Retention or acquisition: where to spend first

Every pound a restaurant spends on marketing does one of two jobs. It either finds guests who have never visited, or it brings back guests who already have. Retention or acquisition: most venues never decide between them on purpose. They boost a post because a quiet week is coming, send a newsletter because it is the first of the month and hope the mix works out.

It is worth deciding. The two jobs cost different amounts, pay back over different periods and suit venues at different stages. A new restaurant with no regulars has to find guests. An established bistro losing regulars faster than it wins them may be pouring money into a leaky bucket. The only way to know which applies to you is to work out the cost of each, using your own numbers.

This guide covers what acquisition and retention each cost, how to work out both from your own figures, when each should come first and how to split a small budget between them. Every venue and figure in it is an example.

The question is simple: for the next pound of marketing, will it earn more by bringing in someone new or by bringing back someone you already have? The answer changes with the venue, the season and how well the venue keeps its guests.

Asking it deliberately changes how marketing decisions are made. Instead of "we should do some Instagram ads", the conversation becomes "a new guest costs us about twenty pounds to win, a lapsed regular costs about five to bring back, and we have two hundred lapsed regulars". That is a decision you can make with confidence.

Acquisition is everything you spend to win a first visit: paid adverts, social media promotion, listings on guides and apps, commissions on bookings from platforms, flyers, launch events and promotions for new guests. Some costs are obvious. Others, such as the staff time spent on social media, are easy to forget.

The figure that matters is the customer acquisition cost: what you spent on winning new guests in a period, divided by the number of new guests who arrived. It will never be exact, because some new guests come through word of mouth that cost nothing, but a rough figure is far better than none.

Retention is everything you spend to bring guests back: emails to regulars, events for existing guests, personal notes, small gestures at the table, recognising regulars and the staff time all of this takes. Much of it is cheap in money and expensive in attention.

The comparable figure is the cost of a returning visit: what you spent on bringing guests back in a period, divided by the extra visits it produced. That second number is the hard part, because regulars would have made some of those visits anyway. The honest approach is to count only the visits you can reasonably link to the effort, such as lapsed guests who returned after a note.

Take an invented example. In one month, a venue spends twelve hundred pounds on adverts and promotions aimed at new guests. Its bookings show sixty first-time guests that month who came through those channels, rather than through word of mouth or walking past. The cost of a new guest is about twenty pounds.

Now compare that with what a new guest is worth on their first visit. If the average first-time guest spends forty pounds and the gross profit on that is about twenty-six, the first visit barely covers its own acquisition cost. The new guest only becomes profitable if they come back.

Now the other side. The same venue spends about a hundred and fifty pounds a month on its email tool and the staff time to write a monthly note to regulars and a short message to lapsed guests. It also runs one regulars' tasting evening, whose extra costs come to about a hundred pounds.

Over the month, around fifty lapsed or occasional guests return after a note or an invitation, more than the venue would normally expect. The cost of a returning visit is about five pounds. Even allowing for some of those guests coming back anyway, it is far cheaper than winning a new guest, and each returning guest is more likely to come again.

Acquisition only pays if new guests return. A new guest who visits once and never again has cost twenty pounds to win and brought in one visit's profit. A new guest who becomes a regular and visits ten times a year has cost the same twenty pounds and brought in many times more.

So the real measure of acquisition is not new guests won, but new guests who became repeat guests. A campaign that brings in a hundred guests who never return is worth less than one that brings in thirty who stay. Our guide to the second visit is the one you have to earn covers how to turn first visits into second ones.

Repeat guests are where most of a restaurant's profit comes from. They visit more often, often spend more as they grow comfortable, fill quiet nights and bring friends. Each of their visits costs little or nothing to win.

That is why the value of acquisition depends on retention. A venue that keeps its guests well can afford to spend more winning them, because each new guest will be worth more over time. A venue that keeps them badly gets less from every pound of acquisition. Our guide to repeat guests are cheaper than new ones covers the economics in detail.

To compare the two properly, estimate the guest value of a typical regular over a year. Multiply how often a regular visits by what they spend per visit and by your gross margin. A regular who visits eight times a year, spending forty pounds each time at a sixty-five per cent gross margin, is worth about two hundred pounds of gross profit a year.

