Top 3 Takeaways from GuestXM’s Q3 State of the Industry Webinar

1. Managing Online Reputation

We are in a feedback economy where our digital reputations have become our most valuable currency.

Breakthroughs in digital technology have had a revolutionary impact on how customers connect with companies. Easy access has transformed digital channels into a hotbed for customer reviews—and online review channels are meant to expose the opinion of the masses to the world.

Brands can no longer ignore the weight of customer demands: they want to be listened to and they want to be acknowledged.

Furthermore, as new channels emerge, brands’ online reputations become more scattered. A system that can help consolidate reviews from multiple channels is key to effectively managing your reputation online, but it’s also important to know how impactful each channel is.

Looking at a sample of over 1.4 million reviews across Google, Yelp, Facebook, and TripAdvisor, we concluded that Google is one of the most critical review channels. This means not only monitoring reviews but also engaging with customers on the platform.

Today, companies that know how to tune in to the Voice of Customers are those mastering the feedback economy.

2. Trade-downs & Traffic Trends

As of June, comp traffic growth for the industry was -2.2% and -2.67% for the first two weeks in July. One of the reasons traffic growth is holding up a bit better and not seeing declines from where we were at the end of 2022 is that average guest checks are moderating. Cost pressures have been easing from both the commodity and labor sides, and as a result, price increases are starting to come down.

Nonetheless, restaurant prices have been rising faster than grocery prices since February. As a result, customers are trading down, opting instead for making food at home, leading to a loss of traffic for all restaurant segments. Our research has shown that those with the largest average checks are seeing smaller growth in sales (primarily due to much larger losses in traffic, except fine dining).

This is a great example of why it is crucial to collect and assimilate online customer feedback or reviews to gain an in-depth understanding of how your decisions, such as raising menu prices, might impact your customers. Without actionable insights, you can’t make educated decisions.

3. Turnover Easing

Employee turnover has a ripple effect: Frequent turnover can lead to inconsistent service quality, as new employees may not be as knowledgeable or experienced as those who have left. Moreover, a high turnover rate often signals internal issues, such as poor management, low morale, or inadequate training, which can indirectly affect customer perception of a brand’s overall effectiveness and reliability.

During our recent SOTI webinar, we took a closer look at the data concerning the impact of turnover on sales and traffic:

• Full-service brands with the best back-of-house retention rates performed 4 percentage points better in traffic growth compared to brands with high turnover rates. In terms of net sentiment—which includes service, food, and intent to return—lower-performing brands showed an 11-percentage-point lower overall score.

• Similarly, full-service brands with the best front-of-house retention rates performed 1 percentage point better in traffic growth compared to the rest. As for net sentiment, lower-performing brands showed an 8-percentage-point lower overall score.

• Limited-service brands with high retention performed 0.7 percentage points better in traffic growth than the rest, and again, brands with high turnover rates showed a 15-percentage-point lower overall score for net sentiment.

Although turnover rates are gradually decreasing, they remain above the norm. Hourly full-service turnover is coming down at a higher rate, whereas management turnover remains persistently high, posing an ongoing challenge for operations.

In terms of voluntary termination factors, job abandonment is the number one reason hourly team members quit. As for non-general managers, the number one reason for departure is higher compensation.

We have found that the biggest drop-off in turnover is between month four and month five at nearly 50%, which means it’s vitally important that you focus on the 100-day mark. Remember, onboarding and training lead to lower job abandonment rates.

Looking Ahead