Free food tastes better. You don't need a scientific study to know that a complimentary bread basket or coffee on the house becomes something greater than the sum of its parts. Loyalty programs offer a rare win-win for restaurant operators and guests alike. Guests get free food and operators gain a database of loyal customers, a tool for increasing sales, and a way to differentiate themselves in a competitive market.
So if restaurant loyalty programs are so great, why doesn't every restaurant offer them? Like most facets of the industry, restaurant loyalty is easier said than done. An effective rewards program requires a successful rollout, regular upkeep, and more than a dash of creativity. Here's our guide to restaurant loyalty programs, how to start one, and how to keep it going for years to come.
- What are some different kinds of customer loyalty programs?
- How to launch a loyalty program
- How to measure loyalty program success
- 25 creative ideas for restaurant loyalty programs
What are some different kinds of customer loyalty programs?
Not all reward programs are the same. Different programs will help you achieve different goals. Do you have an existing customer pool, but you're trying to gain more frequent customers? Are you hoping to increase the average customer spend? Or perhaps you run a casual dining restaurant, and you want guests filling tables beyond peak hours. Here are some different types of customer loyalty programs.
Points-based loyalty program
With this kind of loyalty program, customers earn points per purchase. They can redeem points for a free item, dollar or percentage discount amount, or sometimes a free or discounted piece of swag or experience. These are popular with chain restaurants and fast casual restaurants.
Loyalty points can help your restaurant compete with similar restaurants. If there's an option to earn points at Taqueria Uno and not Taqueria Dos, it makes Taqueria Uno seem more attractive.
Punch card loyalty program
Punch cards incentivize customer loyalty by rewarding loyal customers after a certain amount of visits. Similar to a points-based system, customers usually get a 10% discount or free item after 10 visits.
Punch cards are an analog loyalty offering. While that might seem attractive to some operators, it's not as easy to collect the valuable customer data that will make your loyalty program profitable in the long term. Plus, it's easier for customers to tamper with punch cards and access rewards they haven't earned.
Tiered loyalty program
This type of loyalty program awards loyal customers tiers based on dollars spent or repeat visits. It's a step beyond the points-based loyalty program, awarding exclusive rewards to top-tier guests. They might gain exclusive access to merch, off-menu items, or deeper discounts.
A tiered loyalty program works by incentivizing customers twice: first, to earn points, and second, to earn enough points to reach the higher tier. This can be helpful if you're trying to increase the average customer spend. However, you'll need to make sure the tiers are distinct and attractive enough to get your customers' attention. All it takes is a little creativity and guest feedback. What do your guests want from your restaurant and the dining experience? Let this be your true north.
Subscription-based rewards program
Some fast casual restaurants have such a cult following that they offer a subscription-based rewards program, where loyal customers pay a small monthly subscription fee for exclusive rewards and discounts. While this kind of loyalty program doesn't necessarily encourage new customers, it helps maximize customer satisfaction for your regulars by giving them a VIP experience every time.
It could be something as small as a coffee club, where customers pay a monthly fee for unlimited drip coffees, or a flat rate for three weekly lunches aimed at the 9-5 crowd. Creating a subscription or membership program requires knowing your customer preferences and creating a competitive pricing structure that makes the program actually valuable for returning customers.
How to launch a loyalty program
A successful loyalty program starts with a successful launch. It doesn't have to be splashy to work, but your loyalty program launch should be consistent with your brand and accessible to your customers. A well-planned loyalty program launch can protect against the dreaded "I didn't know you guys had a loyalty program?"
Here's how to launch a loyalty program—bonus points for branded baked goods.
1. Choose your reward structure
Select the loyalty program that works best for your restaurant. First, identify what you want to achieve from a customer loyalty program: more guests, more repeat business, increased sales, or increased order size. Multiple goals are great, and usually, you can achieve more than one outcome from one rewards program.
2. Set a budget
You should already have an accurate, up-to-date profit and loss statement that tracks what's coming in and what's going out (operating costs and COGS). Your loyalty program expenses fall under your marketing budget. Loyalty program costs might include discounts and free item redemptions, paid social media advertising, and printing costs for signage.
Offering a loyalty program, however, doesn't have to be a pricey endeavor. Rewarding customers with a free coffee or low-cost appetizer can be just as incentivizing as something higher value.
Use restaurant POS reporting to make sure your free item redemptions are within the allocated monthly budget and that the loyalty customer spend makes up for the free food rewards.
3. Spread the word online
There are three main online spaces where you can connect with potential rewards members: in their email inbox, on your social media pages, and on your website. Add an email address sign-up button to your business website and send new loyalty customers a discount for signing up.
Share the details of your customer loyalty program on your Instagram, TikTok, and Facebook pages, along with the link to sign up. Finally, use your existing customer database of email addresses to spread the word about your new loyalty program. You might consider offering double reward points for the first week to boost sign-ups.
