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Restaurant loyalty programs incentivize repeat business because they reward customers for returning to your restaurant. Loyalty programs provide guests with things like discounts, freebies, and branded merchandise for hitting milestones like spending a certain amount of money or making a certain number of visits. These programs are essential tools for building a customer base you can count on.
What Is a Restaurant Loyalty Program?
A restaurant loyalty program works by tracking guest metrics like how many times someone visits your location, how many of a specific item they purchase, or how much money they spend overall. Rewards are then given to people when they hit designated milestones, which in turn encourages them to keep coming back to your restaurant time after time.
Why Is a Restaurant Loyalty Program Necessary?
Restaurant loyalty programs make customers feel recognized and appreciated. They're a great way to show your guests you’re grateful for their business. These programs help turn people into regulars by encouraging repeat business, and they also bolster sales by promoting increased spending overall. It’s much more difficult to capture new business than it is to harness the power of repeat business, so it’s crucial to give people a reason to return.
Pros and Cons of a Restaurant Loyalty Program
You’re probably wondering: are loyalty programs worth it? Overall, restaurant rewards programs are generally wise business strategies, but at the end of the day, even the best restaurant rewards programs have pros and cons. Take a look at a few major positives — as well as a few significant downsides — you need to consider:
Pros of a Restaurant Loyalty Program
There are scores of reasons why offering a loyalty program to your dedicated customers can be an amazing strategy for restaurants of all shapes and sizes. Take a look at the three main benefits of offering a restaurant rewards program:
- Increased Guest Morale: Providing guests with benefits for patronizing your restaurant is positive reinforcement that does wonders in terms of making your guests feel valued (and glad they gave you their business).
- Incentivized Sales: If your program necessitates spending a certain amount of money in order to receive rewards, people are much more likely to go out of their way to hit that number — which means they’ll often spend more than they would otherwise.
- Customer Data: Customers usually have to enter information into your restaurant CRM in order to enroll in a loyalty program. This data can help you target your marketing, recognize patterns, and make decisions based on your guests’ habits and preferences.
Cons of a Restaurant Loyalty Program
As beneficial as a restaurant loyalty program can be, there are also a few cons you should keep in mind as you determine what kind of rewards program you’d like to implement. Below are the three main drawbacks to offering a rewards program:
- Cost: Just because a reward is free for your customer, doesn’t mean it’s free for your business. It’s important to really crunch the numbers in order to find the sweet spot between offering enough of a discount so that people are encouraged to enroll, while also keeping costs under control.
- Confusion: Even if you’re using one of the best restaurant loyalty program providers on the market, enrolling customers still takes effort on your team’s part. No system is perfect, and sometimes confusion, mistakes, and misunderstandings can happen.
- Market Saturation: As more and more businesses get on board with the idea of offering rewards programs, the more saturated the market becomes. Not only does this mean you’ll be facing increased competition, but customers can also feel overwhelmed by the sheer number of programs at their disposal.
Restaurant Loyalty Program Ideas and Examples
It’s essential to think about your restaurant’s business model, customer base, and profit margins as you decide on the general direction for your program. Generally speaking, you can structure your program in a few ways by offering rewards based on: dollars spent, number of visits, or more personalized metrics like offering rewards on guests’ birthdays. Below are a few popular ways you to enroll people in your program:
- Database: With so many technology solutions available, this approach is often the easiest for both you and your guests. Many modern POS systems include loyalty program features, so integrating a program into your everyday workflow is easy.
- Punch Card: Cafes and coffee shops frequently use this model, and although it’s somewhat antiquated in the face of more technology-driven options, it can still work for small businesses or for those who don’t want to invest a lot of time or money into a rewards program.
- App: Creating an app for your business allows guests to check in and redeem rewards straight from their phones.
- Cards: This one is geared towards large businesses and franchises, but you can offer rewards to customers who pay with a credit card linked to your business, or even a gift card. The biggest caveat is that people must remember to bring their restaurant loyalty card when they visit your restaurant.
