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For the Love of Loyalty: Rewards Programs Ramp Up

Rewards Programs Ramp Up

70% of a restaurant’s revenue stream consists of repeat visits.1

Driven in part by technological innovation, the foodservice industry is reaching new global proportions, with a projected growth rate of 13% over the next five years, when it’s expected to hit $359 billion in incremental value.2

Digital engagement is increasingly important as tech-savvy consumers step up demand for foodservice tailored to their needs and expectations, according to Stephen Dutton, senior analyst—consumer service for the global market research firm Euromonitor International.2

“Technology has been integrated into every part of the dining experience for customers to make dining a more straightforward process,” Dutton reports.3 “From identifying where to eat, to how consumers decide on their order and how orders are placed, diners expect technology to create a seamless experience for them.”3

As time-strapped consumers increasingly turn to technology to streamline their busy lives, expect demand for unique and rewarding in-app experiences to escalate. Vital for building customer loyalty and integrating engagement through social media, apps have become a must for operators who want to acquire and retain more customers. Watch for more and more restaurants to develop new apps or enhance existing ones to expand market reach.

By connecting with the busy consumer, gamifying the foodservice experience and customizing offers to individual preferences based on order history, apps can serve up increasingly higher levels of engagement, which in turn can lead greater brand loyalty and retention.

Now Tier This: Chains Make Tiered Rewards Programs a Top Priority

To help boost traffic and per-visit spend, big chains are upping the ante with tiered loyalty programs that reward members based on their level of engagement and customer status. Starbucks is stirring up interest among its 15.1 million active Starbucks Rewards members (up 14% year over year)4 with reward incentives that increase in value depending on how many stars members collect.

As Starbucks CEO Kevin Johnson explained: “For the first time, customers will be able to redeem different amounts of stars for different products, giving them a choice to use stars sooner for lower ticket items or save for higher ticket items like lunch, packaged coffee and merchandise.”4

The flexibility to redeem stars immediately or wait to accumulate more stars for higher-value rewards allows for instant gratification while encouraging repeat visits.

Chick-fil-A has also reengineered its app for a new tiered rewards program. Chick-fil-A One enables users to spend as little as $15 to begin redeeming points for rewards, but the more they spend, the higher their status and the greater their rewards. $100 in spend earns them silver-level status, and $500 elevates them to the top tier, red status.

As an added incentive, the new program gives silver and red members the option to transfer rewards as a gift to friends and family or donate a meal to a nonprofit organization.

According to Chick-fil-A One Project Lead Kaitlin White, customers “wanted greater transparency in how progress was earned and more choice over free food rewards. Moving to a more transparent, points-based system allows us to accomplish both, while providing an experience that is personalized to every guest.”4

National sandwich chain Schlotzsky’s also offers a rewards program that treats customers differently based on frequency of use. New and infrequent users tend to receive discount-oriented incentives to drive traffic, while loyal guests are treated to more-exclusive offers and perks, such as invitations to be among the first to try new menu items. Loyalty earns exclusivity that extends beyond discount offers to encompass access to new products and events.

“It’s more about, ‘I’m special, I get to preview products, I’m in the know,’” explains Kelly Roddy, Schlotzsky’s president. “I get to see what’s going on in the brand that other people don’t get to see.”5

Potbelly Sandwich Shop piles on the rewards with Potbelly Perks, a tiered loyalty program which lets members collect a smile for every $2 spent. Perks include free treats, order-ahead and jump-the-line privileges, exclusive first tastings and member events, underground menu access and more.

Satisfying the consumer appetite for apps is essential in an increasingly tech-driven competitive landscape. In 2019 and beyond, the right mix of menu innovation and loyalty incentives may prove especially rewarding, for operators and customers alike.

1 Nation’s Restaurant News, Webinar: 5 Steps for Improving Guest Retention with the Mews Tavern, R.I., 2018
2 Dutton, Stephen, New Concepts in Foodservice, Euromonitor International, p. 6
3 Dutton, Stephen, New Concepts in Foodservice, p. 16
4 Lalley, Heather, “Restaurant Chains Embrace Tiered Loyalty Programs,” Restaurant Business, Aug. 24, 2018
5 Hardy, Kevin, “Inside the Digital Future of Restaurant Loyalty,” QSR, Nov. 2, 2018

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