How to keep customers happy after raising your prices

So you raised your restaurant’s prices. Welcome to the after party.

To kick us off, let’s acknowledge two things: 1) Raising prices can be a great long-term growth strategy for restaurants, especially when combating the pressure of high inflation. 2) Higher prices can often translate to higher customer expectations.

While some patrons might be more forgiving of price increases, many will start expecting more from your restaurant in return for the steeper bill at the end of their meal. One study showed that nearly 80% of respondents correlated higher prices to better experiences.

That’s why after you increase those numbers, your best bet to retain customers and attract new ones is to focus on cultivating a guest experience they’ll have no choice but to love.

Not sure where to start? You’re in luck. If anyone knows about how to keep customers happy after raising prices, it’s Danny Meyer. The founder of Union Square Hospitality Group and Shake Shack famously introduced a no-tipping policy at his restaurants in 2015 by raising menu prices 15-20%.

Although he later reinstated tips due to the COVID-19 pandemic, during the five-year run of his “Hospitality Included” model, Danny not only kept loyal customers happy but managed to grow even more popular during that time despite having markedly higher prices.

The best part? Danny recently sat down with Heartland leaders to discuss his hard-won recipe for how to create a better customer experience and make your restaurant a success — higher prices and all — with a philosophy he coined as “enlightened hospitality.”

Whether you're a multi-location, chart-topping restaurant collective or an up-and-coming hotdog cart, read on to get the ultimate guide to meeting and exceeding customer expectations from the restaurant trailblazer who literally wrote the book on hospitality:

Let’s get cooking!

Top tips for cultivating a customer experience that’ll keep them coming back for seconds — no matter the price

1. Hire people who are great for your restaurant

Aside from the food, the staff your guests interact with will likely have the biggest impact on how they remember their experience dining at your restaurant. That’s why it’s important to hire great employees.

We know. Easier said than done, right? First, you’ll need to define what a “great employee” looks like to your business. You can hire a candidate with an A+ resume and still hire the wrong person. To hire people who are great for your restaurant’s specific culture, it’s best to look beyond the resume.

Here’s what we mean: A survey showed that 42% of customers would pay more for a friendly, welcoming experience. So if you have a candidate who previously worked in a five-star restaurant, but they can’t be bothered to go the extra mile for your customers or lend a helping hand to their co-workers, do you really want them influencing your team’s culture?

Danny recommends looking for these six emotional intelligence skills that indicate a high “hospitality quotient” when interviewing candidates:

The goal? Hire a diverse team of people who bring different things to the table but all exhibit that natural impulse to take care of what a customer needs. Making sure your guests have positive interactions with a warm, attentive, genuine staff is a great way to soften the blow of higher prices.

2. Retain great people with an employee-first philosophy

Once you’ve got the right team on board, your work isn’t done yet. The last thing you want is a great employee leaving just when you need them most (like that sensitive time period right after you raise prices). So the second, equally crucial act to recruiting those great employees is retaining them.

How do you do that? For starters, it’s about getting in the right mindset as an operator:

Put your investors last: In Danny’s words, as a restaurant operator, you have five stakeholders, and every time you make a choice you have to ask yourself how it will impact them. But you get to choose how to prioritize your stakeholders.

Here’s Danny’s recommended order:

While it might seem counterintuitive, the idea is that when you take care of your staff first, it’ll create a virtuous cycle where one good thing leads to another. Ultimately, you’re improving customer satisfaction and making your investors more money by keeping your staff happy.

Treat employees as volunteers: Another of Danny’s secrets to cultivating happy employees is to treat them as if they’re volunteering for the job. We want to be clear — you should definitely pay your employees! But know that if they got a job with you, they can probably get another one at the same pay rate somewhere else. Showing your employees gratitude for “volunteering” to bring their gifts to your business can go a long way.

Carve out a path to growth: As Danny learned from experience, the final must-have ingredient to retaining great employees is giving them somewhere to grow. Make a place for team members to move up at your restaurant by promoting from within instead of forcing them onto the off ramp if they have aspirations for a next step.

3. Build a culture that puts hospitality above service

According to research, 59% of consumers said they’d walk away from a brand after several bad experiences, while 17% said they’d walk away after just one. Add higher prices — and higher expectations — to the mix, and you’ve got your work cut out for you when it comes to customer retention and making a good impression on new customers.

