With nearly one in two Americans enrolled in a restaurant loyalty program, we had to get to the bottom of how restaurateurs could make the most of their most devoted customers. So, we hosted a webinar that uncovered powerful loyalty program ideas for restaurants from industry experts.
TouchBistro’s own Senior Content Marketing Manager Katherine Pendrill led the discussion with two brilliant business leaders who know all about how to keep diners coming back for more.
First there’s Fred LeFranc, Chaos Strategist and CEO of restaurant advisory firm Results Thru Strategy. Fred guides both emerging brands that need a roadmap for growth, as well as legacy brands in need of revitalization. We were also joined by Erinn Weatherbie, co-founder of Burlington, Ontario-based bakery Kelly’s Bake Shoppe. The allergen-free bakery has spent the last 12 years helping customers celebrate life’s big and little moments together.
In this exciting webinar, our moderator and experts discussed:
- How trending consumer habits are shaping the industry
- How restaurant rewards programs can build brand affinity and improve customer retention, without eating into revenue
- 3 loyalty program ideas for restaurants that offer value and secure repeat visits
- Audience FAQs about restaurant loyalty programs
Keep reading for a sneak peek of this discussion, then watch the webinar recording on demand for the full scoop.
Unpacking What Diners Want
It’s more important than ever for restaurant operators to be tuned into what their customers want. Here’s what we discovered about today’s consumers in our 2024 Diner Trend Report.
Diners are More Cost-Conscious Than Ever Before
During the COVID-19 pandemic, consumers were willing to pay a premium for food, especially for deliveries.
But now, with the cost of food and living expenses rising, Fred says, “we’re back to the days of deals. Restaurants are losing traffic, and people are spending more at grocery stores and less on dining out.”
Consumers are more price sensitive than ever before, in all spending categories. When it comes to restaurants, our report found that 31% of Americans say a price hike would significantly impact their choice to dine at a particular restaurant. This number jumps up to 40% among Gen Z, which is actually the group that dines out the most.
Loyalty Program Membership is on the Rise
While consumers are being very intentional about where they spend their money, our study also found that restaurant loyalty programs recently saw a big jump in popularity and engagement. When we conducted our study, nearly half (46%) of diners reported being part of a dining reward program, which is a big jump from just 36% in 2022.
Of this group, 34% say they engage with these programs once a week or more often, while 45% engage at least once a month. There’s also a small group of 7% of loyalty programs members who say they engage with these programs daily.
So why is loyalty program membership on the up if diners are more cost-conscious than ever?
“I actually don’t see it as something that’s an opposition to one another,” Fred says. “Once you engage customers emotionally [with personalized offers and rewards] so they feel special, I’m not surprised that they’re looking to loyalty programs and actually spending more in some cases.”
Erinn seconds this sentiment and says her “customers feel like they’re part of this cool club” when they join Kelly’s Bake Shoppe’s loyalty program.
“They get access to special deals, promotions, perks, and they’re insiders that get access to different rewards than other customers who aren’t part of our loyalty program. So we’ve seen customers come back in more frequently because they’re just so excited,” she says.
In short, consumers are looking for a way to connect with brands and loyalty programs can easily facilitate that.
A Lucrative Audience
The final key finding of our Diner Trend Report was that, unsurprisingly, the most frequent customers are actually dining rewards program members.
In fact, 47% of loyalty members dine out weekly or more often, which is 8% more than the U.S. average. And, 49% get takeout or delivery with the same frequency, which is 6% more than the U.S. average.
We also see this trend reflected among chain restaurants with loyalty programs, with Taco Bell reporting that their loyalty customers spend 40% more per year than their other other guests.
Erinn says the key to making the most of this lucrative customer base is to have information about their spending habits.
“This data really helps us make offers more engaging. As a bakery, we have peaks in our business on big holidays. We really try to optimize our promotions around downtimes. So, for example, we offer a program of double the points on Tuesdays. That’s our strategy for how to increase restaurant sales on those lower sales days,” she says.
What This Means for Restaurateurs
It’s clear that diners want to see more loyalty programs because the best restaurant loyalty programs deliver the value and connection they crave. And at the same time, these programs can be lucrative to operators because this is an audience of frequent repeat guests.
So, what does all this mean for you? Our industry experts explain.
3 Loyalty Program Ideas for Restaurants that Maximize Engagement and Profits
The challenge for operators is that you don’t want to give away too much of your product or set up heavy discounts that will impact your bottom line. So how can you make loyalty programs work for you? We’ve pinpointed three loyalty program ideas for restaurants that our industry experts have used in their own businesses or helped other restaurants implement.
1. Personalize Your Rewards
The best restaurant loyalty programs deliver personalized rewards that are tailored to each guest’s taste and preferences.