Then ask what share of new guests become regulars. If one in five does, each new guest is worth, on average, about forty pounds a year in future gross profit, plus their first visit. That makes a twenty-pound acquisition cost look reasonable, but only if the venue genuinely keeps one in five.

A venue with high churn is a leaky bucket. Pouring new guests into it keeps the level up for a while, but the water drains out as fast as it goes in. Spending more on acquisition makes the bucket busier, not fuller.

If your regulars are drifting away faster than new ones arrive, fix retention first. Find out why guests leave, act while they are lapsing and make sure first-time guests have a reason to return. Our guide to guest churn: the quiet loss nobody reports covers how to measure the leak.

Some venues have to put acquisition first. A new restaurant has no regulars to retain. A venue that has moved, rebranded or changed concept needs to reach a new audience. A venue in a tourist area, where most guests visit once, depends on a constant flow of new guests.

Even then, retention matters from the first day. A new restaurant that records its first guests, welcomes them back and invites them to return builds its base of regulars while it is still spending on acquisition. The aim is to move, over months, from a venue that depends on new guests to one that is carried by its regulars.

An established venue with a good base of guests usually earns more from retention. If its regulars are visiting less often, if quiet nights depend on guests who have drifted away or if many first-time guests never return, money spent bringing guests back will go further than money spent finding new ones.

The signs are usually in the venue's own records: a falling repeat rate, more lapsed regulars each month, first-time guests who do not come back. Each one is a sign that the cheapest covers available are the ones the venue has already won once.

Customer retention is often treated as something separate from marketing: a matter of good service rather than a plan. It is both. A marketing strategy that includes retention plans for it as deliberately as it plans adverts, with a budget, a calendar and a way of measuring results.

In practice, that means a monthly note to regulars, a message to lapsed guests, a few events a year for existing guests and a habit of recognising regulars in the room. Our guide to restaurant marketing strategies that survive a year covers how to build both sides into a plan you will keep.

You will often read that winning a new customer costs five times as much as keeping an existing one, or some other ratio. These figures come from very different businesses and are rarely sourced. Your venue's numbers may be quite different.

Work out your own. The sums in this guide take an afternoon with your bookings, your marketing spend and your sales figures. They will not be precise, but they will be about your venue, which makes them far more useful than any ratio from an article.

The most important number in the whole comparison is how many first-time guests return. It decides whether acquisition pays. A venue where half of first-time guests come back gets twice the value from each new guest as one where a quarter do.

Improving that number is retention spending that makes acquisition cheaper. A warm welcome for first-timers, a thank-you after the visit and an invitation to return all raise it, and each costs far less than winning another new guest to replace the ones who did not come back.

For most established venues, a sensible approach is to fund retention first, because it is cheap, and then spend on acquisition with what remains. The monthly note, the lapsed-guest message and the regulars' event might take a small fixed share of the budget. The rest goes to finding new guests, measured carefully.

Then adjust each quarter. If acquisition brings in new guests who stay, spend a little more on it. If retention efforts bring back many lapsed guests, keep them going and look for more. The split should follow the results, not habit.

To measure acquisition, count first-time guests and where they came from. Bookings record their source, such as your own booking page or a phone call, and asking new guests how they heard about you fills in the rest. Over a few months, you will see which channels bring guests and which bring guests who return.

Be honest about what you cannot measure. Some guests will have seen an advert and then come because a friend recommended you. Attribution in restaurants is always rough. The aim is a reasonable estimate, consistently made, not a precise figure.

To measure retention, track how many guests came back, the share of first-time guests who return within a few months, and how many lapsed regulars returned after a note or an invitation. Compare each with the same period before you started, so you can see what changed.

As with acquisition, avoid counting everything as a result. Regulars would have made many of their visits anyway. Count the visits you can reasonably link to the effort, and look at trends over several months rather than at any single campaign.

The right balance shifts with the seasons. In a tourist season, acquisition may matter more, because there are many potential new guests nearby. In the quiet months, retention often matters more, because regulars are the guests most likely to come out when nobody else does.

