Loyalty Programs: 6 Valuable Benefits For QSRs

Compared to this past year, April 2023 traffic for quick-service restaurants (QSRs) decreased while pricing increased. Not the ideal direction for either metric, whether you’re an operator or consumer. But, as the threat of recession continues to loom, it remains the situation at hand.

Moving forward, Revenue Management Solutions (RMS) anticipates that average prices will stabilize, particularly given the bullish price increases seen in the past 12-18 months. Good news to be sure but we also believe that for the second half of 2023, traffic will continue to be a challenge. To boost profitability, it’s worth making the most of the customer data and insights that reside in your loyalty programs and apps.

In this post, we’ll share some compelling reasons why loyalty programs are especially relevant and how they can help as we all continue to tighten our belts.

Why are loyalty programs so important right now?

  1. Continued growth in popularity and high adoption rates. During the pandemic, approximately 25% of guests reported signing up for at least one restaurant loyalty program. For 2023, that interest has grown with 1 in 4 guests reporting they are members of even more loyalty programs compared to the past year.
  1. Guests like in-app loyalty programs. In RMS’ recent consumer survey focused on restaurant apps, loyalty programs and dining choices, data indicated that one in two guests use restaurant apps for loyalty or rewards programs. Even more encouraging, for all respondents, rewards and promotions were the most common reason to join a loyalty program.
  1. But not all guests use loyalty programs the same. While top motivators for signing up for a loyalty program were points and rewards, differences do exist among the various generations. Not surprisingly, Gen Z overwhelmingly chooses loyalty programs for the convenience of the technology. Family households tend to use loyalty programs for contactless payment and the convenience of seeing their previous order.
3 out of 5 survey respondents joined a restaurant loyalty program to access rewards and promotions.
  1. Loyalty-only offers work to keep guests closer. These app-exclusive special offers incentivize customers to stay on your platform or entice lapsed customers back to your brand. Your existing guest data lets you offer them personalized coupons, rewards and offers — satisfying their motivations, preferences and welcoming them back to your restaurants.
  1. Loyalty data provides insights. Analyzing your best customers can help identify why segments are returning or lapsing, and which categories and dayparts are shifting. With this data, you can then respond with appropriate offers.

    For example, RMS found that 37% of family households are members of more loyalty programs now compared to last year. With that knowledge, you can create offers in your loyalty program and app that appeal to this particular demographic such as meal bundles that offer the promise of leftovers; ‘happy-hour’ meal specials timed for end of work daypart; value meals with options to customize sides or drinks.
  1. Value-based offers can win new customers. Younger generations are value chasers. These guests are already engaged on the buyer’s journey (they’re hungry) and are online and actively looking for deals, most likely in a restaurant’s app. This demographic believes that deals and coupons offer good value for their money, and if they can redeem one, they’re more likely to dine out and even try new menu items.

    That said, 2 in 3 guests would switch from their usual restaurant if a competitor offered a coupon. But keep in mind, it works both ways — make sure your loyalty program offers are compelling and competitive enough to encourage guests to stay with your franchise or jump ship from their usual QSR. 

As the economy remains uncertain, a loyalty program can be an effective and profitable way to grow your brand’s reach even as price sensitivity remains. Start by optimizing your loyalty program using the customer data you already have. With those insights, you can offer (and test) rewards and other incentives that can attract new and existing customers to keep them engaged — and loyal to your brand.

RMS can help you find profit-boosting value in your data to make the most of your existing loyalty program or the one you want to create. Reach out to us today for practical strategies to optimize your profitability, sales and financial health. We’re here to help.

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