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Loyalty programs are everywhere, and restaurants are harnessing the power of rewarding loyal customers. And for good reason – the data shows it works. In the 2025 Square Future of Restaurants report, Australian restaurant leaders rated their loyalty program as effective in increasing order size (85%), driving repeat visits (84%) and delivering a strong return on investment (81%). That’s a lot of impact for one initiative.
Beyond the numbers, loyalty programs are a clever way to keep your brand in people’s minds and encourage them to come back again (and again). From a free coffee on their eighth visit to a birthday dessert on the house, even small rewards can leave a lasting impression and help your restaurant build deeper relationships.
What is a restaurant loyalty program?
A restaurant loyalty program is a customer retention strategy that rewards customers for dining and engaging with your brand. There are nine types of common restaurant loyalty programs: points-based, tiered, paid, value-based, coalition, game-based, visit-based, amount spent, and item- or category-based loyalty. Some restaurants mix and match – for example, offering both a paid option with premium perks and a free points-based option for casual customers.
The benefits of loyalty programs in restaurants
Having a loyalty program in your restaurant brings several benefits. It can help increase sales and customer satisfaction, and improve your marketing efforts. Customers enrolled in a loyalty program are likely to spend more and visit more often, especially when they know a potential reward or perk is around the corner. According to the same 2025 Square report, 77% of Aussie consumers said they’re likely to use or engage with a loyalty program at a restaurant, and 81% said the ability to earn rewards adds value to their experience.
When diners feel rewarded, they’re more likely to rave about you, such as a glowing review or a share-worthy social post. These organically created ‘brand ambassadors’ can aid in your marketing efforts with user-generated content that may sometimes result in viral testimonials.
Loyalty programs also open up new marketing opportunities, especially when you tap into exclusivity. Over half of Aussie diners consider exclusive events a valuable aspect of a restaurant’s loyalty program. Done right, these moments create buzz and drive repeat visits. Take US-based Chipotle, for example. In 2023, it made its annual Halloween Boorito deal available only to loyalty program customers. It was a simple shift that let Chipotle promote its loyalty program and upcoming deal in one big campaign, making its 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 with a physical loyalty card, these can be easily lost or manipulated. In an era where many people don’t even carry a wallet, they’re quickly becoming outdated. A digital loyalty program simplifies things for you, your customers and your staff. It also helps you gain a better understanding of your customers’ habits. By comparing data on how loyalty members spend versus non-loyal customers, you can map the customer journey and identify ways to convert one-off diners into regulars.
The appetite to go digital is strong, with 89% of Aussie restaurateurs keen to invest in technology to better build a loyal customer base. Tools like Square Loyalty integrate into your Square system so you can make loyalty a seamless experience.
Choose a program type
Those nine types of loyalty programs can seem daunting at first, but choosing one really comes down to what makes the most sense for your business. For instance, if you’re interested in driving traffic to your website or app, a gamified loyalty program might be the way to go. 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 your 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 a spend-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 in place, tell the world! Promoting it on social media, featuring it in email campaigns, making it visible on your website and adding in-store signage all 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.
Marketing gives your loyalty efforts extra muscle. While 35% of restaurants agreed that they need to improve loyalty through a strong rewards program to better compete in today’s marketplace, 39% also highlighted marketing and engagement as key areas for improvement. Loyalty and marketing go hand in hand – each supports the other and helps you stand out in a competitive market. Learn more about how to successfully build an online marketing strategy for your restaurant.
Measure results
After your loyalty program has been live for two or three months, be sure to track how it’s performing. Are people signing up? Are they redeeming rewards? Are they coming back more often? Dig into the data to see where you can improve or add further value. Don’t be afraid to pivot and test different options to discover which program works best for your business. You can also go straight to the source – talk to your customers. Using tools like Square Feedback can help you hear from diners in their own words so you can further 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.
