The restaurant industry has been revolutionized by the introduction of digital ordering, with many big chains using rewards programs to hold on to new customers. NPD Group revealed that from March 2017 – 2018, there was a 124% increase in orders made through restaurants’ apps and websites; this number is due largely in part because of how popular they became during the coronavirus pandemic. By now most chain restaurants offer automatic membership into their loyalty program for those who order via an app or website (not just phone).
Starbucks, Panera Bread, and Domino’s Pizza paved the way for these new programs. Now Wendy’s, Yum Brands’ Taco Bell, and Restaurant Brands International’s Burger King are all taking their turn with innovative ways to reward customers in 2019. McDonald’s has not been left out either: they’re getting ready to launch a loyalty program later this year too!
Consumers are always looking for the next best thing, and with Covid-19’s increased popularity there has been an even greater shift in behavior. Brands that were previously holding out have now launched programs to keep consumers returning by rewarding them every time they visit a restaurant or stay at a hotel.
Chipotle’s loyalty program is the biggest driver of additional transactions for Chipotle’s “light, medium and heavy consumer segments.” Before this time they had 8.5 million members in their program but now have more than 21 million people signed up to it because of its success during the pandemic.
Chipotle has been working hard to get people hooked on its digital ordering app. For the first time ever, Chipotle saw more sales in Q1 go through their online platform than at any other point in history. The company’s most recent business strategy seems to be paying off as they converted over 500 thousand orders onto a digital interface for this quarter alone and have increased foot traffic by 15%. In response, the restaurant will continue experimenting with releasing new items exclusively via the mobile application or website. It looks like these changes are reversing negative trends that show an average of 3% dip year-over-year since before 2017 started which could mean we’re seeing some light at end of the tunnel soon!
The restaurant experience is constantly changing, but one thing remains the same: it’s an all-consuming affair. Chains are adapting to accommodate for this reality by implementing loyalty programs in hopes of retaining customers and providing them with a more personalized dining experience that will leave their stomachs happy as well as their wallets.
For now, customers largely don’t mind giving away this data about themselves in exchange for the occasional free drink or discount. Goldman Sachs surveyed 2,000 consumers about their opinions on tech features within the restaurant industry and found that loyalty programs are rising in importance to these consumers. In fact according to a recent study by Foursquare Loyalty Wallet “more than two-thirds of merchants say they will offer more rewards as a result.”
Nowadays, restaurant loyalty programs are more similar to airline rewards than ever before. For example, in 2019 Starbucks dropped its tiers which is a bid to get new members engaged with the program. Members can now earn free drinks and food without worrying about how many points they have accumulated.
The pandemic that recently spread across the world has been difficult for Starbucks to manage, but recent data suggests it is doing well. The company saw a 15% increase in membership during this period and reported strong sales growth excluding when the pandemic was affecting business.
The coffee giant has expanded its loyalty program to include cash and PayPal in order to keep up with this economic crisis. Customers who are loyal spend 52% of the time at Starbucks cafes, making it more attractive than any other chain by a landslide. Mobile orders now account for 26% of U.S company-owned transactions – which is an increase from 18%.
McDonald’s is giving its customers more reasons to stay loyal with their digital rewards program. Customers who purchase items on the app or kiosk will be able to accumulate points that can then be exchanged for free food and other perks. The company’s U.S president, Joe Erlinger, said they saw $1.5 billion worth of sales in just one quarter alone! And as McDonald’s continues testing this new initiative across 900 locations nationwide it could only mean great things are coming our way soon enough!
Loyalty programs are a fundamental component of the restaurant industry, helping to build relationships with customers and better accommodate their needs. Panera Bread’s latest design is based on recognition: if you go through the drive-thru or enter from outside into one of its new restaurants, it will automatically know who you are when your loyalty card connects to WiFi hotspots throughout the store.
In order for customer service interactions in fast food chains across America to be more personalized, some companies have come up with innovative ways like recognizing members as they zoom past at high speeds by scanning driver’s licenses and connecting them instantaneously via wifi connections located around every part of both interior spaces (e.g., tables) and exterior ones (e.g.,
Panera Chief Brand and Concept Officer Eduardo Luz had a vision of treating customers to the same level of personalized service that they would experience at their favorite neighborhood cafe once people are identified, which is why all current locations have self-ordering kiosks.
Luz said that the company is considering several options to make this a reality, including scanning codes or microfinancing technology. The first location with the new restaurant design will open in November at Ballwin, Missouri for its citizens’ convenience.
All restaurants with existing loyalty programs are asking themselves the same thing. How do we keep our members happy and engaged even when they’re faced with more competition? The answer is simple: offer them something that their competitors can’t, a reward so good it’s worth having to deal with all of those other annoying things like credit card information or long lines at the register.
The chains with the most resources will have an advantage over small players in this competitive market. These large restaurant companies are investing in technology to make their customers happier and more satisfied, but there may not be enough room for smaller competitors without a partner like that. Third-party programs could help these smaller restaurants get closer to what they need, but it’ll still leave them vulnerable when compared to larger businesses who can provide all of those things on top of customer data which is one thing third parties cannot do.
A recent study has found that competition in the restaurant industry is getting fierce. Allen predicts that these big chains will become more strategic and aggressive, employing strategies similar to those seen in hotels like Hilton Honors which matches rewards status for customers of rival hoteliers. Kross, the Vice President of Marketing at Dunkin’ Donuts, points to their year-end emails for loyalty members as a prime example of how fast-food chains are getting creative. These kinds of summaries recap member’s years and give data on various activities like the number of drinks they earned from DD or hours spent working out with
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