Restaurant Loyalty Programs: Why They’re Beneficial

What is a Loyalty Program?

A loyalty program is a system that offers customers incentives such as rewards and discounts as a thank you for their continuous support of your business. There are a few different types of loyalty programs to choose from, but ultimately you have the power to create a fully customized system. A common type of loyalty program uses a point-based system where customers receive a certain number of points for each dollar they spend. In a restaurant, this may look like a $10 off offer after the guests spend a combined amount of $100 overtime and collect a designated amount of points. Similarly, another type of loyalty program rewards guests after they visit the restaurant a specific number of times. This could look like an offer for a free meal after 10 restaurant visits. Loyalty programs are an excellent way of attracting and retaining guests! 

Do Loyalty Programs Work?

The short answer to this question is, yes loyalty programs work wonders! The long answer is still a yes, but here's why loyalty programs are so beneficial for restaurants! People build a higher-level connection with a business when they feel they’re being appreciated. A loyalty program is an easy and effective way to show your appreciation for your guests. The National Restaurant Association conducted a study that proved the benefit of loyalty programs. The data discovered that customers would increase their business with a particular restaurant by 35% if they had an appealing loyalty card program. Along with that, the study found that 73% of customers would recommend a restaurant with an appealing loyalty program to friends and family. Keep reading to see more statistics on how a loyalty program will benefit your business!

Loyalty Program Statistics

• 75% of American consumers say they’re more likely to be loyal to brands that understand them on a personal level. (Source)
• 59% of American consumers say that once they’re loyal to a brand, they’re loyal to it for life. (Source)
• The average American consumer belongs to 16.7 customer loyalty programs. (Source)
• 69% of brand executives say they’ve increased loyalty investment over the past two years. (Source)
• The most common reason consumers dislike a loyalty program is taking too long to earn rewards. (Source)
• Consumers are twice as likely to spend money on a brand with a paid loyalty program over a free loyalty program. (Source)
• American women are 15% more likely to join a loyalty or rewards program than American men. (Source)
• Millennials are 14 times more likely to access loyalty programs via smartphone than they are from a computer. (Source)
• 41% of consumers say loyalty programs encourage them to buy from restaurants. (Source)

5 Benefits of Restaurant Loyalty Programs

When creating a loyalty program for your restaurant you can decide if you’d like to offer a physical loyalty card, have a digital loyalty program, or do a mixture of both. Each style of loyalty program has its perks so it’s up to you to decide what works the best in your restaurant. Either way, a loyalty program will leave a lasting impression on your guests, keep them reminded of your business, and increase brand awareness among potential customers. 

With a physical loyalty program, your brand’s logo and colors will be featured on the loyalty card. Customers will often store loyalty cards inside their wallets or in another easy-to-access place. When a restaurant customer repeatedly sees a loyalty card in their wallet with your restaurant branding and logo on it, they’ll be reminded of your business and may be more inclined to visit your restaurant over competitors because of this. The more a consumer sees your branding the more likely they are to recognize and remember it. This process of reappearing in the consumer's mind connects to a marketing tactic called the “rule of 7” which is often used with advertising. Marketing experts have discovered that customers need to see an advertisement at least seven times for it to be the most effective. 

A digital loyalty program has a similar approach to the physical loyalty cards but instead of in their wallet your brand will be displayed on their digital device. When a loyalty program is integrated into a restaurant app, the consumer will be reminded of this every time they scroll past the app on their device. To make things even better, you can choose to send out custom or automated notifications to remind guests about your incentives and create a lasting impression. 

In the restaurant industry, retaining guests is critical. On average it costs a business 5x more to acquire new customers than it does to keep existing ones. Implementing a strategy to incentivize current customers into returning time after time will help boost your restaurant’s revenue! Loyalty programs are a simple and effective way to encourage repeat guests and increase your restaurant's overall customer retention rate. A report by the Harvard Business School claims that on average, a 5% increase in customer retention rates results in a 25%–95% increase in profits. Loyalty programs turn regular customers into loyalists of your brand and help you see a significant boost in your profits!

Not only are returning guests cheaper to maintain, but they’re also higher spenders. A loyal customer's check will be 67% higher than a first-time guest's. When you have a loyalty program set in place, your guests will be encouraged to earn rewards at a faster pace so they can redeem them. About 64% of loyalty program members spend more money each transaction to maximize point earnings.  Loyalty programs with point systems give guests a reason to return and make the trip worth it. Customers are 54% more likely to pursue future purchases after their third visit to your restaurant. The recurring visits produced by your loyalty program will mean an increase in sales and a rise in revenue like you’ve never seen before!

Loyalty programs offer incentives that help your restaurant to stand out among the crowd. If someone is trying to decide between dining at your restaurant or another one without a loyalty program, they’ll be more inclined to choose yours. That's because they’ll be benefiting themselves in the present with delicious food as well as in the future as the transaction helps them collect more points. The meal they choose is both satisfying their hunger and getting them one step closer to redeeming a reward. The aspect of building up points means every trip to your restaurant is one step closer to a free meal. 

Loyalty programs allow restaurants to understand their guests more than they ever have before. They give access to valuable guest data and can track information such as what items customers purchase, which locations they frequent, as well as what time of day they visit. This information can be used to offer targeted promotions and rewards to increase guest retention, the number of visits, and order size. Using the data discovered through the loyalty program, you’ll be able to better cater your efforts towards your guest's preferences which will allow your business to stand out among the crowd! 

On top of all the other benefits loyalty programs bring to your business, they also encourage guest engagement! Loyalty programs take engagement to a new level because they encourage guests to interact with your brand both in-store and online. They allow you to promote your brand through the loyalty program itself, as well as other means of advertising such as emails and social media posts. Whenever you are featuring a special offer, you can send customers a custom notification straight to their mobile device which will make it easier for them to send these offers to others and use them themselves. Within some loyalty programs, you can even give guests bonus rewards for sharing your restaurant on their social media. Guests want to share how much they enjoy your restaurant so why not let them earn rewards while they're at it?