Plan the mix across the year. A venue might spend more on acquisition before its busy summer and more on retention through the winter, with regulars' events and invitations filling the quiet weeks that acquisition struggles to fill.

Word of mouth is acquisition that retention pays for. Regulars who love a venue bring friends and recommend it to colleagues, and those new guests arrive already trusting the place. It is the cheapest acquisition there is, and it comes entirely from keeping existing guests happy.

That makes retention spending doubly valuable. Every regular you keep is also a source of new guests. A venue that looks after its regulars well often finds that its acquisition costs fall, because more of its new guests arrive through recommendations rather than adverts.

Booking platforms and listing sites can be a source of new guests, but they often charge for repeat visits too, and they keep the relationship with the guest. A guest who books through a platform every time is a regular you are still paying to acquire.

Encourage guests who found you on a platform to book directly next time: a word from the server, a card with the bill, a reason to use your own booking page. Moving a guest from a platform to a direct relationship turns an acquisition cost into a retention opportunity.

The team does much of the work on both sides. A warm welcome and a good first visit turn new guests into repeat guests, which makes acquisition pay. Recognising regulars and noticing when they have not been in for a while keeps them coming back.

Most of retention's real cost is staff time and attention, and it is time well spent. Make it part of the job: reading the bookings before service, greeting first-timers well and mentioning regulars at the briefing. These habits cost little in money and decide much of a venue's marketing return.

Once a quarter, sit down with the numbers: what you spent on acquisition and retention, how many new guests arrived and from where, how many of them returned, how many lapsed guests came back and how the repeat rate moved.

Then decide where the next quarter's money goes. The review need not take long, and it keeps the decision deliberate rather than habitual. Our guide to a restaurant marketing plan on one page covers how to keep the plan and the review together.

An invented bistro spends almost all of its marketing budget on social media adverts and works out that a new guest costs it about twenty pounds. Looking at its bookings, it finds that only about one in six first-time guests returns within six months, and that it has around two hundred regulars who have not visited for three months or more.

It moves a small part of the budget to retention: a monthly note to regulars in the owner's voice, a message to lapsed regulars about the new menu and a thank-you email after every first visit. Within two quarters, more first-time guests return, around sixty lapsed regulars come back, and the bistro trims its advert spend without losing covers.

servearound shows both sides of the guest count, but not what you spent to win them. Guest analytics show new and returning guests by day, how many guests came back, the repeat rate, the booking channel mix and the return rate by the week guests were first seen, and reservation analytics show bookings by source: the booking page, the widget on your own site, phone, staff entered and walk-in. What an advert or a listing cost lives in your own accounts, so the cost of a new guest is a sum you finish yourself.

On the retention side, Campaigns send email to guests who opted in, using ready-made audiences such as lapsed regulars, new guests here and regulars here, and each send's report lists its recipients and the clicks on each link, with the unsubscribe rate in the campaign analytics. The dashboard shows returning guests and the campaign click rate alongside revenue and covers. See Analytics and Campaigns.

For most established venues, retention first, because it is cheaper. New venues and venues with few regulars need acquisition first.

Divide what you spent on winning new guests in a period by the number of first-time guests who arrived through those channels.

Divide what you spent on bringing guests back by the extra visits you can reasonably link to that effort.

That figure is often quoted but rarely sourced. Work out your own numbers.

The share of first-time guests who come back. It decides whether acquisition pays.

A venue losing regulars as fast as it wins new ones, so acquisition spending keeps it busy without making it fuller.

Fund cheap retention habits first, spend the rest on acquisition and adjust each quarter by results.

Once a quarter.

Retention or acquisition is a decision worth making on purpose. Work out the cost of a new guest, what you spent winning them divided by the first-time guests who arrived, and the cost of a returning visit, what you spent bringing guests back divided by the visits you can reasonably link to it. Use your own numbers, not ratios from other industries.

New guests only pay if they return, so the share of first-time guests who come back decides whether acquisition works. Fix a leaky bucket before filling it, fund cheap retention habits first in an established venue, put acquisition first in a new one and review the split every quarter, following the results rather than habit.