A restaurant’s loyalty program can keep customers engaged and drive tremendous opportunities for growth. In fact, Fast Casual reported that increasing one’s loyalty following by just 5% can increase your profits by more than 25%. The key word is “can.” Too many times, restaurants jump on the loyalty program bandwagon without clear direction. This may lead to reduced revenue, the opposite of the intended result.
Implementing a solid restaurant loyalty program is a proven strategy and one of the best practices for increasing repeat business. To ensure its success, look at your program as more of a customer engagement program than a rewards program.
Successful Loyalty Programs
Chipotle’s loyalty program began in 2019. By the end of the year, the program had more than 8 million members. Now, three years later, that number has risen to about 27 million customers and growing.
They contribute to its success by offering different rewards and redemption, like cashing in points for free drinks and guacamole. They offer their loyal customers early releases on new menu items, and some items are available only via digital ordering. They are using these rewards to turn new guests into frequent customers.
Panera Bread is considering microfencing technology or code scanning to help them recognize loyalty members and acknowledge their preferences.
Loyalty programs don’t necessarily have to revolve around a discount strategy. For example, some of the best and most successful programs involve exclusive access to tastings, wine pairings, or guest chefs.
It’s also essential to keep your customer’s profile in mind. Your guests may appreciate an experience, such as a dish created just for them, more than rewards points. Or, their loyalty may be driven by a gamifying model and rewards based on their past purchases. As with most marketing models, individualization is critical.
Data is King
“Content is King,” a familiar saying among bloggers, is being replaced by “Data is King.” Customer data drives a personalized experience and enables restaurants to tailor customized offers. As a result, incentives based on a data-driven approach are much more powerful. When you collect and analyze data based on preferences and personal information, you can offer a much greater guest experience and the individualization that today’s guests demand.
Creating a Loyal Following
Speaking of loyalty, Mighty Quinn’s, a small 13-unit barbeque chain in New York City, made the news when they reportedly lowered the prices on two of their most popular menu items by 9%. The brand reduced prices on two meat samplers with side dishes, citing the desire to pass on the recently lowered protein costs to their guests.
Restaurant Business reported that Mighty Quinn’s meat sampler with brisket went from about $20 to $18. That move is certainly one that will increase the restaurant’s fan base. Micha Magid, the CEO, reported that they have seen an increase in traffic since deciding to lower some prices. Many restaurant chains are looking carefully at the inflationary pressures affecting consumer spending and creating value items that offer lower costs while maintaining quality.
The bottom line: One survey found that 79% of consumers prefer that brands invest in loyalty programs over social media advertising. Many of today’s customers have grown used to sharing their data in exchange for personalized offers and increased engagement. If done correctly, restaurants can gain valuable insight and increase their brand’s following.
How do loyalty programs help restaurants?
Restaurant loyalty programs allow operators to offer personalized experiences or discounts to their guests based on their behavior. They achieve this by collecting data that enables them to understand their customer’s preferences and then provide rewards based on those preferences.
As you can imagine, the impact is much greater when you offer a complimentary appetizer to a group that frequently orders it, compared to random offerings that don’t resonate with their selections. While many different strategies are involved in a successful loyalty program, they all have one goal: driving more business through repeat customers.
What are customer loyalty programs in restaurants?
Customer loyalty programs may be points-based or item based. The former enables customers to earn a point for every dollar they spend at your establishment. They then redeem these points for food or drinks. For example, after a customer earns 200 points, they can turn them in for a complimentary drink or appetizer. You’ll need to do the numbers to ensure you retain your profit margin.
Item-based rewards allow customers to earn a free item after purchasing a set number. An example is a free coffee you receive after buying 10 lattes. You can also offer a gift card for $20 after customers spend so much at your restaurant. Better yet, offer them a seat at your limited dining experience.