What the Rise of Loyalty Programs Means for Casual Restaurants

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Casual dining rewards members seek enhanced experiences more comparable to the travel industry.

Loyalty has long been a part of the restaurant industry landscape, with brands like Starbucks and Panera leading the pack for years with groundbreaking programs. Even the most successful recent launches at McDonalds, Popeyes and Taco Bell came as no surprise, as loyalty has been a proven method for years to attract, retain and reward loyal customers. Yet adoption of loyalty programs and digital innovation, in general, has been slow for the full-service industry. Some attribute this to the industry falling behind their channels, forcing them to innovate almost overnight to build systems to support delivery, curbside and online ordering. While this may be true, time may also be up.

Recently, casual breakfast brand Snooze an AM Eatery announced that it had just launched its new loyalty app, integrated directly into its waitlist system. Days later, Red Robin cited in its latest earnings call that, alongside improved cost metrics, its new loyalty program was a critical factor in its 21% increase in revenue.

Simply put, we are seeing an increase in loyalty at full-service establishments.

Customers have many expectations from loyalty programs, especially when it comes to the full-service or casual dining space. What makes the casual dining industry so different is what the customer expects from their visit. Overall, casual dining loyal members are looking for enhanced experiences more comparable to the travel industry. Like travel, casual dining is seen as a special event, and that experience must match or exceed value. This naturally lends itself to more experiential rewards or extras, as well as smaller, more frequent rewards to encourage frequent visits.

That being said, there are many differentiators for this industry when it comes to loyalty. Here’s what full-service operators need to know about the coming wave of loyalty in the casual dining space.

Customers expect to be rewarded

One thing fast food brands do exceptionally well is offer personalized engagements. Not only do their loyalty programs offer multiple ways to interact with the brand, such as online, in-app, or in-store redemption, but they also offer multiple ways to offer rewards, including bank points, systems multilevel and experiential gifts. This flexibility gives customers unique ways to not only engage, but also feel rewarded for every engagement. As this sense of “sentiment” becomes normalized across fast food and fast food brands, casual dining concepts will need to keep pace. Indeed, each guest’s visit becomes more grounded in them feeling “rewarded” for the visit, sometimes beyond the enjoyment of the food or the experience. This is a systematic change for most operators who have been able to bank on frequency of visits strictly based on special events, family reunions or even catering sales.

Mobile as a must

It’s no secret that consumers have spent the past decade living on their devices. The rise of unlimited memory in cell phones today means that they can now support the arrival of hundreds of applications, from a multitude of brands. Officially, the floodgates have opened and having a working application is no longer just an asset, it is now a necessity. What casual dining restaurants have yet to figure out is how these apps fit into their existing systems. Curbside and online ordering capabilities managed through a branded app provide restaurants with the benefits of creating a frictionless, secure, end-to-end experience for customers and employees. When integrated with loyalty, you have a seamless way to not only track all of your consumer’s different touchpoints with your full-service brand, but also a way to engage and reward them by permanence.

Value increases with inflation

With rising prices for raw materials, gasoline and wages, the full-service operator faces more challenges than ever. The very nature of their business is based on more menu options, more staff, and of course more focus on an elevated experience. This means clean and regularly updated facilities to ensure that the restaurant sees the value of a slightly higher visit transaction. While these factors remain inflexible, what changes is the customer’s view of value. Consumers now rate valuable accessories based on a seamless transactional experience and convenience of engagement, however they order. So your curbside or loyalty interaction should be as simple and on-brand as eating within your own four walls. Time is money to them, and as inflation continues to impact families nationwide, it will continue to factor into their dining decisions.

A complete service must offer experiences

We’ve named several ways quick service and fast food use loyalty effectively, but one of the most important differences between them and full service is how loyalty should be used. Coupon is only an effective method when costs are low for SKU level items. Therefore, full service needs to reevaluate what it offers for a busy, cost-conscious consumer. Namely, what experiences can you provide? Some of the brands that have done this most effectively are those that think outside the box. Consider the value behind offering a monthly “Buy-One-Get-One” pasta subscription or exclusive menu/LTO items for your top-tier followers. Work within your waiting list and provide quick access to seats for frequent customers. We’re even seeing experiential giveaways by awarding fans lifetime memberships to menu items or meeting and greeting celebrity spokespersons.

Quick service concepts may have had the initial advantage on loyalty, but full service and casual dining aren’t far behind. Indeed, loyalty programs can not only be a profitable business on the part of the brand, but also cultivate a better customer experience. And casual dining means experiences.

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