Loyalty programs are one fun aspect of restaurant marketing. They involve leveraging customer information to create incentive for repeat business, converting first-time diners into full-fledged regulars. And people love restaurant loyalty programs—nearly half of restaurant loyalty users use their memberships several times a month.
The best restaurant loyalty program for your restaurant will depend on your customer demographics, restaurant type, and administrative bandwidth for managing a loyalty system, though there is plenty of software to help you expand your admin capacity. Here are some restaurant reward program ideas that I’ve seen be effective in most any restaurant type.
1. Points & Rewards
The points and rewards structure is the most popular restaurant loyalty program. It offers points to customers based on how much they spend or specific actions that they take (like signing up for newsletters or purchasing a special). Customers can then redeem their points as payment for their check or to unlock rewards like a free coffee or dessert.
Points don’t have to be dollar-for-dollar discounts. For example, Anchor Bar, a restaurant chain specializing in buffalo wings, has a points-based loyalty program. Members earn one point for every dollar they spend. They can later redeem 100 points for $10 off their bill.
Chain brunch spot Sabrina’s Cafe also uses a points-based reward system—the same structure and points value as Anchor Bar. Though in this case, new loyalty members also earn 25 points for signing up.
2. Punch Cards
A punch card program is a loyalty structure in which you tally people’s purchases and offer a free reward once the customer reaches a certain number. This structure specifically promotes frequent visits and the cultivation of “regular” customers.
For example, Aviano, a small coffee shop near a business hub, has a loyalty program that offers a free coffee for every 10 you purchase. The small shop is constantly flooded with people and has a steady stream of regular customers from the surrounding areas.
3. Tiered Programs
Some restaurants implement tiered loyalty programs, where customers can progress to higher tiers by accumulating more points. Higher tiers often come with enhanced benefits and more valuable rewards.
A tiered program is a loyalty program structure where you create different levels that customers can reach once they meet a threshold of points. As customers move up the levels (or tiers), they get access to better and more exclusive rewards and offers.
Tiered programs are typically paired with a points program, and use exclusivity and gamification to incentivize customers to make purchases.
4. Paid Loyalty Programs
Another type of loyalty structure you can use is a premium or fee-based program. In this structure, members pay an upfront or ongoing fee to join and get access to special rewards and deals.
This structure rewards customers with instant gratification and motivates loyalty. Be sure to offer rewards in line with the price. If you create the right amount of incentive and offer rewards that provide enough value, consumers will be more willing to join your premium loyalty program.
Illinois restaurant group Khayat Enterpises offers a VIP club that offers perks to members for a charge of $20 per month, which makes sense for a restaurant group that offers ticketed events alongside popular restaurants.
5. Coalition Programs
A coalition program is a loyalty structure in which customers get access to deals from two or more businesses in exchange for shared user information.
For example, say, your store is on a busy street of shops and you all decide to join a coalition loyalty program for the neighborhood. This would make it so that if a customer signed up for a loyalty program at one of the shops, they would be signing up for the neighborhood coalition of loyalty programs.
In this strategy, groups of shops will hold events for their loyalty members, like combined sales, special parties, or coalition-wide offers. In certain coalitions and with certain software, individual stores are also able to hold their own sales and market to the shared coalition customer base.
6. Hybrid
Hybrid loyalty programs are restaurant rewards programs that offer a combination of several different kinds of loyalty structures. For example, as we covered earlier, points and tiered structures are typically used together, and you might also see coalition and punch cards, or premium and tiered. Feel free to customize your loyalty experience to cater to your customers’ needs.
One unique example is the Tin Shop Social Club, a paid coalition loyalty program. Tin Shop is actually a real estate development firm—specializing in food and beverage. Its Social Club membership is $39.99 per month, and members get free items at various Tin Shop locations and two free happy hours each month.
7. Subscriptions
Restaurant subscriptions are the newest spin on a restaurant loyalty program. Subscriptions work incredibly well for small, neighborhood restaurants that may struggle with cash flow. With a subscription model, some of your customers pay a fee monthly, so you always know you have that cash coming in. This might sound like an administrative headache, but if you have ever run house accounts, you can handle subscriptions.
There are a lot of fascinating ways to run a subscription-based loyalty program, and you don’t need to be a large restaurant brand to do it. Consider the program at the San Francisco restaurant El Lopo.
El Lopo’s Take Care of Me Club is a fantastic example of a loyalty program that offers personalization. Members of the San Francisco-based restaurant’s loyalty program can visit and enjoy a menu- and bill-free experience. The restaurant will serve members dishes they know they’ll like.
What to Consider When Launching Your Restaurant Loyalty Program
Launching a restaurant loyalty program for a small business requires careful planning and consideration. Consider the following factors when building and launching your loyalty program:
Determine What to Reward
First, identify your target audience and understand their preferences. Then tailor your restaurant loyalty program to match the interests and behaviors of that specific customer demographic.
Here are some things you might reward customers for:
- Anniversary discounts
- Birthday rewards
- Dining at your restaurant X times
- Following or engaging with your restaurant on social media
- Meeting a spend threshold during their visit
- Ordering a specific menu item
- Referrals
- Using the mobile app to place a to-go order
- Writing a customer review
Offer Valuable Rewards
Ensure the rewards you offer are attractive and meaningful to your customers. Consider discounts, free items, exclusive access, or personalized offers that genuinely add value to the customer experience.
