May 1, 2020

How to Increase Customer Retention and Grow Revenue with a Restaurant Loyalty App

By Sam Littlefield

You’ve had a long day at work—it’s 6:00 pm and you’re leaving the office to pick up a quick dinner for you and the family so you can enjoy a meal at home together. You’ve got a snap decision to make. What restaurant immediately comes to mind?

Let’s look at this from a slightly different perspective. It’s Friday night. You’ve had a great week at work, and you and your significant other decide to have a date night out to escape a home-cooked meal. What’s your go-to?

Odds are, you didn’t have to blink before the usual restaurants you dine at popped right in your head. We, as consumers, are creatures of habit. You have restaurants you’ve been dining at for years. The waiters and waitresses know you by name. You get the occasional cocktail or dessert on the house as a token of appreciation for your loyalty. And, it’s these little details that keep you coming back week after week, month after month, and year after year.

Now, let’s think about your restaurant’s best customer. Do you know how often they are in your restaurant? What’s their usual order? Do they dine in or carry out? How are you keeping them enticed to come back besides the tasty food you’re serving? If you have a loyalty program in place, these are all questions you would be able to answer through your restaurant marketing strategy. While you need new customers who have never experienced your restaurant before (and you better believe they will be back after tasting your food), you make your money off your repeat customers.

Below are reasons that will help you and the rest of your restaurant team decide if a loyalty program is right for your restaurant marketing strategy going forward.

Why Implement A Restaurant Loyalty Program?

The world we’re living in today is always looking for a deal. Remember the coupon clippers of the ‘90s? People still operate that way, but just in a digital sort of way. The reasons you should implement a loyalty program as part of your restaurant marketing and sales strategy are as follows:

Increase Restaurant Revenue

As we mentioned earlier, your repeat restaurant customers are the people that continue to keep your lights on. Enticing them with a rewards program is what can make that three times per month customer come back a fourth or fifth time. According to a 2018 Forester Report, loyalty program members on average spend $42.33 more with traditional retailers than shoppers that are not enrolled in a loyalty program. Let’s break it down.

Assuming a customer’s per person expenditure (PPE) is $12 before tip, they are supplying roughly $24/month if they visit your restaurant twice a month. Let’s say you implement a loyalty program, and they decide to come in three more times per month because that customer is working towards a free meal or whatever offer your restaurant decides to implement. Not only does he/she get a free meal, but your restaurant is making almost three times more off of that one individual at $60/month. And, this is assuming that customer spends the normal $12 each visit. What happens if they have a great day and decide to have a celebratory beer? You’re looking around $20 PPE now. If you can simply increase your restaurant retention by 5%, you can potentially boost revenue by over 25%.

Gather Good Customer Data

Every data point that you collect on your customer dining in (or out) is an opportunity for your restaurant to really get to know that individual customer. Let’s say you’re a 25 location fast-casual barbecue restaurant in Chicago and the surrounding area. You have a loyal customer that dines in at least once a week for lunch. Nine times out of ten she orders the same thing: grilled chicken salad with no onion, extra tomatoes, and a side of reduced-fat ranch dressing. With this in consideration, would it make sense to send her an email with a rack of ribs and a side of macaroni and cheese? No. She’s obviously trying to eat healthier at lunch, so let’s serve her content that’s relevant to her eating habits.

Your restaurant marketing strategy has to be cognizant of your customer and that gets into the personalization piece. Is there a menu item that’s a healthier option where you make a better profit margin? Maybe instead of grilled chicken, you target that customer with a pulled pork salad. Similar price point, still healthier than a slab of ribs, but your restaurant is making more revenue because pork is cheaper than chicken. See where we are going here? The more personalized you can get with each individual customer, the more likely they are to return.

Most consumers prefer a personalized experience. It’s a good feeling to be known. Welcome them back with open arms at every touchpoint and, before you know it, they are back in your establishment eating whatever they prefer to eat. Now you have a happy, repeat customer. Check averages will most likely increase, and guess what? Your happy customer is more likely to refer your restaurant to their family and friends. On top of your annual marketing strategy, the best form of marketing can sometimes be a personal referral.

As you increase the lifetime value of your current customers and build a new customer base, what is it exactly that they are looking for in a rewards program?

What Your Customers Want

Through clients we’ve worked with in the past paired with research provided by our team, we’ve found that a mobile/digital rewards program is absolutely key. Nobody wants to carry a physical card—punch or swipe—around in their wallets. We’ve found that companies that saw a decrease in customer loyalty don’t have a mobile appMillennials and Gen Z prefer to dine at restaurants with a tech-savvy program.

Your restaurant has to make it as easy as possible for your consumer to track rewards. Whether you create this through your own website/app or implement a loyalty program, your marketing strategy needs to have a simple dashboard, and rewards must be easily redeemable. Don’t tell someone they need 1,000 points for a free dessert. Simplicity is key. Could be for every dollar your consumer spends, they get 1 point. For every 100 points they earn, they get a free dessert, or free entrée, or free whatever you want to give them… just make it easy.

Examples of the Best Restaurant Loyalty Program Apps

If you’re seriously considering implementing a loyalty program for your restaurant and its customers, we recommend downloading the following if you don’t already have them on your phone.

Panera: It taps into the pre-existing loyalty program and makes it mobile. Customers register and log into their existing loyalty accounts and pair them with the app. Then, they order from the app. The points are added immediately, and rewards are displayed on-screen for instant redemption. A GPS store locator and a digital menu are also available.

Chipotle: App acts as a mobile menu, store locator, and loyalty program. Users have their own account and redeem receipts or check-ins for points. Rewards are free burritos, sides, and other in-store discounts.

Chick-fil-A: This app has the restaurant’s menu and instant mobile ordering. Customers check-in to earn loyalty points as well as to pick their order up instantly. Points can add up to prizes like tickets to the Chick-fil-A College Football Hall of Fame and Backstage Tour Tickets, too. All members get a birthday reward!

Starbucks: Starbucks recently made it easier for members to claim small rewards instead of having to save up. For 25 stars, you can get a free espresso shot or dairy substitute; if you’re patient, you can get free merchandise or at-home coffee with 400 stars. Members are the first to know about Starbucks’ weekly happy hour deals.

Zoës Kitchen: This app has the restaurant’s menu, locations, and loyalty program. Users have their own accounts and can automatically get points when they order from the app. They can also upload receipts for points too. Points can get users discounted meals, free drinks, and Amazon gift cards.

TLDR: Why You Need a Restaurant Loyalty Program & How to Get Started

  • Your customer is always looking for the best deal possible. If they continually dine at your restaurant, consider a loyalty program to reward them for their consistent business.
  • Loyalty program members on average spend $42.33 more with traditional retailers than shoppers that are not enrolled in a loyalty program.
  • Make sure and personalize your loyalty program. A majority of consumers prefer a personalized experience.
  • The technology you move forward with should be simple and intuitive. Users want to easily understand how your rewards work.