Fred says that the key to successful personalization is having guest data, which restaurant loyalty program providers gather, so you understand how often customers are dining at your restaurant and what they’re ordering. Fred recommends using this data to send highly targeted, personalized offers that resonate with loyalty members emotionally.
Erinn adds that at Kelly’s Bake Shoppe, she’s always finding ways to personalize rewards to excite loyalty members.
“One of the main ways we do this is by offering a free cupcake on your birthday for loyalty members. Customers love it, and when they come into the shop to actually claim their reward, they 99% of the time are also purchasing additional treats, too, [which] generates more revenue for the business,” she says.
2. Reframe the Idea of Value
It’s no secret that loyalty programs have typically been associated with freebies and deep discounts. But with expenses rising for restaurateurs, heavy discounting isn’t a sustainable loyalty model. Instead, restaurants with loyalty programs need to reframe how they present value to their members.
Kelly’s Bake Shoppe did this by making its loyalty program more inclusive and more accessible to those who may not like certain reward options. To do this, the bakery swapped its punch-card-like system that only rewarded customers who purchased cupcakes and cookies with one that gives customers points for anything they purchase.
“We wanted to give our customers more incentive to engage with our loyalty program overall,” Erinn says.
Another way to get creative and reframe value, according to Fred, is to “reframe the rewards that loyalty members get beyond just the product that you offer.”
He suggests partnering with local businesses to refer customers to each other. For example, the loyalty members of a smoothie shop could get a day pass to a gym down the street, while gym members could receive a free size upgrade at the smoothie shop. It’s a strategy that’s win-win for small businesses and your guests.
3. Zero in on your “Power Users”
Your loyalty program’s power users are “your biggest fans,” Fred says.
“They’re the most fanatical about your business and they have an opportunity to evangelize and create the ripples to have people be curious about your business and come in,” he says. Think of power users as micro influencers.
At Kelly’s Bake Shoppe, Erinn gives her micro influencers additional rewards to make them feel appreciated, and keep them coming back for more.
“Through the TouchBistro Loyalty and Marketing integration we’re able to send messages to these power users for additional rewards. So, for example, we can send out a $5 extra reward for our top 50 customers to spend in a seven-day period, for example. We try to create a bit of a sense of urgency while also giving back to those top spenders as well.”
FAQs About Loyalty Program Ideas for Restaurants
In addition to outlining the three strategies listed above, our guests also answered some audience questions about how to set up and amplify restaurant loyalty programs. For even more FAQs, watch the webinar recording on demand, now!
1. Is there a benefit to gamifying your restaurant’s loyalty program?
According to Fred, gamification (the process of adding games or game-like elements to something) is a great way to boost loyalty program engagement. The more members engage with your loyalty program, the easier it is for them to make a habit of frequenting your business.
“If you do gamification in a fun, clever way that it’s appropriate to your brand, it does work very, very well.”
He points out that Starbucks Rewards members, for example, collect stars, not points. Think of a star equivalent for your loyalty program to strengthen your brand and boost engagement.
2. Do you need a CRM and a loyalty solution?
While some loyalty program management solutions require you to purchase a separate customer relationship management (CRM) tool, TouchBistro Loyalty comes with a built-in CRM that Erinn speaks highly of.
“The CRM feature that comes with TouchBistro is so seamless. It’s built right in, it’s very, very user friendly, and the filters that you can use to track different customers are very intuitive,” she says.
3. What’s the best way to measure loyalty program ROI?
While strengthening customer relationships is great, you ultimately want to make sure the value you’re giving your loyalty program members is financially worthwhile for your business. Fred says that the most important indicator you need to keep track of is the lifetime value of your guests.
“If I give [my customers] something that costs me $3 and has a retail price of $7 and they give me $10,000 back in business over their lifetime, I’ll do that all day long,” he says.
You can also measure average transactions to gauge the value of your loyalty program. For instance, in just the first 3 months of using TouchBistro Loyalty, venues experience a 12-13% increase in average transactions.
The moral of the story: design a loyalty program that keeps customers coming back for more and more, day after day (and year after year) for financial success.
–Rising loyalty program membership and engagement combined with powerful restaurant loyalty program providers gives restaurateurs a unique opportunity to make the most of their biggest fans. And fortunately, TouchBistro Loyalty makes it easy to create a loyalty program that increases sales, delights customers, and improves efficiency. Get in touch to learn more about TouchBistro Loyalty and start driving repeat visits today!
Katherine is the Content Marketing Manager at TouchBistro, where she writes about trending topics in food and restaurants. The opposite of a picky eater, she’ll try (almost) anything at least once. Whether it’s chowing down on camel burgers in Morocco or snacking on octopus dumplings in Japan, she’s always up for new food experiences.
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