Loyal customers are the backbone of any business and knowing the Power of ARPU for Restaurant may help the businesses. However, the value of having devoted consumers is most evident for restaurants still reeling from the aftermath of the pandemic. While newer restaurants are currently struggling to establish a footing in the volatile F&B industry, existing restaurants have had to hold the attention of their existing customers and re-engage them frequently to cover overhead costs. Most restaurateurs have accepted the immediate challenge of staying afloat because they have seen many of their competitors shut down.
People started cooking more frequently during the pandemic than ever before. A trend that has inadvertently impacted restaurants that didn’t expect such a drastic shift in consumer behavior. The reasons for this behavior change might vary from healthier eating habits, a desire to pick up cooking as a hobby or cutting back on expenses. This has resulted in the decrease of prospective new customers, increasing restaurant dependence on frequent customers.
Customers have a huge number of restaurants to choose from than ever before but, usually, each customer has a go-to spot for each cuisine. At least, that was the case until aggregators figured out customers could be swayed with offers, gamification, and targeted notifications. Undecided users are fair game as well. Often, these customers don’t have loyalty to a particular restaurant and are easily swayed.
Average Revenue Per User (ARPU) is defined as the total revenue divided by the number of users. It is a measure of the revenue generated by a customer per order, over a while. Earlier, restaurants used to have a higher ARPU but this changed after the entry of aggregators in the market. Aggregators usually charge restaurants a commission on each successful order placed. Many restaurants think this proposition is fair considering the large user pool they gain access to through the aggregators. They fail to take into account that they even end up paying a commission on orders from recurring customers that have stuck by them for years.
ARPU – Average Revenue Per User
|Average Order Value||₹100||₹100|
|Frequency of Order||3||3|
|ARPU (1 Month)||₹60||₹120|
|ARPU (12 Months)||₹720||₹1440|
In many cases, restaurants have to increase their prices on such apps to remain solvent, while not changing their offline menus. As a result, it’s not unheard of for many loyal customers to make a trip down to their favorite restaurant and order takeaways directly.
Thus, it’s important to understand Power of ARPU for a Restaurant and at least offer an alternative to their loyal customers and save on commissions. If the lost revenue is reacquired, it will have a two-fold effect ensuring their most loyal customers are not being fleeced and they can focus on acquiring new customers through online and offline marketing channels.
YumzyX helps restaurants break out of this cycle by providing them with comprehensive solutions for all their needs. For restaurants that want to build their independent platform so they can save on commissions, YumzyX provides a responsive and easy-to-use website along with order management dashboards. An AI-powered delivery marketplace integration also ensures an efficient delivery experience. Visit to know how to retain customer loyalty https://blog.yumzyx.com/how-loyalty-programs-help-restaurants-retain-customers/
Reach out to us for a product demo or any other queries.