What Is a Restaurant Loyalty Program?

2024 is poised to be a good year for the restaurant industry, according to the National Restaurant Association’s State of the Restaurant Industry 2024 report. For the first time in history, sales are forecast to top $1 trillion, and nearly 8 in 10 restaurant operators expect their 2024 sales will be higher than (33%) or hold steady (45%) at 2023 levels. While signs point to a promising year, restaurants face stiff competition—and nearly half (45%) of operators anticipate competition will be even stiffer this year.  

An effective restaurant loyalty program can be a differentiator in a tight market. While the economy is humming along nicely, inflationary concerns are driving many consumers to tighten their belts. In fact, according to the report, 70% of adults look for daily specials or discounts when eating at restaurants, and 78% are more likely to visit a restaurant where they can earn points—even if they must go out of their way to do so. 

Restaurants can capitalize on that value consciousness, give customers more of what they want, and boost retention by offering a restaurant loyalty program. Since it’s cheaper to retain customers than get new ones, it makes sense to do whatever you can to keep your customers coming back for more.  

What is restaurant loyalty?

Restaurant loyalty is quite simply when customers return to your business again and again. At the its core, you build restaurant loyalty by offering:  

• Great food  
• Impeccable service  
• Comfortable atmosphere  
• Value (Note: this doesn’t mean “cheap”—it means giving consumers their money’s worth)  

Restaurant loyalty programs are also an increasingly popular way to keep customers invested in returning to your restaurant—even when they have many other options. It turns out consumers like earning points that get them free stuff and receiving the VIP treatment—receiving exclusive offers, coupons, free merchandise, and access to special events—just in exchange for having being a part of a restaurant loyalty program.  

Why do you need a restaurant loyalty program?

Even though inflation fell sharply in 2023, and Morningstar predicts it will reach normal levels in 2024, the average consumer is still feeling the burn of high prices.  

According to the Bureau of Labor Statistics, the Consumer Price Index for Food Away from Home increased 4.5% between February 2023 and February 2024. While growth in menu prices continued to slow in February, still-high prices on everything consumers need to buy—including groceries and household staples—are driving many to be conscientious when it comes to their spending. They’re looking for savings value where they can get it, and a brand loyalty program enables you to deliver that value to them. have more communication with them and reward their restaurant loyalty with those savings. 

However, brand loyalty programs go beyond just saving customers money and making them feel appreciated. They allow you to capture invaluable first-party data you can use to send promotions based on customer behavior, preferences and buying habits. That level of personalization and tailored incentives can bring customers in to eat more often, while creating opportunities for you to cross-sell and up-sell to increase average spend.  

Plus, the more data you collect, the more fine-tuned your marketing and segmentation becomes, so your campaigns are much more effective. You can even use your brand loyalty program to send surveys or request feedback so you can make needed improvements to drive increase customer satisfaction.  

What are the different types of restaurant loyalty programs?

Restaurants of all shapes and sizes are offering several types of loyalty programs, including:  

• Points-based restaurant loyalty programs. For each purchase, customers earn points they can redeem for free menu items or merchandise. 
• Tiered restaurant loyalty programs. Upon signing up, customers receive a reward, but as they continue to frequent the restaurant, they move up in status, essentially earning more or better perks. 
• Gamified restaurant loyalty programs. This type of loyalty program includes challenges, games, surveys, badges, and social media engagement. 
• Subscription-based restaurant loyalty programs. This program requires customers to pay a subscription fee to receive ongoing perks and offers. 
• Frequency-based restaurant loyalty programs. This brand loyalty program rewards guests based on the number of times they visit your restaurant versus how much they spend. The traditional stamped or punched card falls under this category.  

The one you choose for your restaurant depends on your target audience and their overall preferences. For example, in the State of the Restaurant Industry 2024 report, 60% of current loyalty program members prefer to access the program through a smartphone app. Only 18% preferred a physical card, and 22% didn’t have a preference. Gen Z (70%), Millennials (68%), and Gen X (68%) prefer a smartphone app, while 39% of Baby Boomers do. Incentives are likely to vary among those demographics, as well. 

That’s why it is so vital to understand your target audience, including demographics—age income, geographical location—and their buying and spending habits and digital behavior. Then tailor your loyalty program specifically to their preferences. The good news is a brand loyalty program can help you gather this behavioral data so you can better shape your messaging and offers to fit your target demographics.  

Establish crystal-clear objectives for your restaurant loyalty program—and make sure they align with your overall business goals—before you begin implementation. For example, do you want to increase your average order value? You’ll want your restaurant loyalty program to recommend upsells when customers order through the app. Want to capture first-time visitors? Make it easy for people to sign up.    

Download this step-by-step guide to discover how to choose the right loyalty program for your business.  

How Smashburgers’ new restaurant loyalty program increased sales by 6.5%

In short, an intuitive restaurant loyalty program that meets the wants and needs of your target audience can build customer loyalty and boost revenue.  

Case in point: When Smashburger was ready to replace its old rewards program—which sent the same rewards and messaging to everyone—with a more personalized one, the company turned to Paytronix’s AI to IA℠ services. Smashburger can now send highly targeted, one-to-one messages, based on customers’ preferences and behavior. As a result, the burger chain saw a 16% lift in visits and a 20% lift in spend. In fact, the loyalty program accounted for at least $1.9 million in incremental sales, a 6.5% of the brand’s overall sales growth for the year. Read the full case study here.  

If you’re ready to join Smashburger and many other restaurants differentiating themselves in the market and growing their business with an effective restaurant loyalty program, contact us today. Or learn more at our loyalty page.