How Loyalty Programs Can Attract Value-Conscious Customers

When you ask customers what they want from foodservice operators today, what do they say over and over again?

Value. Value. Value.

At a time when high prices and inflation continue to be top of mind for so many consumers, every visit to a foodservice operation has to clearly showcase its worth.

When you ask foodservice operators what they want from customers today, what do they say over and over again?

Traffic. Traffic. Traffic.

With so many operators feeling the financial squeeze as margins get slimmer, they need to both attract new customers and give their existing customers reasons to keep coming back.

These two needs are interrelated, of course. When customers see the value in a dining experience, they are more likely to try a new establishment and become repeat customers. That additional traffic and spending can give operators the capital they need to invest in new offerings and offer new discounts, creating even more value. It's a virtuous circle.

So what if there was one solution that could support both needs?

Enter the loyalty program. Done well, a loyalty program delivers the kind of tangible value that consumers are demanding today, while giving operators a built-in tool to bring in new customers and make them repeat visitors.

Loyalty programs are growing in popularity

Foodservice loyalty programs are only increasing in popularity. In fact, over half, or 52%, of consumers today say they actively participate in restaurant-based loyalty programs, a 5% increase in just 3 years.¹

That’s perhaps not as surprising as it may seem at first. Technology has made it easier than ever for a consumer to sign up for a loyalty program. Websites and social media apps mean anyone can sign up in seconds, and these technologies also make it easier than ever to reach a wide audience.

But consumers are also more deal-conscious than ever.

In fact, 72% of consumers say they have become more selective about where they spend their money on food.²

Overall, value is the second most important factor influencing where consumers purchase food away-from-home, just after taste.²

Loyalty programs that offer discounts, special deals, secret menu item releases, early access, and even experiential options like games unlock the value that today’s consumers are seeking.

Offering consumers the value they continue to demand is clearly a core concern for operators. The vast majority, or 92%, of foodservice operators say delivering strong value is a core priority.²

That also makes loyalty programs attractive for operators. Not only can they easily deliver on what consumers demand or crave, but customer data and research can help drive more relevant, winning value-focused promotions (and hopefully traffic) in the future.

Who is using loyalty rewards programs?

While commercial restaurant chains may have spearheaded the loyalty program adoption, today a wide range of tech solutions make them available to independents, as well. Non-commercial operators, from colleges and universities to healthcare to lodging/hotels, often have their own programs, rewarding customers who may be particularly loyal, even visiting almost every day for some segments like the cafeteria.

Current loyalty program usage is heavily skewed toward limited-service operators. QSRs lead the way, with a whopping 73% of loyalty program members saying they’re enrolled in a QSR program, followed by 47% enrolled in coffee shop programs and 45% in fast casual options.¹

That leaves plenty of white space opportunity for other segments. Only 36% of consumers are enrolled in casual dining loyalty programs.¹ But that segment has recently been reengaging consumers through a wide range of deals and campaigns, attracting customers who may normally be scared off by the comparatively higher prices. By incorporating those deals into a loyalty program, casual dining operators can earn those traffic opportunities.

Overall, loyalty programs also skew toward younger consumers. In fact, 59% of Gen Z consumers are enrolled in some type of foodservice rewards program, half of whom plan to enroll in even more programs in the future.¹

That creates an opportunity to not only grow Gen Z traffic, but also to potentially convert them into brand loyalists for the future.

Tactics for loyalty program success

So how do you build a loyalty program that drives traffic? Luckily, customers are pretty clear about what they want: deals and value.

The top reasons consumers sign up for loyalty programs are that they want to earn free food and beverage items (62%) and they want to receive discounts and promotional offers (53%). Those numbers vastly trumped any other reasons to sign up.¹

So that should be the start for any loyalty program launch (and the focus for any operators already offering loyalty programs). Customers want to see clear, tangible deals and rewards that lower the price of a meal.

Here are five other tactics to consider:

Consumers are going to keep hunting for value. At a time when they are more price-conscious than ever, sticker shock can easily turn them off. But a good deal delivered through a loyalty program can bring them in and keep them coming back.

Operators will always be on the lookout for ways to drive traffic. After years of cutting costs and optimizing nearly every aspect of their business, driving traffic is one of the few tactics still available to boost the bottom line. Harnessing a well-run loyalty program will be a key part of driving that traffic.

It's clear that loyalty programs can help solve the needs of both customers and operators. They make customers feel like they’re winning and making a values-conscious decision, while giving operators an avenue to increase traffic, dive into customer data, and build lasting customer relationships.