4. Host a launch event
Don't forget about the offline world, too. Posters in your storefront window or a sign showcasing your new customer loyalty program can garner interest from the folks already visiting your restaurant.
To encourage customers to sign up for your new rewards program, offer double reward points for in-person sign-ups. Or, you could get creative and offer exclusive merch, like a travel mug or baseball cap, or exclusive access to a menu item. You don't need to roll out the literal red carpet—all it takes is a little decor, some signage, and a lot of staff enthusiasm.
5. Train your staff
Your front-of-house staff are on the front line of your restaurant, which makes them excellent ambassadors of your restaurant's loyalty program. Include loyalty program details in your employee handbook. Dedicate part of your pre-shift meeting to reviewing the perks and rules of your rewards program.
Make sure your staff is equipped to promote your loyalty program, answer any questions about how to earn rewards and know how to use the restaurant loyalty software that's integrated into your restaurant POS system.
How to measure loyalty program success
Your loyalty program is in full swing: the personalized rewards are flowing, brand loyalty is high, and it seems like the online orders are coming in hot. But unless you've set goals and know how to check them, you won't really know whether all those free meals are paying off.
1. Set loyalty program goals
250 loyalty program members in the first 100 days of your loyalty program. 10% increase in monthly sales. 5% increase in food sales during non-peak hours. Whatever you're hoping to achieve from your loyalty program, write it down to hold yourself accountable. If you're an owner-operator, a loyalty program is probably the last thing on your mind. But launching a loyalty program requires going whole hog and that starts with setting realistic (yet still ambitious) goals.
2. Plan regular check-ins
Once you've set a goal for your rewards program, set a cadence for regular check-ins. Perhaps that means a quarterly readout in your pre-shift meeting, or during a monthly 1-one-1 with your restaurant marketing manager. Even if you're running a one-person show, hold yourself accountable by scheduling time to measure how your rewards program is performing against your goals.
3. Get customer feedback
A loyalty program is equal parts a tool for increasing customer loyalty as it is a tool to reward customers. That requires knowing what your customers value and getting their feedback. Is a free pizza desirable? Or would your customers prefer a free dessert or free beverage? This information is key to encouraging customers to sign up for your loyalty program, as well as to get them to actually use the loyalty program.
Send a quick survey to your loyalty members asking for a rating out of 5 and some notes on what would make the program benefits better. Talk to rewards members in-store and ask what they think about your rewards program, and how it compares to competitors' loyalty programs.
4. Check your reports
If you want a successful loyalty program, your restaurant POS reports are your best friend. Monitor total loyalty spending and loyalty redemption to determine your ROI. Want to determine if your loyalty program has helped boost sales? Compare loyalty members' spend to the average customer spend, or sales during periods where you're offering deals compared to average sales periods.
25 Creative ideas for restaurant loyalty programs
- Customers get a free dessert on their birthday and a free half portion of dessert on their half-birthday.
- Loyalty members get a branded baseball cap or tote bag when they reach a certain level of dollars spent.
- Loyalty program members gain access to a behind-the-scenes kitchen tour.
- Program members get a discount for private parties or room rentals.
- Rewards program members get extended happy hour an hour after the regular happy hour ends.
- Online orders from loyalty program members come with a free appetizer.
- Free pizza toppings for loyalty members.
- Free drink on slow days.
- Discount on your most popular items for new loyalty program members to create a strong first impression.
- Bonus points for weekday visits.
- Free drink on your first repeat visit.
- Free meals for kids under 5, only for reward members.
- Restaurant loyalty bingo: earn points for online orders, repeat visits, ordering certain menu items, and following on social media.
- Create personalized offers on loyal customers' favorite items and items that they haven't tried yet.
- Secret menu for reward customers.
- Discount an item by the customer's birth year for birthday rewards (i.e. 19.84% off an appetizer for someone born in 1984).
- Discount for catering orders.
- Birthday rewards for everyone on your restaurant's birthday.
- Bonus rewards for new customers who make repeat visits during their first week.
- Exclusive merch for sale for rewards program customers.
- More points for online orders made during off-peak hours.
- Discounts for rewards program members wearing restaurant merch.
- Spin the wheel (virtual, or otherwise) for a different percentage discount for your next visit.
- More points for your more profitable menu items.
- Earn points and redeem them for a chef's table experience.
The best restaurant loyalty programs understand value and promote customer engagement.
From Starbucks rewards to Chick-fil-A One, there are plenty of popular rewards programs that model the gold standard. But you don't need to be a multinational chain to incentivize repeat business. Start small. Offer discounts and free items that take customer preferences into account. Get restaurant loyalty software that integrates into your POS to make redemption easier for staff and make it easier for you to measure the program's success. Retaining customers in a competitive marketplace will never be easy, but a great loyalty program can help you get there.
