How to Create a Restaurant Referral Program & Why You Should Consider It

Are you struggling with customer acquisition at your restaurant? Since new customers translate to new business, that’s not something you should take lightly.

Consider creating a restaurant referral program to bring in new customers by using regulars as brand ambassadors. Here’s how!

The Benefits of Having a Restaurant Referral Program

Bring in new customers

Customers are 4 times more likely to buy something when they’re referred by a friend. That is why referral programs are so profitable for businesses. 

You can simply rely on word of mouth to attract new customers. Remember that your biggest promoters are your loyal customers.

Get more loyal customers

If a customer first visits your restaurant using a referral program, you’re already off to a great start. Everybody wins in this scenario, from the person who referred their friend, to the new customer, to you.

Referred clients are 18% more likely to stay as your customers. Incentivize them to keep coming back and they will. 

Save on marketing and advertising costs

Advertising and marketing can be costly, especially for a small family-owned restaurant that’s just getting started. This is where a referral program comes in.

With minimal costs and attractive rewards, you can get a high return on investment by marketing to people who are more likely to become customers due to their friends or family.

Increase engagement and brand awareness

A referral program gets people talking. That helps your brand reach a larger audience, making it more widespread in the local community.

Not to mention people who become part of your referral program will interact with your restaurant and share their experience offline and online for more people to see.

Gather valuable customer insights

Using a referral program, you can identify who your most loyal customers are, what their preferences are, and how many other customers they brought in.

This can help you create more targeted marketing campaigns and find the best restaurant promotions for every specific case.

How to Create a Restaurant Referral Program

Set SMART goals

Before you start working on a referral program, you need to have clear expectations of what you’re trying to achieve.

SMART goals are the best because they are:

• Specific: what are you trying to accomplish, what steps do you need to take, and who is responsible for this?
• Measurable: do you have clear and easy-to-track key performance indicators? 
• Attainable: is your goal realistic? Can you and your team reasonably accomplish this?
• Relevant: how does the goal you set fit into the bottom line? What is the big picture?
• Time-bound: what is your time frame for achieving this goal? Does it involve multiple steps and is everyone aware of the time allotted for each?

One example of a SMART goal would be: Grow the number of new customers coming from referrals by 10% in 3 months. This will be accomplished by sending targeted emails to existing customers about the benefits of referring a friend or family member. We will send emails to 3,000 existing customers starting in July 2024 until the end of September 2024. Since a consistent flow of new customers is one of our main overall goals, doing this will ultimately help us increase sales. 

Choose the right incentives

For a referral program to work, you need to incentivize both referrers and referred. You can opt for a variety of rewards, such as:

• Personalized referral codes that customers can share with others so they both get a discount.
• Gift vouchers for a free or discounted meal at your restaurant.
• Freebies for specific order types (order online to get a free dessert).
• Limited-time promos.
• Exclusive menu items only available for referrers and referred.
• Holiday-themed deals and special offers.
• Exclusive events for members of the referral program.

The type of incentive you end up offering also depends on the goals you’ve set. For example, if your goal is to boost holiday sales, you should offer incentives that are specific to the holiday season.

Consider a tiered reward system

Tiered rewards are very popular with referral programs because they motivate customers to keep recommending your restaurant to others to unlock more perks.

It provides a sense of competition and keeps customers engaged with your brand, as opposed to them redeeming a one-time reward and then forgetting about your restaurant.

For one successful referral, you can give customers a 10% discount. For three, they can get a free appetizer, for five, a free meal, and so on.

Spread the word on social media

Social media is an excellent place to promote your referral program because this is where most of your customers spend their free time.

This will create awareness and boost engagement, and you can even encourage your existing customers to get in on the fun. How? By sharing their referral code on social media and tagging you in the post.

Whoever sees it can use it, which will bring a flurry of rewards to your existing customers and a new influx of clients to you.

Track referral conversions

Finally, the only way to see if your referral program is actually successful is to monitor conversion rates. Regularly analyze conversion data to see if you need to adjust your strategy or perhaps offer more convincing rewards. 

Keep a close eye on the return on investment to see how much you’re earning for every dollar you spend, as well as the growth rate of your referral program to see how fast you’re gaining new customers.

Final Thoughts

A referral program is one of the simplest, most affordable ways for a restaurant to attract new customers while rewarding loyal ones. Follow the tips and tricks above to kickstart your own referral program and boost sales with little time and effort.