Name a major restaurant brand and chances are that it has relaunched its loyalty program over the past year. As competition has increased along with consumers’ need for value, more brands have reinvented their loyalty programs to meet the moment. If your program hasn’t had a refresh in a while, make sure it’s not only driving return visits but also allows guests to earn rewards in ways that work long-term for both your business and your guests. For instance, Sweetgreen Chief Marketing Officer Daniel Shlossman said in an interview with PYMNTS that points-based systems, for example, can lead to situations where guests become rich in rewards and ready to redeem them, while the restaurant has to respond to the high demand by degrading the value of the rewards. For that reason, Shlossman said, Sweetgreen decided to offer a gamified approach that rewards guests in exchange for certain kinds of purchases – and enables to brand to provide different offers to different kinds of guests. If you have a loyalty program, have you tested it to better understand how guests will be able to redeem rewards months down the line? Do you have the flexibility to recalibrate your program to manage the demand? Are you offering the kinds of rewards that provide a little incentive for different subsets of your most loyal guests? Strong third-quarter retail sales and overall growth in the U.S. point to a promising sign for restaurants as the holidays approach: Consumers may be looking to spend more freely than they spent in earlier months of the year. Are you ready to make the most of guest traffic? First lean on your technology – to enable seamless payments in the forms guests prefer, to generate greater participation in your loyalty program, to anticipate high-traffic peaks (and valleys), to schedule staff accordingly, and to deliver targeted promotions to guests looking to get out and celebrate with others over the festive period. Assess potential bottlenecks in your various sales streams, as well as opportunities to promote different parts of your business that could do especially well over the holidays. For instance, what mechanisms do you have in place to manage catering orders, track reservations, maintain your ingredients for your most popular holiday dishes, and promote retail items? What safety nets are in place to support you when problems happen? It can help to review the guest journey along every sales stream you have, gather feedback from staff about what works well and what needs to improve, and to check your online reviews to identify parts of your business that may need attention. The battle to win loyal guests continues in the restaurant space – and lately, many restaurant brands are vying with each other to stand out in the market with perks including special experiences and merchandise in addition to food. Amid economic challenges like higher interest rates and more controlled consumer spending, loyalty programs have become critical for restaurant brands. However, some brands have been pushing so hard to attract guest sign-ups that those with franchisees are getting some pushback from operators about the new offerings (and therefore delivering an uneven experience with regard to the loyalty rewards offered). If you’re trying to fine tune your loyalty program right now, it’s most important to be able to run it consistently and efficiently. Above all, keeping your loyalty program members interested and engaged means keeping your program simple. It should be easy for your guests to sign up and understand how they can accumulate rewards – and they shouldn’t have to jump through hoops to redeem them. Your guests should have the same loyalty experience across your stores. When you can deliver these things, you may be surprised to see how much your loyalty members value them. Case in point: An annual loyalty survey from Deloitte found that as consumer participation in loyalty programs has increased, it’s been fairly even across paid and free programs. So you may have an opportunity to offer a paid program that allows you to deliver a more premium experience and incentivize additional guest engagement and spending. Your loyalty program members are valuable – but do you know exactly how valuable? A recent Paytronix study may provide some insight. It collected in-store and online transactions for full-service restaurants, quick-service restaurants and convenience stores that occurred between January 1, 2020 and June 30, 2023. The results confirmed that active loyalty program members are climbing steadily, with FSRs seeing a 16 percent increase in members and QSRs seeing a 24 percent increase over the course of the study. But how these people are spending is more telling: The research found that in 2022, FSR and QSR active loyalty members had check sizes that were at least 5 percent higher than those of non-loyalty members. Further, the top 10 percent of active loyalty program members were responsible for nearly half of all loyalty visits (and spending) across concepts. These guests are true VIPs. In your restaurant, are they getting some special focus? There is a lot of noise in the loyalty space right now, with restaurant brands making bold offers aiming to grab people’s attention and generate increased program participation. But the offers may not even be practical for most guests. Drilling down on the data you have about your best guests will always be most helpful in determining how to take care of them. What do these guests love about your restaurant? Is it your homemade pasta? Your inventive desserts? Your friendly staff? Can you build an event, a reward, or simply include a personal touch around these elements for your best guests? Restaurant aren't one-size-fits-all, so restaurant loyalty programs shouldn't be either. Yet many restaurants operate this way. If you're offering blanket rewards for different tiers of your program, or not allowing for some choice on the part of your guests, you may be leaving sales on the table. A guide from the guest engagement company Paytronix suggests some approaches restaurants should keep in mind to offer a program that most closely reflects their brand and the preferences of their guests. It asks you to consider five factors: First, think about how to best engage your guests. Conduct a survey so you understand what motivates them to come to your restaurant -- and what would drive them back to make incremental purchases over time. Second, build in the flexibility to run promotions that suit your brand. Do you want to build continued interest around a signature menu item or other unique aspect of your brand? Third, make it easy for your staff to use the program with guests -- to promote it, answer questions about it, and provide updates to account balances. Fourth, choose only the options that allow you to earn a financial return and plan clear steps to achieve it. Finally, capture key guest information that helps you segment offers. Your longtime guest with kids may well be interested in different offers than the newer guest who comes in once a month for happy hour -- and that should come through in their offers. In