What is Customer lifetime value for restaurants?
Customer lifetime value (LTV) is the total revenue a customer generates for the restaurant throughout their relationship. It's calculated by multiplying average ticket × visit frequency × time as customer. It's key for deciding how much to invest in acquisition and retention.
Why it matters for restaurants
- Identify how much to invest to acquire a new customer
- Prioritize retention over acquisition when LTV is high
- Segment customers by value to personalize service
Example applied to a restaurant
A healthy food restaurant in Bogotá calculated their average customer spent $42,000 COP per visit, came 1.8 times per month, and stayed active 11 months. Their LTV was $831,600 COP. With this data they decided to invest up to $80,000 COP to acquire new customers through referrals with rewards.
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