Are You Addressing This Critical Customer Retention Gap In Your Restaurant?

A new report from Upside, "Winning the Uncommitted Customer," reveals a critical retention gap in the restaurant industry: 64% of new restaurant customers never return after their first month.

Based on 75 million transactions and two years of retailer and consumer survey data, the report shows that uncommitted customers — those who routinely visit different brands and even blend channels — drive 70% of a restaurant’s revenue. These restaurant customers visit an average of three different restaurants per month.

“The data shows that a visit doesn’t mean a customer is here to stay,” said Dr. Thomas Weinandy, Senior Research Economist at Upside. “To retain customers and recoup acquisition costs, restaurants need to prioritize winning each and every successive transaction. Winning just one more meal a month could create a meaningful boost in revenue.”

In fact, in the restaurant industry, just one additional visit per month from uncommitted customers could drive a 209% increase in overall revenue — helping restaurants turn one-time visits into lasting relationships and justify their acquisition investment. The study also found that retained customers spend more: New restaurant customers spend $99 annually on average, while retained customers spend $241 annually—an additional $142 per customer.

Despite the findings, many retailers underestimate the scope of the problem. In Upside’s survey, 65% of restaurant retailers said they don’t believe a meaningful portion of their customers are uncommitted. But the data shows otherwise: 71% of restaurant customers fit this profile — and they span all ages, income levels, and household types.

“This data reinforces what we’re hearing from brands and operators every day. Repeat visits are harder to earn,” said Ryan Gaylor, Head of Restaurant at Upside. “This report proves that while most customers aren’t loyal, they are influenceable and the restaurant vertical has the greatest opportunity to gain from engaging uncommitted customers more effectively.”

 

Customer Retention Solutions

When it comes to influencing uncommitted customer behavior, restaurants need to intervene early to have a shot at retention. The study found that 66% of restaurant customers decide where to dine less than two hours before their meal, making real-time engagement essential.

This engagement should happen digitally, as 67% of restaurant customers use digital tools (social media, search engines, online ads, or reviews) to discover new products/brands. Don't leave out delivery apps when considering digital engagement—50% of delivery customers compare prices across businesses when deciding where to order, according to the study.

Aside from offering value to uncommitted customers, loyalty and rewards programs also play well with restaurant diners, as 61% said they are willing to change where they go based on these programs. According to the study, restaurant customers say they need 9% cash back to change behavior, but actually accept 16% cash back—the only category where customers accept more than they claim to need.

Restaurant customers are also more likely to go the extra mile—literally and figuratively—for dining that meets their budget and taste preferences. The study found that customers are more willing to pay for what they want and that distance doesn't matter when there are incentives involved—the average restaurant customer travels 3.1 miles, but those earning cash back will travel 4.6 miles.


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