What do In-N-Out, T.G.I.F. have that others don't?

In-N-Out Burger and T.G.I. Friday's topped the Top 10 lists for fast-food retailers and casual-dining retailers, respectively, in dunnhumbyUSA's second Customer Centricity Index (CCI) on foodservice retailers. While the survey did not include convenience store foodservice brands, its findings measure how well the foodservice retailers are responding to the needs and wants of consumers based on feedback from actual customers.

"Restaurants are facing increasing challenges every day--pricing pressures, an increased focus on having an assortment mix of healthy and indulgent offerings, as well as increasing labor and food costs," said Peter Miles-Prouten, senior vice president of consumer markets for Cincinnati-based dunnhumbyUSA. "With new competitors and formats being introduced almost daily, the key to winning the 'battle for the stomach' is to find new and different ways to connect to the customer. The restaurants included in this report lead their respective categories, from the perspective of their guests."

The consumer analysis firm surveyed customers for their opinions on menu assortment, price, overall experience, feedback, promotions, loyalty and communications for restaurants in these categories. These factors comprise the "Seven Pillars of Customer Centricity" that dunnhumby has identified as most important to long-term loyal customer growth. Customer centricity is key to business growth and the CCI research demonstrates that when customers perceive a company as being "right for them," it correlates to long-term revenue growth.

In the quick-service restaurant (QSR) segment, competition is fierce, labor costs are rising and the pressure for promotion and low prices is ever-present. Still, several the quick-service restaurant (QSR) chains have found a way to differentiate themselves by focusing on what matters to their customers.

In-N-Out Burger is the most customer-centric restaurant in fast food, dunnhumbyUSA said. The restaurant has the highest score in price, but its differentiation is mostly in experience. Despite a limited menu of mostly burgers, its assortment scores highly, up with restaurants that often have a wider assortment. In-N-Out Burger is a strong example that customer-centric assortment isn't about giving customers everything, but in understanding what customers want and meeting that expectation.

Promotions for limited-time offers are everywhere throughout the industry, and low prices are seemingly the key to survival. In general, all fast-food chains score high on the price and promotions pillars. Yet low prices don't guarantee success. McDonald's leads all others in pricing, but ranks at No. 10 overall. Chick-fil-A does very well overall despite having below average scores on price and promotion. Value is the key that customers are looking for.

In general, fast-food chains rank low in the loyalty pillar. Loyalty doesn't necessarily have to be driven by formal or complex programs. But the loyalty programs at Chick-fil-A and Subway seem to create some differentiation in the minds of their customers.

Like loyalty, scores for feedback and communications are low for fast-food chains in general. In the digital age, this seems like a ripe area for improvement, by leveraging social media and direct feedback as a way for customers to feel like they are being heard. Also, fast-food chains have a long way to go in making their communications seem relevant to each customer.

In the casual dining segment, food matters. Balancing old favorites with new innovations on the menu is a constant struggle, but restaurants like LongHorn Steakhouse and Carrabba's Italian Grill differentiate by keeping customers excited about the menu.

And customer experience matters as much as the food does. Customers at Texas Roadhouse and Bonefish Grill have cited the ambience and great dining experience as reasons for their loyalty.

T.G.I .Friday's has earned the No. 1 spot, in part by providing value and rewarding customers for their loyalty in an industry where loyalty is still emerging.

Click here to access the dunnhumbyUSA report.

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