Arguably the #1 thing companies care most about is driving shareholder value (aka pushing up their stock price). We see them go to great lengths to achieve this goal, often using all kinds of sketchy tactics from shrinking sizes to creative accounting methods. But what if the best way to drive shareholder returns is actually by providing value to customers? (I know, crazy concept right?)
Arguably the #1 thing companies care most about is driving shareholder value (aka pushing up their stock price). We see them go to great lengths to achieve this goal, often using all kinds of sketchy tactics from shrinking sizes to creative accounting methods. But what if the best way to drive shareholder returns is actually by providing value to customers? (I know, crazy concept right?)
I wanted to look into this and used our program (Cotera) to read through thousands of customer reviews for the top five public restaurant chains. I only looked at reviews in the past year to make sure my data was relevant and then correlated these findings with YTD stock performance. Here’s what I found:
It’s actually insane how correlated stock performance is with service rating. And what’s even crazier is that this is only looking at service quality and doesn’t account for other factors such as portion size, quality of food, price etc.
A minor note: Wingstop and Chipotle are swapped in this pattern. However, the difference between the two is marginal and could likely be attributed to Chipotle’s exceptionally strong sales growth which has stayed resilient amid price increases.
These results really go to show the big economic payoff of good service. Assuming comparable wages, delivering an exceptional customer experience doesn’t necessarily require significant additional investment. Yet, as our analysis shows, the financial benefits of prioritizing customer satisfaction is significant.
I plan to run this same analysis for every public restaurant chain to see if this pattern holds. If you want an update to this follow Cotera on LinkedIn (@coterahq) and sign up for email updates on our website (cotera.co)!