The “My Starbucks Rewards” program has become one of the most successful loyalty programs in Canada, and now other major players, such as McDonald’s and Tim Hortons, are joining the competition, finding ways to win repeat business at a time when the share of Canadians using restaurants daily has slipped.
According to NPD’s CREST research, 45 per cent of the Canadian population visits a restaurant daily, down from 46.3 per cent a year ago. Measured as ‘daily penetration,’ the quick-service restaurant (QSR) segment experienced the sharpest decline in customer visits (54.3 million) year-over-year followed by the casual-dining segment (8.5 million). As such, the competitive pressures between restaurant operators to “steal customers,” while wooing back existing customers has intensified. This intense competitive pressure is resulting in customer loyalty programs receiving attention as restaurant operators look for strategies to “own the customer” and increase visit frequency.
According to a recent mobile-enabled survey completed by The NPD Group’s panel of restaurant consumers, close to 31 per cent of quick-service and full-service restaurant customers participate in a restaurant loyalty program. And nearly half of restaurant customers participating in a loyalty program claimed they increased their visit frequency to the restaurants in which they are loyalty program members.
Implementing a restaurant loyalty program clearly makes sense strategically, but it needs to drive awareness. After all, the two primary reasons restaurant customers say they don’t participate in a loyalty program is they don’t know about it (45 per cent) or the restaurants they typically visit do not have loyalty programs (37 per cent). Interestingly, the majority of restaurant customers participating in a loyalty program said meal discounts were the primary benefit of participation — few noted an experience-related benefit such as “being treated as a valued customer.”
Foodservice operators can remedy this by offering discounts that target loyal customers who are likely to spend money. A loyalty program can also create “multiple daypart customers” as well as “[move] customers into a high spending threshold” by grading rewards based on spending levels.
There’s little doubt a well-designed, well-managed restaurant loyalty program can yield results, so expect to see more chains rolling them out in the next year.