So the question is, what makes a good experience? You might be thinking excellent customer service that’s high-performing on a technical level is the answer. But if you ask Danny, he’d say hospitality is even more important. Wondering what the difference is? Think of it this way: Service is the technical delivery of a product, while hospitality is how the delivery of that product makes its recipient feel.

If you’re not sure how to build that concept into your staff’s daily approach, take a page out of Danny’s book and start by providing your staff with a common language and standard by which to make hospitality-driven decisions.

The way Danny does this is by challenging his staff to think of service as a “test” they must pass with 100%. You can get up to 49 points based on how good your performance is technically. And the remaining 51 points come from how you make others feel. So even if you do everything perfectly on a technical level, you’ll fail if you don’t have the other half, and vice versa.

To sum things up: Meeting customer service expectations isn’t a matter of forced scripts and strict uniforms. It’s about holding a healthy tension between how you make people feel and how you execute on the fundamentals. Providing your staff with that framework, and then giving them the freedom to create a personalized experience that makes each customer feel seen, heard and welcome can help you win loyal customers even when your prices are elevated.

4. Tap into technology to deliver convenience

One of the quickest and most effective ways to up your restaurant’s game is through technology. But as Danny would tell you, not just any technology — technology that reinforces hospitality.

What does that mean? Basically, don’t sacrifice your restaurant’s personality and charm at the altar of more technology. Do add tech to your restaurant that will boost your restaurant’s efficiency, deliver convenience and help you create a thoughtful, customer-led experience in a way that still feels true to your business.

For example, when selecting or upgrading your restaurant point of sale (POS), these are some features that can add to hospitality:

There are many more examples we could talk about. But since we know you’re busy, we’ll leave you with this. According to a PWC survey, nearly 80% of American consumers said that speed, convenience/ease-of-use, knowledgeable assistance and friendly service are the most important elements of a positive customer experience.

So a good rule of thumb when selecting technology for your restaurant is to ask yourself these two questions: 1) Is it making the customer’s experience fast and frictionless? 2) Is it freeing up your staff to deliver the special assistance and attentiveness that excellent hospitality demands?

Ready for better restaurant technology?

5. Master the art of paying attention to customer feedback

If you’ve been avoiding customer reviews after raising your prices, don’t. It’s a better idea to keep your ear to the ground instead of your head in the sand.

As an entrepreneur, you’re an innovator, a solver of problems. The way you get to the solution is by gathering information from experiences good and bad, and building up your knowledge base until you can use what you’ve learned to find a better way forward. Customer feedback is a big part of that.

We get it. Nobody likes negative customer reviews. It would be great if the only ones you received were perfect five-stars. Unfortunately, that’s not the world we live in. But you’re not alone, not by a long shot. Even Danny faced his fair share of reviews that were less than glowing when he started out. However, instead of pretending they didn’t exist, he paid attention. And it paid off.

Listening to your customers: Social media, online reviews, email marketing … they’re all invaluable tools for gathering current intel on how people are talking about your restaurant. Is it uncomfortable? Yes, sometimes it can be. But it’s also a great way to hear real-time conversations about the good, the bad and the ugly of how your guests feel about their customer journey at your restaurant and whether or not it’s meeting customer expectations.

Listening to yourself: More than listening to your patrons, Danny also recommends paying attention to your own experiences as a customer. What are some things you love about dining at your favorite restaurant? What went wrong with the restaurants that disappointed you?

Bottom line? Simply by paying attention to your customers’ dialogue and your own roses and thorns as a diner, you can connect the dots to create a better customer experience — and make the next review that much better.

Ready to take on those great expectations?

So, to wrap things up: How do you meet heightened customer expectations after you’ve raised your prices? Well, the answer is a lot of smaller stuff that adds up to something greater.

If you succeed in nailing all five of the tactics we just talked about, that’s awesome. But it’s even better if you don’t stop there.

Over time, doing things just a little better every day can lead to a customer service experience worthy of fostering customer loyalty out of diners new and old who will stick with your restaurant through thick and thin. Sticker shock included.

Food for thought before you go: Remember, the point of “enlightened hospitality” is not perfection.

If you’re looking for more content from entrepreneurs who have been in your shoes, head on over to The Entrepreneur’s Studio and browse our growing library of podcast episodes. We’re collecting tons of can’t-miss strategies, tools and tips for how to run and grow your small business, with heaps of inspiration to boot.

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