(866) 509-7199
(866) 509-7199

The Rise of Loyalty Programs in the Restaurant Industry

Restaurant loyalty programs are designed to help reduce churn and build a steady flow of repeat customers. This is due to the fact that you have a 60% – 70% probability of bringing back existing customers and a 5%-20% probability of getting new customers. The focus should obviously be heavily skewed toward bringing existing customers back again and again, but many restaurants stick to promoting to their potential audience, hoping to convert new customers.

With a rewards program, you have a much better chance of keeping those existing clients coming back for more. Not only will they return to eat at your restaurant, they’ll be happy to refer you to friends. They also tend to spend more money overall when they are with your restaurant, particularly if the rewards program adds benefits at each level of spending.

The Growth of Loyalty Programs for Restaurants

COVID-19 spelled the end of many food-related businesses, but others managed to hang on through the lockdowns and come out the other side in better shape. The pandemic made it necessary for everyone to pivot, and restaurants were no exception. Loyalty programs were already on the rise, but they really skyrocketed during the pandemic, and as things began to reopen, those places offering deals and rewards made it easier for people to start eating out again.

Restaurant chains such as McDonald’s, Wendy’s, and Burger King are currently implementing new loyalty programs, inspired by the success of other popular chains like Starbucks. As they test the programs, the companies collect information on their customers, determining which deals and rewards will most likely keep customers coming back. These restaurants have learned that customers who have a loyalty rewards program that they use spend nearly double what those without rewards do. This occurs whether they purchase in the restaurant or online.

Starbucks saw a 15% increase in its rewards program in late 2020, thanks to making it possible for anyone to get points through their purchases. Not only did the coffee company recover the rewards members lost during the pandemic when everything was closed, but they passed their pre-pandemic numbers and reached close to 22 million members.

This success was instrumental in inspiring other chains and even smaller restaurants to implement loyalty programs. The key seems to be simplicity. The easier it is for members to collect their rewards, the more likely they are to use the program and the more they spend with the restaurant.

Why You Should Consider a Restaurant Loyalty Program

Any restaurant owner would be wise to consider the pros and cons of a loyalty program before implementing it. The main downsides are that it can be complicated to implement your loyalty program and there is the possibility of people cheating with it. However, there are usually enough pros to make it worthwhile to implement a program, which is why this is becoming more and more popular.

People tend to visit a restaurant more often when a rewards program is implemented. The simple act of creating a loyalty program can immediately increase your repeat customers, making it a profitable move and one that more than a few restaurants are testing out.

With well over half of restaurant goers being influenced by special deals offered by restaurants, it makes sense to look into loyalty offers. In fact, 81% of consumers would switch restaurants if they saw a good deal and 79% would consider getting a discount worth revisiting a restaurant where they previously had a bad experience. While this may not be the same as a points system, offering discounts and special deals to existing customers can help ensure they come back again and again.

Types of Restaurant Loyalty Programs

Loyalty programs have come a long way since the old hole punch cards that were used back in the day. Now, everything is digital, and people can usually use their phone app or a plastic card to collect their points or rewards. However, there are different types of loyalty programs.

Earn reward points for every dollar: This is the preferred type of loyalty program for most people, and you can see it used by big names like Starbucks. Essentially, customers earn reward points for every coffee they buy and the points can be cashed in for a monetary amount of product.

Spending-based rewards: Adding free delivery or a side dish with a specific order amount is a good way to get customers to order a little extra so they can get the freebie. It encourages them to meet a minimum spending goal to receive a benefit, and this can work greatly in your favor.

Receive discounts and freebies: Some restaurants prefer to surprise their clients with random free items or discounts if they are signed up for the loyalty program. This can be easy to implement, but it also doesn’t reward the customer specifically for buying, just for signing up.

Tiered loyalty programs: With these types of programs, the customer reaches a new tier for each milestone amount spent at the restaurant. These tiers may allow for specific rewards, such as a free cake on the card member’s birthday, a free meal, or discounts on every purchase. Half of the restaurant consumers would be fine with paying a membership fee if they received enough value in return.

Cashback program: With this method, your customer gets money back every time they eat with you. They can then use that money to get food whenever they like or apply it to a meal.

Of course, you can always blend two or more of these into one loyalty program; it all depends on what works best for you and your customers. Remember that loyalty programs are meant to bring you more business and more revenue, so you need to plan them out carefully to ensure you’re making money, not losing it.

How LOLA POS Can Help

Restaurants can be difficult to manage, particularly if your current model is online. However, you need to be able to accept multiple types of payments and that’s where a merchant account comes into play. LOLA POS offers a merchant account that works for you with high-risk credit card processing and other merchant services.

If you need help to set up your payments, experts are useful to have on your side. LOLA POS has high-risk payments experts available in the restaurant industry, so they know exactly what you’re dealing with and can ensure you get payments made personal. This is the best way to make sure you’re keeping things simple for your customers. After all, simplicity is what really works.Ready to learn more about how to implement a merchant program and loyalty rewards into your restaurant? Contact LOLA POS, A Merchant Account That values your business, today.

I'd like to be a: