Growing popularity of loyalty programs in the restaurant industry

Par 8 April 2021 July 14th, 2022 Aucuns Commentaires

Over the past three years, the restaurant industry has seen the biggest growth in new loyalty programs. This is not surprising when we consider the latest statistics from the United States where loyalty programs are very popular.

Great popularity in the USA

In Quebec, loyalty in the restaurant industry is present, but it seems rather modest. Most consumers know about Starbucks, La Cage, and Archibald’s programs. Whereas in the United States, a multitude of programs exist for all types of restaurants. From chains such as TGI Fridays to independent restaurants and fast food outlets, there is something for everyone. Among the top-performing loyalty programs1 are Panera Bread, P.F. Chang’s, Chipotle, and Chick-fil-A.

With the Panera Bread program, Premium Members generate 6 to 10 times more transactions than the non-members.

Many of these programs are very efficient and offer interesting benefits such as:

  • Tiers with increasing benefits as one progresses through the levels
  • Faster accumulation for the best customers (higher levels)
  • Accumulation of points based on the total spent
  • Bonuses for member engagement
  • Birthday gifts
  • Custom offers
  • Challenges supported by gamification elements
  • Exclusive access to new products
  • Possibility to gift points to friends, parents, or charitable associations
  • Invitations to events and unique experiences
  • Participation in surveys and focus groups

Good practices: customization and mobile devices

As is the case for other business sectors, the customer data generated by loyalty programs allow to:

  • Better understand customer purchasing behaviour
  • Identify the most loyal customers
  • Retain 15 to 20% of the customers who represent up 50 to 60% of sales
  • Increase the frequency of visits and average spent by customers

These same data allow restaurants’ operators to customize their content and offerings to consider allergies, preferences, diets (e.g., vegan), etc. This customization increases the rate of customer engagement and the conversion rate.

On average, 42% of members mainly use their cell phone to stay informed of a loyalty program’s rewards.2 In the restaurant industry, this particular device allows for many interesting features:

  • Ordering capacity
  • Payment management
  • Bonus achievement
  • Achievement of the next tier
  • Redeeming rewards
  • Account management
  • QR code to pay or get a bonus

The data is promising despite COVID-19

The restaurant industry has been drastically impacted by the COVID-19 pandemic which has greatly modified customer behaviour. Since the beginning of the pandemic, nearly 17% of Americans have said they eat less often in restaurants, but order online more often.3 Of this number, 82% plan to continue ordering online even after restaurants reopen.

A loyalty program with a well-implemented omnichannel experience allows a restaurant to reach customers who are cautious about returning in person to their favourite location.

Despite the pandemic, the 2020 statistics3 show great potential for loyalty programs in restaurant operations. With such data, the R3 team would be very surprised to see an erosion of the popularity of loyalty programs in the restaurant industry in the next few years.

Text transcription of the infographic Growing popularity of loyalty programs in the restaurant industry

  • 43% of all U.S. restaurant customers are members of at least one loyalty program in the restaurant industry.
  • Among those who do not use restaurant programs, the main reason in 37.8% of cases is because their favourite restaurant does not have a program.
  • With a membership rate of 54.7%, millennials (24-39) are the largest users, followed by 32-41-year-olds (54.5%). More than 48% of Generation X (40-55) are members of restaurant industry loyalty programs.
  • 5% of consumers earning more than $100,000/year use restaurant rewards programs.
  • 77% are interested in accessing the program and the rewards via a cell phone
  • The main reasons customers spend more in restaurants are:
    • A loyalty program (38.6%)
    • Online ordering (38.5%)
    • Online payment or on a cell phone (37.6%)
    • Express line or in-restaurant pick-up (36.4%)

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1 America’s Best Loyalty Programs 2021, Newsweek and Statista
2 2020 LoyalT Study, in collaboration with Leger
3 Delivering on Restaurant Rewards, Paytronix, November 2020