Here are some other ideas for rewards to offer your patrons:
- Early access to new menu items
- Exclusive deals or offers
- Exclusive dishes
- Free beverage, appetizer, or dessert
- Gift cards (to your own restaurant or others)
- Moving up in membership tiers
- Restaurant credit
- Small gifts
- Special events
Membership Cards vs Digital Platforms
You can choose to use a physical membership card or digital platforms like mobile apps. While offering physical cards might be easier upfront, going digital allows you to track and reward customer behavior to improve your program over time.
In the era of digitalization, many loyalty programs are integrated into mobile apps. Customers can track their points, receive notifications about promotions, and conveniently redeem rewards through these applications.
Flour Bakery has an app customers can use to participate in its Flour Rewards program. It’s available on both Android and iOS platforms, so customers can use it regardless of if they have an iPhone or not.
Keep It Simple
Avoid overly complex structures that might confuse or discourage participation. A straightforward and easy-to-understand loyalty program is more likely to be embraced by customers.
Set clear objectives for the program to help stay focused. Define the business goals and key metrics for your loyalty program—whether it’s increasing customer retention, boosting sales, or gaining a competitive edge. Having specific objectives will guide the design and implementation of the program and help you simplify along the way.
Leverage Technology
Integrated loyalty software lets you choose how and when to reward your loyal diners. You can give points based on dollar spend or for special cases, such as dining during a slow time of day or season or buying specific items. You can reward with discounts, apply points like money to pay a bill or offer a specific reward (like free dessert) when a certain limit is met.
Take advantage of restaurant technology, even if on a small scale. This could include a digital loyalty app or a simple point-of-sale (POS) system that can track customer purchases and loyalty program participation.
Look for a dedicated loyalty program software or a marketing software with loyalty features. Prioritize options with customizable incentives and rewards so you don’t get pigeon-holed into a rigid points structure that can’t serve your business’s evolving needs.
Personalization
Many loyalty programs leverage customer data to personalize offers based on individual preferences and behavior. This personalization enhances the overall customer experience and increases the relevance of rewards. In fact, nearly two-thirds of consumers believe personalization is a critical part of their shopping experience.
You should personalize rewards and offers in your loyalty program to each individual customer. This doesn’t have to be manual—technology and automation can help you do this.
Benefits of a Restaurant Loyalty Program
Implementing a restaurant loyalty program can offer numerous benefits for both the restaurant and its customers. Here are some key advantages:
Customer Retention
Loyalty programs are designed to encourage repeat business. Customers who participate in a loyalty program are more likely to return to the same restaurant, increasing overall customer retention.
Increased Frequency of Visits
Loyalty programs motivate customers to visit the restaurant more frequently by offering rewards and incentives. This increased frequency contributes to higher sales and revenue.
Enhanced Customer Relationships
Loyalty programs allow restaurants to engage with customers on a more personal level. By offering personalized rewards and acknowledging customer loyalty, restaurants can strengthen the emotional connection between the brand and its patrons.
Customer Acquisition
Millennials are jumping on the loyalty train, according to statistics, with 41% reporting they participate in a restaurant loyalty program.
This is great news for independent restaurants since millennials have overtaken Baby Boomers as the largest generational cohort. Their buying power will determine trends into the mid-century. Restaurant owners can lock down their loyalty now by adding loyalty and rewards software to their restaurant tech stack.
Word-of-Mouth Marketing
Satisfied and loyal customers are likely to share their positive experiences with friends and family. This word-of-mouth marketing can bring in new customers, as people tend to trust recommendations from those they know.
Data Collection & Analysis
Loyalty programs enable restaurants to collect valuable customer data, such as preferences, spending patterns, and demographics. This data can be analyzed to gain insights into customer behavior, allowing the restaurant to make informed business decisions and tailor offerings to meet customer expectations.
Feedback & Engagement
Loyalty programs provide a platform for restaurants to engage with customers, gather feedback, and understand their preferences. This valuable data can be used to improve services and tailor offerings to meet customer expectations.
Monitor & Analyze Data
Implement systems to track and analyze data related to the loyalty program. This information can provide insights into customer behavior, allowing you to make informed decisions and adjustments to the program.
Competitive Advantage
In a competitive market, a well-executed loyalty program can set a restaurant apart from its competitors. Customers may choose a particular restaurant over others due to the added value offered through the loyalty program.
Boost in Sales and Revenue
Loyalty program members often spend more than non-members. The promise of rewards and discounts can incentivize customers to order additional items, leading to an increase in average transaction value and overall revenue. It also encourages the return of frequent customers—helping them build a relationship with your brand.
Brand Loyalty
A successful loyalty program fosters a sense of loyalty and commitment among customers. This emotional connection can lead to long-term brand loyalty, where customers actively choose the restaurant over alternatives.
Cost-effective Marketing
Retaining existing customers is generally more cost-effective than acquiring new ones. Loyalty programs serve as a form of targeted marketing, focusing on those who have already demonstrated an interest in the restaurant.
Frequently Asked Questions (FAQs)
Here are some of the most common questions I encounter around restaurant loyalty programs.
Bottom Line
Implementing a well-designed restaurant loyalty program is a strategic investment that goes beyond mere discounts and freebies. From points and rewards to tiered programs, paid memberships, coalition initiatives, and hybrids, you have the flexibility to tailor programs to your specific business model and customer demographics.
Loyalty programs aren’t just an operational necessity but a dynamic tool for staying ahead in the competitive restaurant industry. A well-executed loyalty program is a recipe for sustained success, offering tangible benefits to both the restaurant and its valued patrons.
