Creating a Restaurant Loyalty Program: What to Know

Loyalty programmes are everywhere. From Nando’s to TGI Fridays, restaurants are harnessing the power of rewarding loyal customers. Research shows that the investment is worth the effort. The Square 2024 Dining Report found that 76% of diners expressed an interest in signing up for loyalty programmes at restaurants in exchange for exclusive deals and discounts, and more than half of diners are enrolled in two or fewer programmes.

What is a restaurant loyalty programme?

A restaurant loyalty programme is a customer retention strategy that rewards customers for dining and engaging with a brand. There are nine types of common restaurant loyalty programmes, 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 programme, such as a paid option and a free option, like points-based.

The benefits of a loyalty programmes in restaurants

There are a number of benefits to having a loyalty programme in your restaurant, which include increasing sales, customer satisfaction and improving your marketing efforts. Square data shows that customers enrolled in a loyalty programme spend 53% more and visit 40% more often. Customers who spend and visit your store 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 programmes also give you a new way to market your business.

How to set up a restaurant loyalty programme

Invest in loyalty tools.

While some businesses may opt to offer a stamp system where customers keep track of a physical loyalty card, these can be easy to lose and manipulate. A digital loyalty programme makes keeping track of progress simpler for you, your customers and your staff. Digital programmes 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 programme type.

The aforementioned nine types of loyalty programmes 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 programme might make the most sense. If you’re interested in driving more revenue, consider implementing a loyalty programme 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 programme matter. The most successful programmes 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 programme that doesn’t offer any perks until £500 is spent might not be the best course of action. Keeping your programme reasonable can work to increase your success rate and make it more attractive to customers.

Market your programme.

Once you have your programme structure set, tell the world. Using social media marketing or email 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 sit-down or checkout process can help show customers its value in real time. Adding loyalty programme information to your receipts, even if customers opt out, gives them a chance to change their mind and still gain points. Running special promotional offers for loyalty programme members only is another great way to encourage customers to sign up.

Measure results.

Once your loyalty programme 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 programme 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 programme.