What are the Best Loyalty Program Incentives?
Once you’ve thought about how you want to approach your rewards program overall, you can then start thinking about the specific rewards you’d like to offer your guests when they enroll in your program and hit designated milestones. Below are a few examples of some of the best restaurant loyalty programs, ideas, and rewards:
- Free Drinks
- Free Appetizers
- Percentage Discount
- Free Delivery
- Free Merchandise
- Buy One Get One Free Deals
Using any of the restaurant loyalty programs ideas above will make people excited to walk through your doors!
How to Choose Restaurant Loyalty Incentives
The first thing you need to think about is what’s important to your customers. If your guests regularly order delivery, designing your rewards program to align with their spending patterns is wise. The next thing you should think about is what your business can afford. If your profit margins on alcohol are higher than on your food, you might be better off offering a free drink rather than a free or discounted meal.
Examples of the Best Restaurant Loyalty Programs
As you conceptualize your own program, it can be helpful to look at businesses that have successfully incorporated rewards into their branding strategy. Take a look at the following examples of some of the best restaurant loyalty programs:
- Starbucks: Starbucks is famous for its rewards program which gives customers “stars” for every dollar spent. These stars can be redeemed for a free drink or other rewards once a customer has amassed enough of them. The program uses the Starbucks app, which also encourages online ordering.
- Panera: Panera Bread has been offering a rewards program since 2012 (long before they became popular). Today, members can earn rewards, receive birthday promotions, and enroll in an unlimited coffee subscription.
- P.F. Chang’s: Full-service, sit-down restaurants can successfully offer rewards, too. P.F. Chang’s uses a point-based system that includes sign-up bonuses and exclusive, members-only offers.
How to Set up a Restaurant Loyalty Program
When you’re ready to get the ball rolling, take a look at the most important steps for setting up a successful restaurant loyalty program:
- Set Goals: Setting clear goals such as increasing the average check size or increasing the average number of visits guests make to your restaurant per year can help you determine what type of program will best align with your vision.
- Determine a Budget: As nice as it would be to be able to give away endless discounts or free swag, you need to be realistic about how much your business can actually afford.
- Train Your Staff: Not only do you need to train your staff on how to enroll guests into your program, but you also need to teach them how to honor rewards and troubleshoot potential issues.
- Market: People won’t sign up for your program unless they’re aware it exists, which means good marketing is key. Spreading the word about your loyalty program is crucial for creating buzz. Posting about your program on social media, running local ads, and even just verbalizing your offerings are good places to start.
Tips to Help Your Restaurant Loyalty Program Succeed
There are seemingly infinite factors that contribute to your restaurant’s success. From managing food costs to finding the best restaurant business loans, there are a lot of moving parts to consider. Luckily, your rewards program is one aspect of your business that you can easily prime for success. Take a look at these tips that will make your program worth it:
- Staff Training: Most people sign up for rewards programs after being prompted by a staff member, so it’s essential to teach your staff how to successfully explain, encourage, and enroll guests. Sometimes incentivizing staff members by holding competitions or offering prizes for getting people to sign up can work wonders!
- Promotion: Social media, email campaigns, and even old-fashioned flyers are all helpful ways to spread the word about your loyalty program. Customer loyalty programs for restaurants can also be spread by word of mouth, so be sure to mention it in your conversations with guests.
- Troubleshooting: Whether you’re using an app, restaurant CRM software, or restaurant loyalty program providers, there will most likely be issues you need to iron out as people enroll in your program. Being willing to adjust your strategy as needed is crucial as you see how your program plays out in real time.
- Evaluation: If you’re wondering, “are loyalty programs worth it,” the only way to decide for yourself is to look at your data. Evaluating how much of a profit you’re making (or losing) from your rewards system can help you determine if you need to pivot.