Restaurant Loyalty Programs: Tips & Strategies For Success

Restaurants that follow loyalty program best practices, such as offering rewards, discounts, gamification and hyper-personalization, are 1.6 times more likely to experience double-digit revenue growth, according to a 2021 Forrester Consulting study.

But not all loyalty programs are structured the same. The approach that might work best depends on your restaurant concept and goals. Consider Chicago-based Lettuce Entertain You Enterprises; its loyalty program covers its 60 concepts and more than 120 restaurants nationwide. Its rewards program based on earning points for dining is considered among the most successful.

WHY INCREMENTAL GROWTH IS KEY TO LOYALTY PROGRAM SUCCESS

Everything must be done with hospitality in mind, says Jennifer Bell, LEYE's chief marketing officer. Customers can take points they earn at one concept and redeem them at others and use the loyalty/rewards app to purchase gift cards and track points. But the game-changer came, Bell says, when LEYE added takeout and delivery to the program.

It's that incrementality that really drives our profit,” she says.

"Other restaurant operators often ask Bell how to start a loyalty program. “It's a marathon,” she says. “Running the loyalty program is the single most difficult thing I've ever done in my life. It's complex. These are our best guests ... There's a lot of variables that could go wrong. It's very important to stay on top of that ... Loyalty is tough. You've got to be in it for the right reasons. You're not going to see the return immediately.”

Fast-casual chain Chipotle Mexican Grill, one of the industry leaders in loyalty, launched its rewards program at the beginning of 2019. It now has nearly 40 million members and those members come in more often than nonmembers, and spend more during those visits, Brian Niccol, Chipotle's then-CEO, said during the chain's fourth-quarter earnings call in February 2024.

“So over and over again, what we see is whether you're a light, medium or heavy user, when you're in the rewards program, you come more frequently and you spend more,” Niccol said during the earnings call. “Even when people are redeeming entrées, what we're seeing is they're still buying sides.”

CREATING A SEAMLESS EXPERIENCE FOR YOUR LOYALTY MEMBERS

Sometimes loyalty is less about discounts and more about making regulars feel special.

San Francisco wine bar El Lopo debuted its Take-Care-of-Me Club in 2021. The Spanish restaurant, which opened in 2019, already had a menu item called “just take care of me,” that involved the kitchen crafting a menu based on a diner's budget, dietary restrictions, time constraints and even hunger level, says owner Daniel Azarkman.

A restaurant subscription marketplace called The Third Place approached El Lopo about creating a program that would be a good fit for the restaurant, especially as the world was reopening from pandemic lockdowns.

“How would we create a subscription program that drives dine-in traffic and leverages this already popular experience we offer?” Azarkman says.

MEMBERSHIP-BASED LOYALTY PROGRAMS: A GROWING TREND

El Lopo currently has 31 members in the club, and Azarkman says he probably wouldn't want more than 35. “A major selling point of it is making it a personalized experience, having all of our staff know the names of all of our members so that when they walk in the door, we can already have something for them,” he says.

The program has two tiers, one at $89 and the other at $175 per month. The former offers $100 in food-and-drink credits per month, the latter offers $200 in credits. And there are some fun perks: On every visit, members can send a free drink to a stranger, and registration fees are waived for special tastings and events.

“Apart from that discount, the main selling point is seamlessness,” Azarkman says