Restaurant Share: What Market Share Means and How to Grow It

The term “restaurant share” has more than one meaning. In the restaurant industry, it can refer to market share, share of wallet, or publicly traded restaurant stocks.

Restaurant operators usually focus on the first two: how much of a guest's dining spend they capture and what share of their market they hold. Investors are generally more interested in the third: publicly traded restaurant stocks

We’ll cover all three and explore what restaurant operators can do to grow their market share.

What Does 'Restaurant Share' Mean?

A restaurant share can mean one of three things, and each is measured differently:

1. Share of wallet: The percentage of a guest's total dining spending that goes to your restaurant rather than your competitors.
2. Market share: Your restaurant’s percentage of total foodservice industry or category revenue.
3. Restaurant stocks: Shares of publicly traded restaurant companies, which are generally more relevant to investors rather than restaurant operators.

Why Market Share Matters for Restaurant Operators

The restaurant industry generates around $1.1 trillion per year. Within that market, the Top 500 chains hold an estimated 33% of the market, with the remaining 67% held by independent and small-chain operators.

Growing market share has a compounding effect over time. Restaurants with greater market share can influence prices and price out competitors, especially if they also have customer loyalty and high visit frequency.

Suppliers are also more inclined to work with larger, growing operators that purchase at scale across locations, and brand equity grows stronger as more guests experience the brand.

The Most Important Share Metric: Share of Wallet

Share of wallet (SOW) shows how much of a guest’s overall dining budget your restaurant earns compared with competitors. For example, if a customer spends $500 per month on dining and spends $250 of that at one restaurant, that restaurant captures a 50% share of wallet.

Frequency is one of the biggest drivers of this number. A guest who moves from visiting every other week to visiting weekly can significantly increase the portion of their dining spend your restaurant captures.

Understanding and leveraging share of wallet enables operators to personalize customer experiences, marketing strategies, and menu offerings, including seasonal items.

You can measure SOW more effectively through loyalty program data, which captures every touchpoint and tracks visits and order history over time.

How Loyalty Programs Grow Restaurant Share

Loyalty members visit 22% more often than non-members and spend an average of 38% more per visit, which can translate directly into a higher share of wallet.

Paid and tiered programs can push that share even higher. Loyalty members with paid features are 60% more likely to spend more with the brand than those enrolled in a free loyalty program.

Tiered programs can have a similar effect by incentivizing guests to concentrate more of their spending with a single brand or operator to reach a higher reward tier. Tiered loyalty program members have an estimated 48% engagement rate, 13% higher than non-tiered programs at 35%.

When building your loyalty reward program, use guest data to your advantage. Loyalty data pinpoints guests who are showing a decrease in visit frequency, and you can automate marketing campaigns to trigger when you detect these early signs of disengagement, before you lose visits to your competitors.

How Digital Ordering Captures Off-Premise Share

Digital ordering captures off-site share of wallet and can increase profit and growth exponentially. The National Restaurant Association reports that 75% of restaurant traffic occurs off-site, including delivery, pickup, and drive-thru orders.

Operators without mobile ordering platforms or software simply cannot compete with restaurants that offer delivery and order-ahead options. Offering these channels helps operators compete for a larger portion of the market, especially relative to competitors without this capability.

It’s not just about having digital ordering channels, though. In the same National Restaurant Association report, 94% of consumers say speed is essential, and 80% take advantage of “BOGO” deals or one-time promotions. This means operators need to pair their ordering with quick fulfillment and offers to capture a higher share.

How to Grow Your Restaurant's Market Share

Operators can use several practical tactics to increase market share.

Increase Visit Frequency Among Existing Guests

Your existing customer base is one of your most cost-efficient ways to grow revenue and share of wallet. Research from Bain & Company shows that even a slim 5% increase in customer retention can increase profits by 25% to 95%.

Customer retention is therefore essential to your restaurant marketing strategy. Focus on your existing customer segment and build loyalty rewards programs customized to their purchasing preferences, with personalized offers. Automate campaigns to drive visit frequency alongside your customer acquisition efforts.

Use Guest Data for Personalized, High-Response Marketing

Guest data from loyalty programs is a valuable tool for increasing guest engagement. Personalized emails are a perfect example, with a 41% higher click-through rate than non-personalized emails.

Use guest data and behavioral segments to customize the guest experience at every touchpoint. Offers like birthday campaigns show increased guest engagement, with data from one Paytronix restaurant operator showing a 47% redemption rate.

Target lapsed guests with automated campaigns designed to drive visits by offering promotions or bonuses. “We miss you” campaigns can be straightforward to implement and generate strong returns. A case study from Paytronix shows a “We Miss You” campaign producing $1.7 million in one year.

Expand Your Digital Ordering Presence

Capture more of the market with a broader digital ordering presence. Tick all the boxes with app ordering, web ordering, mobile apps, and third-party delivery integrations such as GrubHub or Uber Eats.

Each channel captures different guest occasions and helps capture additional market share. Digital ordering platforms should also easily integrate with loyalty programs to track transactions and build better sales funnels and targeted promotions.

A Note on Publicly Traded Restaurant Stocks

“Restaurant share” can also mean shares of stock. Major restaurant companies such as Starbucks, Darden Restaurants, McDonald’s, and Restaurant Brands International trade publicly on Nasdaq and the NYSE. Restaurant Brands International (QSR), for example, has a market valuation of about $33.9 billion, a price-to-earnings ratio near 29.73, and a dividend yield of 3.4%.

Trading and selling in the stock market is typically done by investors rather than restaurant operators themselves.

Margin expansion and same-store sales growth are generally the main drivers of restaurant stock prices. We also think it’s worth noting that restaurant investing carries real risk, with about 60% of restaurants failing within the first year and 80% in the first five years.

Restaurant stocks and “restaurant share” are two distinct terms, but both can experience growth in the industry.

Frequently Asked Questions About Restaurant Share

What is share of wallet in a restaurant?

Share of wallet is the percentage of a customer’s total spending at your restaurant over a period of time. The percentage compares their spending at your establishment with their spending at other restaurants. SOW is only compared to spending in the same industry or category.

Having a high share of wallet suggests that your restaurant is one of your guests' preferred dining options.

How Do Restaurants Measure Market Share?

Restaurants measure market share using sales data relative to competitors, loyalty program visit data, and third-party market research reports from authorities such as Technomic and NPD Group.

Loyalty program data can help operators measure visit frequency and share of wallet among known guests, but calculating market share requires an estimate of the wider market or category's total sales.

Grow Your Restaurant's Share With Smarter Guest Engagement

Growing your restaurant's share of wallet boils down to smarter guest engagement. Loyalty programs help you leverage guest data to increase visit frequency, increase retention, and grow your market position.

Request a Paytronix demo to see how guest engagement technology grows visit frequency, wallet share, and competitive market position.