In-N-Out Burger and T.G.I. Friday's are the nation's most "customer-centric" fast food and casual restaurants, according to DunnhumbyUSA.
The company has released top 10 lists based on its second Customer Centricity Index (CCI) on food service retailers, designed to measure how well retailers are responding to the needs and preferences of their guests based on feedback from actual customers.
Dunnhumby surveyed customers to weigh their perceptions of restaurants against how they rank them on menu assortment, price, overall experience, feedback, promotions, loyalty and communications. Those factors were identified as the "seven pillars" of the customer centricity that drive the long-term customer satisfaction and loyalty that are correlated with long-term revenue growth, according to the company.
Restaurants' escalating challenges include pricing pressures, the need to achieve the right mix of healthy and indulgent offerings, increasing labor and food costs, and an unrelenting stream of new formats and competitors, points out Peter Miles-Prouten, SVP, consumer markets, DunnhumbyUSA. Good food and service, while critical, are no longer enough to differentiate a restaurant brand: Restaurants need to deliver on complex combinations of factors sought by customers and connect with them through a personalized customer experience that spans marketing, item selection and pricing strategies, he says.
Top 10 Fast Food Chains, Insights
Following In-N-Out Burger, the CCI leaders among quick-serve restaurants are Chick-fil-A, Culver's, Subway, Whataburger, Sonic, Arby's, Popeye's, Hardee's and McDonald's.
Given that pricing is a core factor in survival in the fast-food industry, it's not surprising that all QSR chains studied scored relatively high on price and promotion. They also score high on assortment.
It's the areas in which QSRs tend not to perform that have the most potential for establishing differentiation, points out Dunnhumby.
In general, fast food chains rank low in loyalty, although the researchers note that the Chick-fil-A-list and MySubway programs "seem to have created some differentiation in the minds of their customers." The category clearly needs to break from traditional operating methods to focus on engagement and personalizing the experience, they stress.
Feedback and communication scores also tend to be low in the fast food segment, making it particularly critical for these chains to ramp up their use of mobile, social media and direct feedback to listen to customers and connect on a one-to-one basis, the report points out.
A closer look at how the scores of the top four-ranked fast-food chains compare with those
of the top 10 overall demonstrates the complexity of how various factors combine to create customers' overall perception of a restaurant brand. "Connection" factors like experience and feedback are
sometimes as important or even outweigh core fast-food attributes like pricing.
Compared with the other CCI-leading brands, In-N-Out scores high on price (though low on promotions) and above-average on assortment (it mostly offers burgers, but the assortment reflects what its customers want). It's also slightly above average on feedback. But its biggest differentiator is its unusually high experience score. Its loyalty score falls in the high average range among the top 10.
Chick-fil-A, second overall, ranks only average in pricing and promotions, but excels in experience, feedback and loyalty. The chain creates "a restaurant-type environment in a fast-food location," in no small part through its staff and service, says the report. No. 3 Culver's is also ranked average on pricing and a just slightly above average on promotions, but excels at communication, experience and feedback and also has a high loyalty ranking.
No. 4 Subway excels on loyalty, promotions, pricing, communication and assortment, and its experience and feedback scores are in the high average range among the top 10.
Top 10 Casual Restaurants, Insights
Following T.G.I. Friday's, the CCI leaders among casual dining restaurants are Texas Roadhouse, LongHorn Steakhouse, Bonefish Grill, Red Robin, Carrabba's Italian Grill, Olive Garden, Outback, Chili's and Bob Evans.
In this sector, food and assortment are particularly key to customer satisfaction. Balancing old favorites with new innovations on the menu is a constant struggle, but restaurants like LongHorn Steakhouse and Carrabba's Italian Grill differentiate by keeping customers excited about the menu, note the researchers.
But experience matters as much as the food. For example, Texas Roadhouse and Bonefish Grill customers cite the ambience and pleasurable dining experience as
reasons for their loyalty.
T.G.I. Friday’s earned the No. 1 spot in part by providing value and rewarding customers for their loyalty in an industry where loyalty is still emerging. While its assortment score is high, its major differentiators are loyalty and promotions. The chain's "Give Me More Stripes" program rewards customers who dine there more often with rewards that are truly of value to them, the report notes.
For the research, Dunnhumby conducted online surveys with more than 40,000 customers (based on trips to a given retailer within the past three months) of more than 400 retailers, including 100 within the food service category. Respondents were asked to rate retailers on more than 40 customer-centric attributes based on the "seven pillars" of customer centricity. Retailer scores are based on a weighted average of those results that link the various factors of customer centricity to loyalty and likelihood to recommend.
A copy of the report can be downloaded free on Dunnhumby's site.