Creating a Restaurant Loyalty Program: What to Know

Creating a Restaurant Loyalty Program: What to Know
Loyalty programs are everywhere and restaurants are harnessing the power of rewarding loyal customers. Learn more about how to create a loyalty program for your restaurant.
by Maya Rollings Jan 19, 2024 — 3 min read
Creating a Restaurant Loyalty Program: What to Know

Loyalty programs are everywhere and restaurants are harnessing the power of rewarding loyal customers. Research shows that the investment is worth the effort. The 2023 Future of Restaurants Report found that in the next year 41% of restaurants will prioritise building customer loyalty and encouraging repeat business through marketing and branding.

What is a restaurant loyalty program? 

A restaurant loyalty program is a customer retention strategy that rewards customers for dining and engaging with a brand. There are nine types of common restaurant loyalty programs, including points-based, tiered, paid, value-based, coalition, game-based, visit-based, amount spent and item- or category-based loyalty. Some restaurants opt to have more than one type of loyalty program, such as a paid option and a free option, like points-based.

The benefits of loyalty programs in restaurants

There are several benefits to having a loyalty program in your restaurant, which include increasing sales, customer satisfaction and improving your marketing efforts. Customers enrolled in a loyalty program are likely to spend more and visit more often. Customers who spend and visit your shop more knowing that they are receiving their favourite items and working toward a potential reward or perk can have a more fulfilling dining experience. 

With a more fulfilling experience, you create organic brand ambassadors that can aid in your marketing efforts with user-generated content that can sometimes result in viral testimonials. Loyalty programs also give you a new way to market your business. For example, US-based Chipotle introduced a subtle change to its annual Halloween Boorito’deal in 2023 by making it exclusive to loyalty program customers only. This gave them an easy way to market its loyalty program and its upcoming deal in one big campaign, making their marketing efforts work twice as hard.

How to set up a restaurant loyalty program

Invest in loyalty tools

While some businesses may opt to offer a punch system where customers keep track of a physical loyalty card, these can be easy to lose and manipulate. A digital loyalty program makes keeping track of progress simpler for you, your customers and your staff. Digital programs also help you gain a better understanding of your customers’ habits. With data around how loyalty customers spend in comparison to non-loyal customers, you can track the customer journey and figure out how to convert shoppers easier and quicker. Tools like Square Loyalty integrate into your Square system so you can make loyalty a seamless experience. 

Choose a program type

The aforementioned nine types of loyalty programs can seem daunting at first, but choosing the type that makes the most sense for your business can help narrow things down. For instance, if you’re interested in driving traffic to your website or app, a gamified loyalty program might make the most sense. If you’re interested in driving more revenue, consider implementing a loyalty program based on the amount spent. Using your goals and business needs to drive your decision can help position you for long-term success.

Create irresistible perks

It goes without saying, but the perks included in a loyalty program matter. The most successful programs have rewards that offer free treats and discounted goods. With this in mind, the rewards have to be attainable. Depending on the pricing structure of your business, implementing an amount spent-based loyalty program that doesn’t offer any perks until $500 is spent might not be the best course of action. Keeping your program reasonable can work to increase your success rate and make it more attractive to customers.

Market your program

Once you have your program structure set, tell the world. Using social media marketing, email or SMS campaigns and making them visible on your website and in-store marketing can help spread the word. Encouraging staff to mention it to customers during the checkout process can help show customers its value in real-time. Adding loyalty program information to your receipts, even if customers opt out, gives them a chance to change their minds and still gain points. Running special promotional offers for loyalty program members only is another great way to encourage customers to sign up.

Measure results

Once your loyalty program has been live for two or three months, be sure to track how it’s performing. Analyse your results to see where you can improve or where you can add further value. Don’t be afraid to pivot and test out different options to discover which program works best for your business. Outside of using data, talk to your customers. Using tools like Square Feedback can help you hear from customers in their own words and help you further determine how you can grow and improve your program. 

This article is for informational purposes only and does not constitute professional advice. For specific advice applicable to your business, please contact a professional.

Maya Rollings
Maya Rollings is an editor at Square where she writes about all things customer experience, from building a solid customer base to leveraging tools and technology that meets them where they are in their journey.

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