addition to providing an overview of the popular programs in use and how they can be customized, the Paytronix guide also includes a worksheet that can help you evaluate program options and determine which features best suit your needs. Consumers like a good value – and increasingly, they are looking to loyalty programs to provide it. A recent consumer survey by PYMNTS found that 51 percent of respondents said they used a restaurant loyalty program. This was true across restaurant categories, with 49 percent participating at quick-service restaurants and 34 percent participating at full-service restaurants. This is spurring restaurants to reinvent their programs with new tiers, increased personalization and new payment capabilities, among other enhancements. There are more businesses vying for more signups to their loyalty program, so it will take a well-coordinated effort to get guests to join. Consider offering a tempting incentive to get people to sign up – a discount on their purchase that day, a free drink or snack, or another popular item you offer. Then get your staff on board, since they are likely the ones who will be prompting guests to join. Make sure they understand it, can explain it, and have some opening language on hand to promote it – have them share suggestions with each other or even engage in some competition for guest signups. Then make sure you promote the program on your website, store signage and social media – with clear language, simple prompts and an easy means of joining (like a QR code that will take guests right where they need to go). Your social media is another avenue to create contests and potentially viral content around your program. As the pandemic demonstrated, businesses gain strength from each other when they collaborate. Looking at your business, where are there opportunities for you to broaden your reach in the local community? As the warmer months approach and people are gathering over food at festivals, charity events and other occasions, think about how you can gain traction for your business through local partnerships. In addition to helping you strengthen word-of-mouth and online marketing of your business, your local partnerships can help staff morale and give them an opportunity to learn new skills and share ideas. Consider local wineries or breweries. Or businesses outside of the hospitality sector whose values complement those of your business or who offer experiences that can be enjoyed alongside the experience of enjoying your food. If you have a lot of local parents in your loyalty program, consider donating food or gift certificates to end-of-year school fundraising events. It isn’t always about stepping outside of your restaurant either. Consider offering apprenticeships to local high schools or colleges, partnering with your local chamber of commerce or with large employers in your neighborhood to offer meeting or event space, or setting up an ongoing food donation to support local people in need. You’re not just generating opportunities for your business – you’re also building a larger support system. A majority of consumers – 55 percent – don’t use a restaurant loyalty program, according to a new study from William Blair. For restaurant operators, this represents a big opportunity for growth at a time when competition for restaurant spending is stiff and loyalty programs can cultivate stronger attachments to brands. As restaurants have stepped up their pursuit of guests in the past few years, these programs have evolved well past the punch-card system and even the digitized system of accumulating rewards points. Nation’s Restaurant News highlighted some of the newer offerings to come to these programs – and many of them focus on gamification, customization or otherwise elevating the experience around buying food from a certain restaurant. Jimmy John’s and Chipotle, for example, have introduced a competitive element to their programs: At Jimmy John’s, the “gauntlet” challenges guests to purchase all 25 sandwiches on the menu within a set time frame in order to win a Jimmy John’s beanbag chair, while at Chipotle, a sweepstakes-style program enhancement dangles the opportunity for 3,100 members to win free food for a year. Other brands are playing with the subscription model, offering tiered program options – some free and some paid – that unlock exclusive menu items, provide early access to events and products, or allow members to access different levels of giveaways and other perks. A restaurant’s rewards program is a critical tool for attracting and retaining loyal guests – even more so since the pandemic has changed how the public buys food from restaurants. Now, the uncertainty in the economy has encouraged restaurant brands to not only get more creative about the rewards they offer, but also to overhaul their programs altogether. In some cases, the changes may be designed to appeal to guests in new ways, while in others they may simply be an unavoidable reflection of the challenges restaurants are experiencing. Starbucks, for one, will soon be changing its loyalty program for the first time in two years. The brand is reducing the number of thresholds at which guests can redeem rewards, while lowering the reward cost of several menu items. The consumer response to the change has been largely negative, which may serve as a warning sign for other brands. If you’re contemplating scaling back your rewards program out of necessity, consider how you might still send the message that you’re providing value. That may have to happen in ways that don’t stretch your budget – perhaps some exclusive menu items for rewards program members, or an experiential benefit for your best guests. Loyalty has become coveted currency for restaurants angling for guests – and at a time when loyalty programs have become so widespread, restaurants are testing creative strategies to entice new sign-ups. McDonald’s, for one, is raising the stakes in a way that is likely to be imitated by other restaurants and even other businesses, such as supermarkets, that compete with restaurants. During the month of December, the brand launched its Gold Card Promotion, whereby it gave away three gold cards (along with three additional gold cards for each winner that can be given to friends and family). Holders of the gold cards are entitled to free McDonald’s meals, worth up to $10 per meal, twice per week for 50 years. All a person had to do to enter to win a gold card was download the McDonald’s app, enroll in the rewards program and make one purchase during the gold card promotion period from Dec. 5 through Christmas. As a recent Forbes report implied, the promotion hinted of the gold-ticket fever on display in Charlie and the Chocolate Factory – and that’s probably the idea. Expect companies to raise the stakes in the coming months when it comes to loyalty by taking more extreme, newsworthy steps to attract attention and change the lives of just a few people – in exchange for collecting a whole lot of valuable data about a much larger segment of the population. |
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