel of more than 2,200 U.S. consumers, reveals that, with rapid restaurant cost inflation, diners are more heavily scrutinizing the quality of restaurant service and the quality of their meals, loath to pay more for a worse experience.

In fact, nearly half of all consumers (48%) who dine out at least three times a week have noted a growing gap between a meal’s costs and their satisfaction with it, and 58% of these frequent diners have cut back when leaving tips.